Bond investors squirm over the budget
House Republicans overcame bitter differences to deliver President Trump a major victory on Thursday.
Minutes ago, they narrowly passed a spending bill that packs in huge tax cuts and guts many of Joe Biden’s signature policies on student-debt relief and climate transition efforts.
The next hurdle is the Senate, where Republican lawmakers — especially those looking to preserve elements of Biden initiatives and Medicaid entitlements — could claw back some cuts. Whatever the outcome, investors remain worried about the costs. Bond yields ticked higher moments after Speaker Mike Johnson banged his gavel in triumph.
What’s in the bill? Here is a handy guide of the latest changes. Notable provisions include a $4 trillion boost to the nation’s debt limit (a move that fiscally hawkish Republicans have traditionally staunchly opposed), and the creation of $1,000 “Trump accounts” for newborns.
What’s not quite in there: Trump’s campaign promise for a straightforward slashing of the corporate tax rate to 15 percent, from 21 percent on Thursday, for domestic manufacturers. Companies can trim their tax bill, especially by bringing more production back to the United States and spending R.&D. money domestically, but it’s unclear how much they would save, and who would qualify.
“It could be because the revenue math didn’t work,” Garrett Watson, director of policy analysis at the Tax Foundation, told DealBook.
The bond market is continuing to revolt. Yields on government debt spiked on Wednesday as investors fretted that the bill would add roughly $3.3 trillion to the federal debt pile over the next decade. The yield on the 10-year Treasury note, which underpins mortgages and commercial loans, has risen nearly a percentage point since September, even as the Fed cut its benchmark lending rate by almost the same amount over that period.
The yield on the 10-year on Thursday stood at 4.61 percent, well above the “yippy” level it traded at last month that forced Trump into a tariffs rethink, and a 90-day pause on some of the biggest levies.
Investors appeared to tank an auction for 20-year Treasury bonds on Wednesday. Another auction is set for on Thursday.
There has been fallout elsewhere. The dollar, a traditional haven that was already battered by trade-war jitters, has sunk in value by roughly 1 percent this week, a big move. Surprised analysts see it as a sign of the “sell America” trade in action.
S&P 500 futures are pointing to a tepid open.
Investors appear doubtful about economic arguments in favor of the bill. The Trump administration has said little about the restive markets. But it has argued that the spending plan would unleash a wave of investment, bolstering G.D.P. and wages.
What’s happening in the markets suggests that’s not finding traction. “At the core of the problem is that foreign investors are simply no longer willing to finance U.S. twin deficits” unless they get a sweeter price, George Saravelos, global head of FX Research at Deutsche Bank Research, wrote in a research note on Wednesday.
HERE’S WHAT’S HAPPENING
Oil falls and Bitcoin soars. The price of Brent crude, the global benchmark, fell about 2 percent on Thursday on speculation that the OPEC Plus cartel of producers will vote at its meeting next week to boost output. Bitcoin rallied above $111,000 overnight, a record, as crypto bulls cheer more industry-friendly regulation, including a stablecoin bill advancing in the Senate.
The U.S. takes possession of a Qatari 747. Despite criticism from Congress and former government officials, the Pentagon formally accepted the luxury wide-body jet, which carries a value of roughly $200 million, and began preparations for it to be retrofitted for use as Air Force One. Experts have warned it could take years and cost hundreds of millions to upgrade the plane for that purpose — unless President Trump waives security requirements for the plane, a move that former Pentagon officials said would be unwise.
Trump suggests Fannie Mae and Freddie Mac could go public. In a social media post, he wrote that “the time would seem right” for the mortgage giants, under government control since the 2008 financial crisis, to finally be privatized. This isn’t the first time a president — including Trump during his first term — has spoken of such a possibility. Complicating matters, the U.S. housing market has been in the doldrums, hurt by high interest rates.
The A.I. bet on hooking consumers
In a week of splashy rollouts of artificial intelligence products, OpenAI made the biggest of all with its planned acquisition of IO, a start-up co-founded by the former Apple design guru Jony Ive.
The move is notable for many reasons, including the union of Ive and Sam Altman and the $6.5 billion price tag. But it also underscores an emerging dynamic in A.I.: Tech giants want to dominate the hardware their models run on — and have it directly in consumers’ hands.
It’s a bet on going beyond the iPhone. While Ive shot to fame and wealth by designing the iPhone and the iMac, he and Altman criticized the way that humans currently interact with technology: largely by being glued to smartphones. “I don’t feel good about my relationship with technology right now,” Altman told The Times.
Not that they see the iPhone going extinct anytime soon. The two shared more details to OpenAI employees, according to The Wall Street Journal: It will be an unobtrusive device that people would carry around, supplementing a laptop or a smartphone.
OpenAI isn’t the only A.I. company doubling down on consumer products. Meta has been focusing on its smart glasses collaboration with Ray-Ban, which has been one of the company’s most popular consumer devices in years.
Google is also getting into smart glasses, working with Warby Parker.
Tech companies are applying one of Apple’s biggest lessons: combining software and hardware helps to lock in users. Right now, customers largely use OpenAI’s ChatGPT, Google’s Gemini or Meta’s Meta AI via websites or apps, making switching easy. Getting customers hooked on devices intimately tied to their A.I. software is intended to reduce that possibility.
A.I.-focused devices have had a mixed record. Consider the start-up Humane, whose A.I. pin flopped. (Altman was an investor.) But OpenAI appears to have big ambitions for its Ive-influenced product: Altman told employees that the IO deal could add $1 trillion in value to their company, The Journal reported.
Apple appears to be getting left in the dust. The company recognizes that A.I. could erode its iPhone business: “You may not need an iPhone 10 years from now, as crazy as it sounds,” Eddy Cue, the head of the company’s services business, testified in court this month.
But the tech giant has drawn criticism for potentially misleading consumers about how A.I.-capable its devices really are, and news reports have dissected why it has struggled to make headway in the technology.
Retail resilience in a time of turmoil
America’s retail heavyweights have all acknowledged the risk of tariffs and dampened consumer sentiment, but most haven’t blinked. Walmart, Home Depot and Lowe’s all held steady on their financial projections for the year.
Target on Wednesday bucked the trend by slashing its guidance, reports Danielle Kaye, which raises the question: Can any company truly forecast in this environment?
Structural shifts in retail may be boosting confidence. Companies in other industries like autos have adjusted their guidance because of uncertainty over tariffs. (Toyota said that its operating profit would decline by about one-fifth for the fiscal year ending in March. General Motors last month abandoned its previous forecast altogether.)
But retailers may feel they have more room to meet expectations because they are betting not only on further easing in trade tensions, but on competitors collapsing, according to Burt Flickinger III, the managing director of Strategic Resource Group. (Big Lots and Rite Aid, for example, have filed for bankruptcy in recent months.)
The giants in the sector, he said, are in a position to gain significant market share as drugstores, department stores and other brick-and-mortar chains shutter. Retail executives have also highlighted on recent earnings calls their strategies such as working with vendors and suppliers to keep prices low, adjusting inventory and tweaking the timing for some orders.
Still, full-year forecasts are a gamble. Retailers have acknowledged financial uncertainty in the short term. Walmart, for example, which said on Wednesday it plans to cut about 1,500 jobs to reduce expenses, held off on projecting profits for its current quarter as tariff policies and pricing decisions remain in flux.
That raises questions about whether these companies will ultimately perform as they say they will. Another spike in tariffs could throw current projections out the window.
Target’s guidance change reflects more than macro trends. It’s grappling with the fallout over the company’s pullback from diversity policies, which has weighed on sales, Target executives acknowledged on their call with analysts. That hurt Target more than other retailers, according to Flickinger.
‘Oura paranoia’
Body hacking is a favorite pastime of executives everywhere, best exemplified by the Oura Ring, a quiet status symbol in the C-suite and among policy wonks who are obsessed with optimizing every facet of their lives.
For years, the appeal has been clear: a continuous stream of biometric data — from sleep quality and heart rate variability to body temperature — promising insights that could unlock peak performance. Everyone from Mark Zuckerberg to Marc Benioff to Senator Cory Booker to Kim Kardashian to Gwyneth Paltrow use the device.
But some wearers are noticing an unintended side effect: High anxiety. Madison Malone Kircher writes of the phenomenon: “Rather than helping them feel more in control of their wellness, the data only made them fixate on potential — and often nonexistent — problems.”
Such “Oura paranoia” could happen with any wearable health technology, Kircher writes. Users report being so worried about their sleep scores that they can’t sleep and stressing so much about their metrics that a therapist recommends they stop tracking.
It highlights a problem of the data economy that we have come to increasingly rely upon: Sometimes too much information breeds doubt and disbelief.
But there’s also a potential upside to all of that data. While some wearers say their health data is keeping them up at night, a few have spotted real health issues. One suggested in a TikTok post that the ring tipped her off to cancer before she was diagnosed.
Another, Hunter Woodhall, a Paralympic track star, said his Oura Ring alerted him to his appendicitis.
It’s how you use it: “I think it’s on us as individuals and users and how we actually leverage this technology so the technology is serving us not the other way around,” Shyamal Patel, Oura’s senior vice president of science, told Kircher.
THE SPEED READ
Deals
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Elliott Investment Management, the big activist investor, won two of the four board seats it had sought at Phillips 66. (WSJ)
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Hinge Health, a digital physical therapy company, priced its I.P.O. at $32 a share, the top end of the expected range. (CNBC)
Politics, policy and regulation
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Jensen Huang, Nvidia’s C.E.O., said that U.S. efforts to limit China’s access to advanced semiconductors has only made Chinese tech companies stronger. (NYT)
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Bernard Arnault, the billionaire chief of LVMH, criticized the E.U.’s approach to trade negotiations with the U.S. (FT)
Best of the rest
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The Google co-founder Sergey Brin gave away another $700 million worth of his shares in the company, though it wasn’t clear to whom. (Bloomberg)
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“Trump’s Mar-a-Lago and Bedminster Clubs Are Taking In More Money Than Ever” (WSJ)
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Andrew Ross Sorkin is a columnist and the founder of DealBook, the flagship business and policy newsletter at The Times and an annual conference.
Edmund Lee is an editor at The Times.
Bernhard Warner is a senior editor for DealBook, a newsletter from The Times, covering business trends, the economy and the markets.
Sarah Kessler is an editor for the DealBook newsletter and writes features on business and how workplaces are changing.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
Lauren Hirsch is a Times reporter who covers deals and dealmakers in Wall Street and Washington.
Danielle Kaye is a Times business reporter and a 2024 David Carr Fellow, a program for journalists early in their careers.
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