Trump Debunks Iran Sanctions Relief Report, Treasuries Selloff, More

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What is the main topic discussed in this episode?

Caroline Hepker 0:00
AI is entering its most consequential phase where scale, safety and sovereignty will determine who leads and who lags. Join Bloomberg Tech in London on November 2nd and 3rd as global leaders across business, finance and policy examine the defining trade-offs shaping the future of AI. Thank you to our presenting sponsor, Salesforce, and supporting sponsors, IDA Ireland and Schneider Electric. Learn more at BloombergLive.com slash TechLondon.
Doug Krisner 0:32
News when you want it with Bloomberg News Now. I'm Doug Krisner.

What did Trump say about Iran sanctions relief and the chance of a nuclear deal?

Doug Krisner 0:35
President Trump says he is open to sanctions relief for Iran in exchange for progress on the nuclear issue. However, later in the day, the president pushed back on that reported notion. Separately, we are told Iranian officials have privately expressed pessimism about reaching a deal to end hostilities and reopen the Strait of Hormuz before the U.S. midterm elections in November. Here is Michael Allen, Managing Director of Beacon Global Strategies.
Michael Allen 1:01
I think there is something magic about the midterms because I think the Iranians believe, and even if they were conditioned to accept something serious, that that would be a gift to President Trump. I think in their minds, they're playing a contributing role to the prospect, the possibility, the likelihood that the president might lose the House of Representatives and possibly even the Senate. And they probably are thinking to themselves, they don't want to forestall that because they think they have leverage, at least through that perspective. particular time period
Doug Krisner 1:32
that is michael allen managing director of beacon global strategy speaking on bloomberg's balance of power now iranian officials have consistently said they are willing to pursue diplomacy but they do not trust the trump administration to abide by the terms of any agreement And to be fair, the White House has similar feelings of distrust toward Tehran. Saudi Arabia has restored about half the flows through its east-west oil pipeline.

How is Saudi Arabia restoring oil flows after damage to its East-West pipeline?

Doug Krisner 1:57
The pipeline was damaged by a Houthi drone strike back on September 10th, and now partial flows of around 3.5 million barrels a day have been restored. The east-west pipeline has served as a vital conduit for Saudi oil exports during the Iran war. It's allowed the kingdom to become less reliant on the Strait of Hormuz. Today, crude oil prices closed well off session highs. After having been up 4.5%, WTI finished up just two-tenths of 1% in $92.60 the barrel. Market psychology is being driven by headlines on the war with Iran. The equity market retreated today as yields rose across the Treasury curve.

Why did Treasury yields rise, and how many Fed rate hikes are markets expecting?

Doug Krisner 2:39
We had the S&P down seven-tenths of one percent. In the bond market, the yield on the 10-year picked up seven basis points, last quoted in New York at 5.23 percent. Of course, the bond market is braced for the Fed to keep raising its policy rate. Here is Bloomberg strategist Ira Jersey.
Ira Jersey 2:55
Well, the market thinks that inflation is going to come down over time, but of course the market's been thinking that for the better part of a couple of years. And when you look at some inflation measures, we're not too, too far from 2%, but we're still above that 2% target that the Fed talks about. So I think in order to keep credibility, the Federal Reserve is going to have to follow the market's lead here and hike rates at least a couple of times.
Doug Krisner 3:18
That is Bloomberg's Ira Jersey. Now, the swaps market is currently pricing in at least three more quarter point rate hikes over the course of the next 12 months and the potential for a fourth. Today, Fed Governor Lisa Cook said she is expecting continuing inflationary pressure from the build out of artificial intelligence in the coming months.

How could AI affect inflation, job growth, and wages?

Doug Krisner 3:38
Meantime, the director of the National Economic Council, Kevin Hassett, says AI will have a beneficial impact on future job growth.
Kevin Hassett 3:46
The growth benefit of it is way bigger than you might think. The concerns, of course, are that it's going to change people's jobs, maybe cause some jobs to be replaced. Firms that start using AI see their sales go up a lot, their employment go up a lot, and wages go up a lot because the people are more productive.

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