Who pays for Trump's $5,000 promise? | Morning Bid

Today, energy and bond markets are on edge, as President Trump indicates no end to the Iran war before the midterm elections. Plus, as US markets await inflation updates, the European Central Bank is set to lift interest rates. And will AI kill us all? Nerves about the new tech's implications are back in the headlines. This is Reuters Morning Bid, bringing you unfiltered market news and analysis straight from the Reuters newsroom. I'm Mike Dolan in London. And I'm Peter Devlin. It's Thursday, September 10th. So Mike, we got a special treat yesterday, a nearly two-hour primetime address from President Trump as he hit the road for the US midterms. And a lot of big promises came through here. He said that if you elect Republicans, every American will get $5,000. He also said he'll make his tax cuts permanent and also would eliminate all swiping fees on credit cards. So big attention-grabbing stuff. But amid all those pledges came one prediction that was quite one that we need to talk about. I mean, he said that the Iran war will end immediately after the US midterms. Now, I don't think this is quite as reassuring as he thinks, because Brent crude's still holding above $100 a barrel this morning. That's still a long time for markets to wait, isn't it? Well, we were talking yesterday that the markets were now starting to assume that this, which they have assumed for six months since the war started, that somehow it would be wound down before the elections. And that's why we're kind of rising as the intense, pretty intense, most intense shipping attacks since the war started over the last couple of days. Beginning to assume this is not going to end before the election, before November. And Trump effectively confirmed that last night, saying somehow that it would end just after the elections. But we are seeing reports even in The Wall Street Journal this morning that Trump advisers are beginning to get him to condition Americans for the war lasting potentially for the rest of his term, which will be another two years. The implications of the oil markets are very clear. We closed last night at Brent crude, its highest level since May. We were again this morning probing that 102 level, which is the highest intraday level since July. So, you know, you might connect all these things because, you know, that very high energy price puts inflation pressures on it. And we will get the first of this week's two inflation updates later today with the producer price report. And that's, you know, that's running hot, certainly on a headline basis and the core basis, running at four or five percent annually. And the Treasury market is very worried now about this rising fuel price and the inflationary implications and, of course, the interest rate implications. And we saw the 10-year US Treasury yield hitting its highest level in three years yesterday. And that was even as Scott Besson's buyback program, his supposed big rescue to calm down the bond market, had its first foray yesterday and it had virtually no impact. Markets basically saying that six billion of purchases was almost irrelevant, given the way in which the yields behaved on the day. And then you go back to the Trump speech, you talk about the 5,000 checks. I think anyone in the bond market looking at where that money is going to come from will be scratching their heads. If every American were to get a 5,000 check, that's a total bill of 1.3 trillion dollars. You know, the Treasury might have to go back to the well and start borrowing that again. That's another stimulus into an economy that people are fearing is overheating already. Well, of course, another big event that we need to be paying attention to is the European Central Bank, where it's widely expected to hike for the second time this year, reaffirming it as the most hawkish central bank in the G7. But as always with these events, we'll be looking to the future. Not only Christine Lagarde, will she be continuing out her eight-year term after reports coming through that her memoir will be released in January, but also is a third hike on the table for December. What are you going to be watching out for today? Well, all those things, obviously. Yes, it is the beginnings of this latest wave of central bank tightening. Well, actually, it's the second one. If you take the New Zealand Central Bank earlier this month, today, we'll almost certainly see that quarter point hike to 2.5 percent. The market is pricing in more. And I think if you go back to the energy story we just talked about, in Europe, there's a particularly sharp effect from that because of natural gas prices. Now, natural gas prices hit their highest level since 2023. And they are significant for Europe because winter storage is being rebuilt. And as we said, only two-thirds of that has been done so far in the middle of September. So that's very important to the ECB because it's going to feed headline inflation rates, at least, whether it is a depressive effect on the economy, of course, is the decision that we'll have to make. So to the other issues you mentioned, that is a fascinating kind of report because we've been on Christine Lagarde, that is, because that issue about when she ends her term and whether it will end early, possibly by the end of this year, has been around for some time. It was never fully put to bed. If, indeed, there is a book coming out in January, that kind of adds fuel to that particular fire. And, of course, inevitably starts the speculation about who replaces her. And, of course, there has been many names in the hat for some time. And, of course, one of the more interesting things for people who watch the ECB very closely is that whether a German official would get the position for the first time, because there has been a pre-euro agreement that essentially the Bundesbank, Germany's central bank, would not get the top spot in the ECB, at least for the early years of the euro. We've talked a lot about succession plans amid all these worries about AI taking our jobs, but now is there a worry that AI is going to take our life? So this new debate has been sparked after an AI researcher at Anthropic has resigned. He cited concerns that the company, as well as its competitor OpenAI, are acting irresponsibly on its pledge for the new tech, saying that it may be a threat to humanity now. I mean, are these justified concerns? Are they hitting the markets? Should we start prepping for doomsday? Okay, so we've got about two minutes to talk about the end of humanity, so no pressure. Look, we can't deal with the actual issues that he raised, obviously, and markets for sure cannot price the end of humanity. That's not going to happen. What they can price, though, is potentially the sort of regulation that I think these warnings are really pointing to. The idea that AI will be a disaster for workers or even some companies where it'll be existential has been through markets and has been a factor. Even this week, again, we saw software stocks falling very sharply on the latest OpenAI, Astra model that was released. But this is much bigger than that. This is going back to some of those scare stories that we heard earlier in the year that within two or three years, there would be global depression because everyone would be out of work. That piece of research went viral in the spring. So these things come back again. But I do think what they are indicating, more than anything else, is there needs to be coordinated and significant regulation around the rollout of this. And Reuters reporting again today that the rogue agents, OpenAI's rogue agents have been in many areas, yet again, ones that weren't even suspected. And the UN, just to add to the scare stories, the UN earlier this week raising a red flag over the use of fully autonomous drones in front lines of many conflicts. Now, that is that is truly scary and maybe does speak very in real terms to to what sort of things the anthropic employee was talking about. But regulation is where markets will look for a reaction to this. And how likely is that in the geopolitical world that we're in at the moment? And for today's recommended read, check out Mike's column on whether U.S. policy is gradually deflating the dollar. The link is in the show notes. And for more of any of today's stories, head to Reuters.com or the Reuters app. Follow us on your favorite podcast player. And if you're on a smart speaker, just ask for the latest market news from Reuters. We'll be back tomorrow.