Squawk Box Europe Express

The Fed hikes for the first time in over 3 years, with the Dow shedding over 600 points while the 10-year Treasury yield holds stubbornly around the 5% mark. The rate hike provokes U.S. President Donald Trump, who once again demands looser monetary policy, calling the FOMC “hostile”. Across the pond the Bank of England looks poised to deliver a hold as long-term borrowing costs hover near their highest in nearly 30 years. And the EU's offer for Canada to become its first-ever associate member also draws the ire of President Trump, who threatens further trade restrictions on the bloc if those plans progress.
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All eyes are on the Federal Reserve decision today, as America’s central bank is all-but certain to have its first hike in over 3 years with the expected move will likely strain ties with U.S. President Donald Trump. Meta’s Mark Zuckaberg is weighing in on the AI safety debate, favoring independent evaluation rather than a slowdown in development, but Nvidia’s Jensen Huang and OpenAI CFO Sarah Friar come down on opposite sides of the conversation.
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Chip names sell off on both sides of the pond amid investor pullback after warnings from AI giants. Software stocks, however, catch a bid, putting the two baskets at a huge divergence. Trump intervenes, calling warnings over the technology a “sick” “hoax,” and telling AI leaders not to kill the “golden goose”, going as far as calling up Jensen Huang during a podcast recording. The 10-year Treasury yield hits its highest ever level in almost 20 years, with traders eyeing a near 95% chance of a Fed hike as the FOMC starts its two-day meeting today.
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AI safety fears have dominated the sphere as Anthropic chief Dario Amodei's proposals to rein in development manage to unite bitter rivals Elon Musk and Sam Altman in support. However, U.S. president Donald Trump disagrees. Trump’s relationship with Fed Chair Warsh is set for a new test as investors eye a more-than 85% chance the central bank raises rates at its meeting this week while the President says the U.S. should have the lowest interest rates in the world. Oil prices notch fresh gains amid new strikes on Saudi Arabia and the Strait of Hormuz, which force Saudi to temporarily shut its East-West oil pipeline.
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The latest U.S. Treasury buyback disappoints which piles on the pressure to sell global bonds. The 10-year Treasury yield is inching towards 5 per cent. In oil news, WTI tops $100 for the first time since May as continued Iranian attacks on Gulf refineries and vessels attempting to pass out of the Strait of Hormuz drive raise concerns over an extended disruption to supply. The ECB bumps rates by a quarter point as energy price concerns steer the inflation outlook upwards.
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