Markets debate the Fed’s next steps, Google’s former CEO raises the alarm about the use of AI in China and US commercial property prices fall.
Fee discussion
The Fed rate debate continues among market players, and Pictet Wealth Management is betting against the notion that the central bank will cut interest rates this year. Andres Sanchez Balcazar, head of global bonds at European Wealth Managers, believes the market’s assumption that policy makers will start cutting rates in September is “extreme”. Pictet, which has about $680 billion in assets, is lowering the futures rate on a condition that the Fed cannot cut borrowing costs in the coming months if it faces persistent inflation.
Nvidia CEO doubled his fortune thanks to the rise of artificial intelligence
AI alarm
China’s adoption of artificial intelligence in wartime settings has alarm bells ringing in the US. Former Google CEO Eric Schmidt joined the chorus during his testimony at a House hearing on Wednesday afternoon. The night focused on accelerating America’s adoption of AI within its military intelligence. Schmidt warned that China spends more than the US on defense artificial intelligence in addition to “civilian-military fusion”, which forces Chinese business companies to work closely with the military. Kathleen Hicks, Deputy Secretary of Defense, said she could see “the PRC trying to move forward and take advantage of AI technologies”.
Properties fall
US commercial real estate prices fell in the first quarter for the first time in more than a decade, which could exacerbate bank stress as lenders look to write off more than 60% of the $3.6 trillion in pending commercial real estate loans in the fourth quarter of 2022. Organized. The increase in the number of employees working from home has prompted some retailers and restaurants to close their businesses and forced office building owners to reduce rents or sell everything. While the decline was less than 1%, Moody’s chief economist estimates that prices will drop by about 10% overall, possibly more if the US goes into recession.
Why stocks and bonds fell in the dollar in Buenos Aires Square
Inventory
Contracts on the S&P 500 and Nasdaq were modest gains this morning, both up about 0.2% as of 5:50 a.m. in New York, as risk appetite re-emerges on optimism about success in US debt limit talks, Treasury yields rose , most decisively in long-dated stocks. Meanwhile, the dollar gauge strengthened, oil fell, along with gold, and iron ore continued to rise.
In terms of data, we will be releasing the US unemployment insurance claims number at 8:30 am, along with the Philadelphia Fed’s business outlook for May. Then, at 10:00 AM, we’ll get the April US Leading Index and Existing Home Sales.
We’ll also hear from some Fed speakers: Jefferson will speak at 9:05 a.m., Barr will testify before the Senate Banking Committee at 9:30 a.m., and Logan will speak at 10:00 a.m.
Meanwhile, President Biden will attend the G7 leaders’ summit in Japan, and Treasury Secretary Janet Yellen will speak at the Bank Policy Institute today on debt limits and banking system developments.
The US will sell $35bn in 4-week bonds and $35bn in 8-week securities at 11:30 am. It will then sell $15bn in 10-year TIPS and $45bn in 156-day CMB at 1:00 p.m. ET.
Among the results we’ll hear from today are Walmart, Alibaba, Applied Materials, Bath & Body Works and Ross Stores.
