Treasury yields hit Financial Crisis highs

0:00Welcome to Seeking Alphas Wall Street Lunch, our afternoon update on today's market action, news and analysis. Good afternoon, today is Thursday, September 10th, and I'm your host, Kim Kahn. Our top story so far, Treasure yields are on the march higher, hitting levels not seen since the financial crisis. Driven by global rate increases in wholesale energy inflation, the 10-year yield hit 4.93%, its highest level since 2008. The 30-year rose to 5.35%, also a new post-2007 high. This morning, the European Central Bank raised its key deposit rate by 25 basis points to 2.5% amid commodity pressures. Shortly after, the August producer Price Index showed annual wholesale inflation rising to 5.4%, with the core PPI moving up to 4.6%. David Russell, head of market strategy at Trade Station, said diesel prices are the biggest concern because it's an input cost for so many goods and services, and the rise in prices threatens to drive up non-core inflation in the coming months.

1:01Pantheon macro-samual tomb said simply there's no disinflation in this report. As Treasure yields climbed, so did expectations for a Federal Reserve rate hike next week. Odds of a quarter point hike were at 70% the highest level in more than a month. Diane Swank, chief economist at KPMG, says regardless of what the CPI shares Friday, the components that feed into services inflation in the PCE measure of inflation were hot and persistent. That is yet another reason that the Fed will need raised rates, she said. The bond market is already in disarray and would be much harder on the economy if the Fed fails to act. Also on the economic front and thethropic's economic steam has released an interactive model estimating how artificial intelligence could reshape the US economy by 2030. In the modest case, AI's economic footprint resembles that of the internet. GDP ends up just 1.6% above a NOAAI baseline, and unemployment stays within normal historical range. The substantial scenario assumes AI autonomously handles about half of all knowledge work by 2030, pushing GDP 8.3% above the baseline to 36 trillion versus roughly 31 trillion today,

2:04while total unemployment settles around 4.6%. The extreme scenario is that AI becomes more productive than humans across nearly all knowledge work tasks and recursive self-improvement drives rapid adoption, annual GDP growth could hit 15%, doubling the economy roughly every 4.5 years, and lifting GDP 32% above baseline to $44.4 trillion. But the gains would be lopsided, knowledge worker unemployment would climb will pass typical recessionary levels, those workers wages could fall by more than 10%, and capital share of GDP would jump nearly 15 points to 55%. Among active stocks, Macy's is showing signs of a turnaround with Q2 growth across all three name plates and improved profitability. CEO Tony Spring said the company remains focused on scaling what is resonating most with customers, exciting brands and assortments, and compelling events and experiences. GDP Morgan upgraded Meta platforms to overweight from neutral and raised its price target to 820 from 640,

3:04saying the company is entering the early stages of monetizing AI beyond its core advertising business. Analyst Margaret Hoffman said Meta's Muse Spark 1.3 model is competitive with leading AI models and that the upcoming watermelon model could unlock opportunities across consumer products, business intelligence, advertising and internal operations. And Cooper companies known for its contact lenses is the biggest S&P declineer after cutting guidance for full year revenue and earnings. In another news of note, Mr. Pib is broken out to become the fastest growing soft drink brand in 2026. Overall purchase considerations jump more than 11 percentage points. The revised Mr. Pib, owned by Coca-Cola, features 30% more caffeine and a spicy cherry taste with hints of caramel. A Mr. Pib Zero Sugar version was also part of the brand Refresh. Popularity is surged across baby boomers, generation X and millennials. Mr. Pib began in 1972 as Coke's Pepper Style soft drink competitor to Dr. Pepper. Coca-Cola first used the name Peppo in unlimited benefits launch, but legal pressure from Dr. Pepper led the company to revise the product and introduce Mr. Pib in test markets.

4:11I'll pay you 450 an hour and all the Mr. Pib you can drink! That's all for today's Wall Street lunch. Look for links for stories in the shownet section. Don't forget, these episodes will be up with transcriptions at seekingoutflow.com slash WS&E. And make sure you're getting the most out of your portfolio with quant news and analysis by heading to seekingoffa.com slash subscriptions.