The guiding hand of the bond market is moving once again, with yields at multi-year highs around the world. Investors know the White House will be watching these shifts closely—Treasury Secretary Scott Bessent has said the bond market is ultimately the most important.
In the past, hiccups in the bond market have led to policy developments from the Oval Office, such as concerns about tariffs. But tensions in the Middle East aren’t so easily remedied, points out UBS’s Paul Donovan in a note to clients this morning.
Bond investors increasingly appear to believe sticky inflation isn’t going away anytime soon—and are preparing for the possibility that rates stay higher for longer. It’s not what President Trump wants to hear, but the data is getting harder to argue with.
ONE BIG THINGThe AI industry’s biggest names are investing billions in ‘world models,’ writes Fortune’s Sharon Goldman.
Unlike existing models, these AI systems are designed not just to recognize patterns in text or images, but also to simulate how the physical world behaves. By training on millions of hours of video, these models can build an accurate internal picture of how the world works, physics and all—a crucial capability for a wide range of technologies, whether it’s to help a self-driving car predict what happens if a child runs into the street; help a home robot learn how to fold clothes; or simulate surgical procedures before a single incision is made.
