Closing Bell - Closing Bell 9/23/26

Episode Date: September 23, 2026

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Melissa Lee and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Thank you very much. Welcome to closing bell. Scott Wobner Live from Post 9, right here at the New York Stock Exchange. This maker break hour begins with AI on the world stage. The CEOs of OpenAI and Anthropic heading to the United Nations this hour. We're going to get to that in just a moment. I do want to show you the scorecard with 60 to go in regulation because we do have a developing story in the market. You see stocks are read across the board. So all of the majors are under pressure. This coming is the 10-year note yield climbs even further. The highest that it's been since 2007. It has been around the high. since 07, but it continues to climb. It's at the highest of the day. 5.12 is that yield now on the 10-year, and we're going to have much more on just a moment. I want to tell you a little bit more about what's happening in the market here. Discretionary stocks are among the hardest hit today. Oil has been rising, as we said off the very top, so it's playing itself out across many sectors. There it is.

WTI up 2%, almost 93 again. Brent's still over 100. Let's talk about meta, because it has another move It's muse-related bounce continuing. That's a story in and of itself. Devin Energy is up on some activist action as well. Again, to the AI story at the UN because that is taking place as we speak. But I do want to begin with what's happening in the bond market right now. And that backup in yields, which does continue. Let's get to our senior economics correspondent, Steve Leesman, joining us now.

So what are we supposed to think? Is this because oils up? Is this because inflation concerns? are up. Is this because growth is up? Is this because Barr was speaking today and says more hikes are probably needed? All the above? I like all the above if that's an option, Scott. I think it's worth running through the tail of the tape. We started off with a little bit of a rise. You can see that. Folks, look at what's happening just above the 7 a.m. hour there. And you're kind of inching a little bit higher. And then you have this PMIs come out at around 945, and they're indicating strong

economic growth. Shortly after that, at 11 a.m., Barr, the Federal Reserve Governor, says he thinks additional hikes are needed. So all of that adding up, Scott. And then, of course, if you would show an oil chart, you could see oil starts to creep higher as well. And that ends up essentially adding fuel to the fire, so to speak. And there's that creep up as the day goes by. And you know already, Scott, that oil and the 10-year have been married at the hip for a while. In fact, it's a bigger story these days when they don't go up together. But the important thing here, Scott, is it's not just the 10. It's the two-year as well, which hit 490 at one point today.

I'm not sure exactly where it is right now, maybe down just a couple basis points off of that. 489, yeah. So that's where we are on the two-year. And people think of that, Scott, as an indication of where people think the Fed is going to go. and then I look at the probabilities of the Fed, if you will, just for a second here. We're now looking at a 70% probability of a rate hike in October, and people kind of thought, well, more or less, they may take the month off. Well, that's less and less the thought right now,

a 70% probability of an October hike leading to a 94% probability of a December hike, and then pretty confident in pricing in a hike after that, another hike in March 27. So those are four charts there proving, I think, the all of the above answer. Scott being correct. Now we know what, you know, Jeffrey Gunlock has told us on numerous occasions about the Fed following the two year. And the two year looks like it's directly reacted today to what Governor Barr had to say, an influential voice. Of course, anytime it comes from a governor level on the Fed, it's going to reach a little bit a higher echelon, I think, of attention from the market. I think that's right. And I think really the framework that Fed Chairman Kevin Warsh has laid out is

one that would lead you to the similar conclusion, right? He's looking at these markets, and what are the markets telling him? They're telling him you need to be higher, Mr. Chairman. I don't see anything in these markets. Now, there's a potential side of this thing that is the other conversation, which is what is the impact of all this? And you can start to think about when you have movements like this, Scott, just so you know, the average move to the 10-year, I went back since the 2000,

so that's 26 years, is four basis points in a day. We're talking about three times that level today. These kind of movements, and especially, I don't know guys in the back, if you have the 2-10 spread, you go back to August 17th, the difference between the two, look at there, so good back there. 54 basis points is where that part is on the left there at August 17th. It's come down to just 20 basis points. Everybody was playing the rise of the 210 spread.

Then some of them, of course, got off the train and went the other way and bet on the decline. But now down the 20 basis points. These are the kind of movements that cause a little bit of jitters, I think, in markets because of how quick they are, Scott. The biggest one-day move, in fact, and I'm glad you brought this up since May. I guess the other thing that I think about when you see the movement, especially at the long end, let's just move towards the 10 and the 30, you start to think about the Treasury potentially losing the plot of, I'm the House, the comment that the Secretary Bessent

obviously made in the last week or so. The idea that he already came in, maybe not at. as big as the market wanted, but I think made it clear to everybody, including the market itself, that we're prepared to do more. I have a level of asymmetric information that you don't, and the market seems to have pushed its chips into the table and says, okay, Mr. Secretary, ante up. And he didn't do that today, Scott. I was monitoring at 11 o'clock this morning, the announcement of the treasury of the amount of the buybacks on the long end. He came in exactly where he had been at the $6 billion mark.

Some people I had spoken to said they would not have been surprised for a bigger number, $8 or $10 billion. And we'll see how that auction goes tomorrow. I would say that's another marker for how this bond market behaves, is how much the Treasury takes down in terms of buying back some of those off-the-run securities. But you're right. And the question becomes how you hold the Treasury secondary. to account. On the one level, since he announced these buybacks, yields are quite a bit higher. I believe

we're around the 469, 470 level on the 10 years. So now what is that, almost 40 basis points higher since that announcement at 510, if my math is right. On the other hand, he might argue that, hey, the whole treasury complex or government bond complex around the world has gone higher, and the U.S. has gone up somewhat less than that, so he could claim some victory there. I don't know if he's drawing a line in the sand to hold them account for that, or just trying to slow the movement of something, Scott, that these days has been pretty inexorable and then gets to a point where it kind of busts out on a day like this. But how much of an issue is it for the Fed itself, which neither Treasury nor the Fed obviously want to, quote-unquote, lose control of the long end and have it

become untethered. There was some discussion early on in the Treasury announcement that we were almost at the point when yields were at 464, as you say. So what does this now mean for a Fed that if you listen to Barr may think it needs to continue hiking at the same time that the long end of the curve is rising kind of unabated? Scott, let me take one second and tell you the first order of analysis the Treasury and the Fed are going to do. And that is, is the bond market behaving well? Is it is our trades clearing? And there's no indication. that there's that kind of problem. That's the first order of business

of the Treasury and the Fed's analysis. So while we talk about this movement in the 10-year, which is important and significant, has economic implications, we're not talking about the kind of thing that we experience, for example, around the Liberation Day Treasury yields or around, for example, the pandemic.

It's not that kind of market disruption. The market is acting in what appears to be an orderly way. I think it's important to put that out there. In the second instance, the Fed is going to look at, I think, the idea of Treasury yields being relatively high here, in part doing its job, but it has to acknowledge the expectation of the market, embedded in the two-year, embedded in the Fed funds, that the market needs the Fed to go higher here. It cannot ignore it unless it obviously gets some data that helps that case. So it's going to have to respond here.

I don't think this idea that was initially mentioned by Chairman Kevin, Warsh and he's backed off of this idea that the market can do the feds work for it that's not accurate he's been very plain since he made those comments that the fed controls that the short end controls the overnight rate and that is its tool and it will use it as necessary and that was a big part of the reason why they eventually raised rates here so the fed is going to have to follow this at some point i don't think it has to have an emergency meeting of any kind but it's going to have to indicate bar did it today musolam did it the other day that the fed needs to head higher I think that's where we're going here.

Steve, appreciate it, as always, what is really a developing story in some ways by the hour. That's Steve Leesman, our senior economics correspondent. Let's bring in our panel now. Solis is Dan Greenhouse, Investco is Brian Levitt. They're both here with me at Post 9. You're looking at this and thinking what about the market? I think it's important to note that the S&B 500 is down 70 basis points right now. And despite a huge move, for lack of a better word, in the tenure over the last couple of days, and certainly today,

the overall market has held in there. But this is also an important thing to note, which is a lot of that, as you've talked about on your show, the last couple of days, is tech. When you look at the market outside of tech over the last couple of days, there's been plenty of weakness going around. The restaurants, pull up a chart of McDonald's.

Yeah, that's why I said discretionary. What was going on? It's not quite the weakest. Utilities are, but obviously the backup in yields is going to hurt utilities. I think everybody kind of gets that. but discretionary is the second worst sector to your point. Yeah, that's right.

And staples are having a real hard time here, not just because of the yield argument for utilities and staples, but also the freight component for a lot of the staple companies. Look at Mongleys, Procter & Gamble, et cetera, et cetera. So there is a lot going on under the headline here, and it's not fair to look at the market down 70 basis points and go, okay, it's not that bad. Underneath the headline, only about half the index

is trading above the 200-day moving average right now, which is pretty unusual for, overall stock market that's sitting at a near-time high, a near-term high. So I think that's probably for me one of the more important observations to keep in mind. Yeah. I mean, that's why you had, for example, on Monday, where you have a 1% move in the S&P 500, and still you had more stocks hitting new lows than new highs. It speaks to the concentration of the market in many respects,

but it also speaks to the rollover under the surface in many other areas of the market outside of the mega-caps. Yeah, it was the broadening trade that we were all talking about at the beginning of the year that actually had done quite well. The challenge, of course, being the move higher in rates and the move higher in oil prices. So the interesting thing, Scott, is while we were doing that broadening, the types of names that investors used to ask, what happens if they ever go down? Can this market sustain itself? We had the very weak moments in software and the hyperscalers and the chip stock. So what you're seeing a bit now is another one of these transitions from, you know,

what had been finally a broadening market back to, you know, companies that can still generate growth in these types of environments. Is there a level that you start to get more concerned about, a backup in yields? The interesting thing is it's not a particularly over-levered economy. And so if you ask most Americans, do you have a fixed-rate mortgage or mortgage, do you have no mortgage, most hands go up. If you look at businesses, businesses have not levered up significantly, and most CFOs locked in low rates.

So when we talk up, people often ask about breaking points. Was 5% the breaking point or is 515 the breaking point? No, I don't think it's the breaking point. And I think if you look at what's going on in credit spreads, that's very interesting. They've been very contained. So you're not seeing spreads widened in investment grade in high yield in business development corps. You're not seeing them widen. And so, and the other thing,

people say 5% so valuations have to come down. But if you look at the level of earnings growth in this market, it's sort of surprising where valuations are. They may have already come down. So no, I don't think this is a breaking point. This is the real yield generally moving higher in a better growth factor. I mean, yeah, go ahead. You've asked that question on this desk for quite some time now. And this is for the viewers out there. Any number of people have sat here and said, 475 is the breaking point. For competition, 5% is the breaking point because the economy gets,

nobody knows. There's no right, and I don't fault you for asking the question. There's no right answer. I think both Brian and I would probably agree it's not the level so much as the speed to which you get there. The speed's picked up. The speed is certainly picked up in that.

And I think you see that. Maybe the financials trade has been the biggest tell of anything in the market. market itself over the last month. If you guys want to show, there you see, I mean, 5% for the XLF. If you look at, you can cycle guys, if you would please, through some individual names, and you'll see stocks, Bank of America over the last month down 9%. Morgan Stanley, down 7%. Some of the losses, Goldman Sachs, down more than 9%. Why, in some respects, concerns that profits have peaked or are in the process of peaking.

I should let everybody know Brian Moynihan's coming up in the next 30 minutes. It's an exclusive interview on this show. You're going to hear right from him about the backup and yields in real time and what he thinks it means for his business. It's the caution about peaking profits. It's the idea of a flattening yield curve for the banks. if you have a two-year that is approaching 5%, and then the long end that is at 5% and over, obviously you get less for what you borrow at versus what you lend at. The net interest margin that people cite has been one of the, you know, better earning points for the banks recently.

But now if you have the market trying to sniff out more hikes, you kind of have that evaporate, don't you? Yeah, although I will note for viewers, banks don't borrow a two and lend a 10. They borrow it zero and lend somewhere in the – But yes. Nonetheless, the flattening curve is not good for the banks. Well, the flattening curve is not really good for anyone, if you believe historically, given its leading indicator with respect to a recession, as Brian, I will both note, did not work last time it inverted, but neither here nor there, you're probably going to start hearing about that again.

And I think that's a fair question. Well, what I mean by that is – so Steve came up before. and talked about Alberto Musilum and Michael Bart this morning talking about additional rate hikes, something the Fed already told us at their meeting. But Austin Gouldsby, the other day, brought up the P word again, pain. And I think that's probably the most important comment to come out of any Fed governor or or president the last couple of days. I'd be interested if Brian agrees.

We've gotten where we've gotten so far. Without much pain, so to speak, obviously inflation has caused enormous pain. but in terms of the labor market, you haven't got much pain. If this Fed and this Fed share has decided enough is enough, five and a half years of missed target, et cetera, et cetera, is too much. And we are now willing to accept labor market pain, the likes of which I would argue they were not several years ago in exchange for getting that inflation rate back down,

that's a whole difficult. I don't necessarily think they're willing to accept labor market pain because they don't think they have to accept that now. They feel comfortable where the labor market is. They feel confident enough in the economy that they can lean on inflation a little harder. They said as much. They said as much the chair did. I mean, at the same time, we're looking at an environment where they have not lost price stability.

Right. You can look out in the bond market three or five years. They have not lost price stability, which is quite positive to me. No, but if you ask the average person out on the street. Because they're thinking about level, right? They're thinking about level. and the rate of change. I'm thinking about gasoline.

It's not up to the Fed to bring prices down. If they were going to bring prices down, that's a far. But the average person on the street thinks. But the Fed is going to be setting based on what the expectation would be with regards to prices going forward. And so far reasonably contained. What I would say, so why didn't we have a recession in 2020? Let's make this the last point, too, because I've got to move on. I've got this event at the U.N., which is taking place.

My last point, then, my last point would be, this moving rates has been, good growth signal today. The naysayers were saying if the straight of Hermousas is closed, you're going to have a recession. This is a good growth story that's driving rates higher. All right, guys. I appreciate you being with us right off the top as we follow this move in yields and the impact on the stock market. Let's go back to that other story that we we're going to begin with. It's happening right here in New York City, as you know, those AI leaders addressing the UN Security Council, OpenAI Sam Altman, making his remarks as you speak. They'll be closely followed. So many issues are on the table.

Kate Rooney's following all of it, joins us now with more. How do you view all of this taking place here, Kate? Scott, well, it's good we got a minute because now Sam Alman has officially started speaking at the UN. This is the Security Council meeting in New York. I'll give you a couple of highlights so far again. He just kicked this off. He started calling this technology a new industrial revolution. Talked about this moment being complicated. He said we feel both tremendous potential and very understandable anxiety at the same time. Again, he is continuing to speak right now, so we'll bring you some of the other highlights. But I did talk to somebody earlier who was briefed on what he plans to say and says that Altman today is going to try to find a pragmatic middle ground, especially on safety, and then plans to ask the group for a common global benchmark, really, to help measure some of these AI capabilities.

Dario Amade, the CEO of Anthropic, is also expected to join. He is going to be joining remotely. And despite this public rivalry, we've talked about before, between these former co-founders, and now two of the biggest names in AI and the biggest AI companies, they have found a lot more common ground on AI guardrails, at least lately. Dario Amadeh has often been painted as the more extreme voice on AI safety, which he's pushed back on lately, especially some of the, quote, Dumer criticism,

saying that he is balanced between the risks and the benefits. Amade was the first to really call for coordination between the AI labs. He's argued for international cooperation. We expect to hear a lot of that today, but there has been a bit of a split, so not all CEOs agree. agree with that, you have Jensen Wong and Mark Zuckerberg on the other side. Either way, the White House has also made their stance extremely clear this week. We had President Trump at the UN yesterday as well.

He said the U.S. quote, totally rejects a global system to control AI in any way and then any sort of new laws and regulations here in the U.S. And Scott, finally, Elon Musk also gave an interview to Chinese state media praising Chinese leadership and also called for a joint platform for regulating AI. This all comes ahead of this week's state dinner with President Trump. and Xi Jinping. Kate, thank you. Jump on again with us, if you would, depending on what happens at the UN,

we'd love to hear more about that. That's Kate Rooney, joining us from San Francisco. Let's bring in CNBC contributor, Big Technology founder, Alex Kentow. It's good to have you here as well. How do you read what's taking place at the UN and what, you know, Dario Amode may say in front of the Security Council as well?

Yeah, I think it's good that the United Nations is tackling this issue. We know there have already been some close calls with AI. For instance, the United States and China, you know, they almost got into some conflict last week, according to a CNN report. So you want to have some coordination internationally in terms of AI-driven reports that could lead to war. And that's what they're talking about. More of these practical concerns and less of the runaway AI that could come kill us. So I think this is a good conversation to have.

Is it realistic to think that you could get any kind of quote-unquote? quote, global benchmark related to AI, or is that a far-fetched concept sounds great in practice will never happen in reality? Yeah, I do think the effort is good, like have these conversations and try to sync up around it, but to expect much to come out of the United Nations collaboration on artificial intelligence, I think is unrealistic. What do we make as well of this apparent agreement? And I'll say apparent, because I'd like your take on, you know,

what Amode has said, what Sam Altman has said, and now what Kate Rooney was telling us what Elon Musk has told Chinese State TV about this idea of, you know, more regulation being needed, whether you think that that's genuine concern, whether it's in any way related to the competitive landscape that exists between those three gentlemen and their companies? I think it's genuine concern, laced with a lot of self-preferencing. And what I mean by that is these three leaders have seen the conversation that's happened in the United States and globally about AI's risks. And they would like to get ahead of whatever the United States or any international body would like to do with them. So they're going out and they're proposing some solutions that they like that won't push them off the lead that they have right now.

That's a live feed again from the UN there. As you see Dario Amode, again, the Anthropic CEO. he is now speaking to the Security Council. Our Kate Rooney continues to monitor. That's going to jump on, I'm sure, with the headlines that are coming out of that. Where do you come down on the idea of the critics raising the idea of regulatory capture? That, you know, sure, they're calling for regulations now because they want to have a heavy hand in coming up with the regulations if there are going to be any.

Yeah. Well, I don't view it 100% as regulatory capture because what they're proposing is, observers and potential slowdowns. And if you slow down your model development and everybody else is chasing at your heels, you know, I don't see how that's you capturing the market. But what I do see it as them reading the room. And the room is telling them you're in deep trouble, that there is popular unrest about this technology. You can see it everywhere from the polls to the states that were, you know, previously very pro enterprise. Texas, for instance, the Republican Party there, they were demanding AI data centers be built in the state.

And now they're campaigning against data centers. So it's less I want to get rules in to keep me ahead. And it's more like I want to propose some of these light touch rules. You know, we have observers that come in. So you don't have things like moratoriums, kill switches, bands, because that's really what they're facing. Okay. Bear with us for a moment. You're going to stay over the break.

We're going to continue to monitor what's happening at the UN. It's been a big week, as you know, for META. We're going to get the very latest from its MetaConnect conferences. as well. We'll get AK's take on all of that. Don't forget about the exclusive interview coming up with Bank of America's CEO Brian Moynihan. That is ahead. We're doing it all. We're live at the New York Stock Exchange. You're watching closing bell on CNBC. All right. Welcome back. We mentioned Meta's moment. The stock extending recent gains as its Meta Connect event begins. Our Julia Borson has more today from Menlo Park. They got a lot of momentum suddenly. That's right, Scott. I'm here at Meta's headquarters. We're at 7 p.m. Eastern Medicio market. Mark Zuckerberg is going to be taking the stage to unveil the latest hardware and updates on META's AI strategy on the heels of its launch of the MUSE AI agent just two weeks ago. Now, META shares are up 21% since then bolstered by analyst optimism on the app surpassing chat GBT to top the app store.

Now investors are looking for updates on user adoption of Mews and insight into monetization, plus any new partners. News of Mews deals with Shopify, PayPal, PayPal, and Expedia sent those stocks surging higher. Now, other potential announcements to watch for today, a camera-free version of Mehta's rayband glasses, which would address privacy concerns while removing the camera, also enables a lower price point, and that would potentially drive more adoption of this AI-enabled hardware,

which would be a key access point for Meuse beyond just the app on your phone. We're also looking for a roadmap for meta-sophisticated, augmented reality glasses, as well as its next virtual reality headset model. Now, as for the next generation of META's frontier model, which is codenamed watermelon, META's AI chief Alex Wang says it's not going to be announced today, but it is coming soon, is now expected in early October.

Scott? Julia, thanks. Keep us up to date on what transpires in Menlo Park. Appreciate that. That is Julia Borsden. Alex Kanchowitz is back with us. Of course, big technology, also a CNBC contributor. This stock has undergone a transformation. in a very short period of time. It is up more than 12% week to date, and it's up almost 36% over the

past month. What's going on? Well, I think a lot of this has due to Mews, and Mews has surprised me a lot. This is obviously the personal assistant that they've recently released. I had a pretty cool moment with Mews. I was with my wife yesterday. She was looking for a specialist here in New York and couldn't find anything going through Google Maps and making phone calls for months. And I said, this is a job for Mews. So I just told what insurance we had. have and said, go find it. And she's got an appointment next week with a doctor that was at the top of its list. So what it could do is it could take these arduous tasks that kind of suck to do on the internet and do it for you. And it's really taken off in a big way. It's very popular. But I would

caution that it's not meta's lead to hold. The competition is going to come in from places like Open AI and potentially Apple. How is this monetizable in a way that matches the stock reaction? Oh, yeah. I mean, this is the dream monetization scenario if meta can make this stick. Because not only do you have subscription for people that are heavy users, you have ads that you can insert into there. You know, if people are looking for certain products, you can find, you know, similar products that it could suggest. Then the coolest thing is when you're starting to connect it with third parties, you can take a cut off of the transactions that you enable. So if you thought ads was a good business, you know, the personal AI assistant is an amazing business if you can make it work. So how should we then view the arc of the last few years for META in terms of Mark Zuckerberg's leadership?

Also what the stock has done. You've had periods of incredible spending. The market was distrusting of that, I think, for a moment. But now he seems to have delivered, at least for now, on what all of that money was being thrown behind that investors seemed once skeptical about. Well, look, the backup for META is always that if this doesn't work, you could probably sell the GPUs to Open AI and Anthropics. So for those saying META didn't have a clue on AI, there was always the infrastructure piece.

And so you could fall back on that. Now the question is, does META now have the infrastructure piece and the application layer, which would be a slam dunk? I'm not ready to say they've fully reversed it on the application layer. Yes, Mews is promising, and I talked about a use case that I thought was really good. But I do expect that everybody else is going to come in, They're noticing. People within Google are telling me they're noticing.

Open AI is obviously noticing. And the other companies have advantages that Meta does not. They have better records on privacy, and they have better AI models. So to me, part of this is an OpenAI story. Remember, OpenAI made this big push into enterprise and business earlier this year, once they saw where Anthropic was going, and they left a gaping hole for a consumer AI application. And meta has jumped through that hole. Let's see if OpenAI regroups and tries to punch back.

You make good points, lastly, before I go. So are you suggesting that what appears to be a first mover advantage today may not be tomorrow, in part because of the others who are sort of nipping at their heels, but they haven't exactly been at the forefront of trust and safety? Yeah, so here's how it stacks up. Meta's advantage is it has distribution, like 3 billion people using its products that it can push it to, and it hasn't been shy. Instagram, WhatsApp is pushing news really hard.

But the other advantages is, you know, better AI. Open AI has better AI models, and they have a better track record on privacy. I think people are going to be much more likely to connect their Gmail and calendar to Chad ChiPT's version of this, and they are with Meta's version of this. And this use case may live and die on people's willingness to do that. All right. Appreciate you very much, and your insights. We'll talk more about it, I'm sure.

Alex Cantorowitz up next. Gearing up for a high-stakes meeting between President Trump and China's President Xi will take you live to the White House for the very latest next. Another developing story. China's President Xi expected in Washington this evening for that highly anticipated summit with President Trump. Our Megan Casella on that story joins us now with more. Hi there.

Hey, Scott, that's right. So everything is expected to kick off a little less than three hours from now. That's when President Trump will greet President Xi on the tarmac at Andrew's Air Force Base. Now, that is an exceedingly rare diplomatic gesture and one that will really set the tone for all the pomp and circumstance to come

over the next few days. So here are the contours of the schedule. Tomorrow kicks off with a formal welcome, followed by the official bilateral meeting, and then at night a big state dinner where we expect a slate of big name tech and finance CEOs. Elon Musk, Mark Zuckerberg, Jamie Diamond, just to name a few. There's also a tea and a tour on Friday as well. Now, all that pageantry is taking center stage here. Expectations from everyone I've been speaking with are quite low for any real breakthroughs on policy,

especially on areas where there's deep division. So Iran, Taiwan, export controls. So the focus then is more on portraying stability and closeness in this U.S.-China relationship. That said, there have been prep meetings ongoing on policy, including another one today between Treasury Secretary Bessent and his counterpart. You can see them here. We know they've been talking trade and AI. And as a result, an extension of that Busan trade truce and the establishment of an AI safety dialogue could be two of the most concrete deliverables we see later this week. Scott.

We'll look out for that. Megan. We'll talk to you much more in the next time. 24 hours, I'm sure of that. Megan Cassell at the White House. Up next, the backup and yields what it means for the big banks. Bank of America CEO Brian Moynihan exclusively with us next. Bank stocks under pressure lately with investors worried profits are peaking while the yield curve flattens.

Our Leslie Picker is with Bank of America CEO Brian Moynihan for an exclusive interview. joins us now from Boston and so timely, Leslie, given this backup and yields that we're witnessing as we speak. A very timely interview, Scott. You're right. And Brian, thank you for taking the time on what is an important day for the markets as well as just the overall innovation economy. So we'll get into all of that. But as Scott mentioned, I want to first ask you about what's going on with yields because you have the 10-year and the two-year each at multi-year highs, largely over concerns that the economy is running too hot. You've been long saying that inflation will be sticky. What do you think it will take to get inflation back to its target? And are you expecting bonds? to continue selling off in the meantime. So I think you have to sort of separate short-term rates, long-term rates, because there's different impacts. But the number one thing is that inflation is higher than people want it to be in the targets, and they're going to wage the war on it.

So they raised 25 basis points recently. Our team still has two more rate rises this year, so they were a bit out there with three. I think now that's probably not been out there. But their view is it'll take, even with a three-rate rise, it'll take to the end of 2070. to start to approach 2%, and it did 28. And inflation's sticky. It's hard to get out of the system, and there's been different impacts.

So, you know, two years ago when we started talking about inflation, it was one set impacts, but now it's the follow-through from oil prices and the products are starting to see. Wages are starting to grow faster. So there's a lot of different impacts over time, but they've got to get the rate structure right now. The good news is this, people think this is higher,

and it's actually more normal to have a rate structure with a 3 and 1⁄2% Fed funds rate to, you know, four and a half, five percent, 10-year rate. That's more of a natural curve and a curve that is consistent with a growing strong U.S. economy. So a little bit is just getting used to a different environment than we were post-financial crisis for many, many years. We barely got back to it. COVID hits. We barely get back to again. They start cutting rates of worried and now it's back. So we'll play out. The longer term is more affected by the budget deficit, and we've got to get that under control, the demand for bonds, people having

alternatives that are crowding out U.S. Treasury rates because other rates are three, four, or five hundred basis points better that are pretty good credits. And so there's a lot of that today, but going on, which is much more impactful as you go out to occur. But inflation's got to get under control. The Fed has already moved once. I think they'll continue to move, whether it's two times this year again or one time or in one time early next year. But over the next six months to 12 months, they'll have to move the rate structure up to make sure the inflation continues its path down. What does it mean for bank profitability, as we're seeing the yield curve flattening once again today. Do you expect what's going on with market rates to change your outlook for net interest income?

Our net income is very strong growth anyway because of the dynamics are balance cheap. But we sit with $2 trillion in deposits. The total rate paid to the customers 2%. And that's because a bunch of them are checking accounts and transactional accounts for businesses. So when rates go up, it actually benefits our company. That's been true forever. the nominal rate environment is actually important to banks because we were so low with a zero-floor when a half a percent Fed funds rate and you don't charge people to keep their money.

What would happen then is you got squeezed. That is out of the system now at this type of rate range, so you have more up and down when rates move. But as long as the economy stays strong, credit-wise, spending-wise and things like that, it's a good environment for banking. While we're on the topic of deposit costs, we did see banks. stock sell off yesterday as this muse product spurred concerns about deposit disruption. Bank of America's bank analysts writing just this morning, quote, a chatbot can tell customers they are earning too little. An agent can identify excess liquidity, compare yields, and act. How are you thinking about the

disruption risk here? Well, look, AI is very important to banking and all the different variations on it. So we have 20 million people who use AI agents today. We have the complete ability to move cash. And so the piece that people sort of miss is why do people have money in the bank? Safekeeping, trust, transactional value. And when they have money that's in excess of that, they actually put it either at higher rates

in our bank or outside our bank and money market funds or other for higher net worth customers, direct bond holdings and stuff. So the dynamic of moving cash is not a new dynamic. If you bet around long enough when they form money funds, that's what they did is they moved a lot of money outside the system. So

the customer will make the choice. Now, AI is interesting because the thing you have learned if you have 70 million customers like you have to be perfectly right. The device can't be right 90% of time. It has to be right 99.999% percent. So for our Erica, which has 20 million people, use it 200 million times in a quarter, it's got 110 systems that's looking at for a specific transaction, for a specific customer across all their accounts. It has to be perfectly right with the customer loses faith. So I think one of the things that will be more interesting to put all of some. place from the transaction side is you can't be wrong. So your data has to be perfect, your

systems, the military place you have to refer to your answer has to be perfect, because if it isn't, the people are currently relying on it. And so if you think about Erica that 200 million times, that's like 11,000 human need people to capture that interface in a call or something. So we have to make sure it's right or else we'll end up having to change the whole business. You go to investing, we have a thing called Meggie. It's automated rebalancing. You put the money in. You answer questions. Your balance have been at it for years. You remember the robo investing craze, most of those companies have gone. We have 50 billion in it. It goes on. Again, people want an advisor for the tunes of trillions of dollars because they want a piece of personalized advice,

which the AI tools are helping them, and we're deploying them rapidly. But the end of the day, they want to be able to look somebody in the eye and say, tell me what you think. And I'll get a lot of information from AI. I'll do a lot of my own research, an investor or client. But at the end of day, they trust the person's going to give them an out of view with all that research, all backing. So it's a very complex equation. It's not going to happen overnight. It never does. But we are taking advantage of AI to drive our company. And yes, the market will have views of this, but none of this actually has a new principle. You could move the money tomorrow. Today, right now, you could move your money out of your checking counter out of your things if you want to move it.

But if you move it and then bounce a check, that's not a good day for you. Do you think then that there are enough customer protections in place, or are you concerned that agent and commerce and the technology therein has really served? past the protections for fraud and other safety concerns that you might have. So one of the interesting things here is everybody looks at these ways money moves and why, and it says all that's arcane and old stuff, but a lot of that was developed. So you go anywhere in the world, you hand up your piece of plastic, and you get a meal, a hotel room, or buy a hat with a piece of plastic.

You are protected that if you don't get what you wanted, you can deny the thing. And then from the merchant underwriting, we then go to the merchant and say, you've got a problem and we settle it out. So there's no liability in part of the consumer that they got the goods they want. That's a pretty powerful system. That operates pretty well. It operates for us billions of times a year. So the question is how do you improve those things? And that's where you've got to be careful because the end of day, the customer expectations, the frauds, you know, they want you to protect them from fraud.

They want you to be perfect accurate in the application of payments. And they want to have ubiquity of access, and they want to be able to think twice about things. And so you order goods from the store, you can return them. Those types of things have to go into these systems or else they won't work. And we're highly excited by the AI prospects. We see it work every day. 150 implementations already, spending $400 million, get $800 million a benefit. This is not small or an interesting for us.

But we also realize how perfect it has to be. We also realize the rules of safety, security, soundness. The reason why banks exist? People had money. They had to put it in a place that they could keep. it that we keep it safe for them. That's that's a lot of those systems seem archaic but worked out for real reasons. We started 250 years ago down the street 246 or something down the street because a bunch of people said we need to

take our money and put it someplace so there could be lent out to help other people do business. So you know these principles have to get embedded in all these systems. Right Brian Moynihan. Thank you so much from the World Medical Innovation Forum here in Boston. Appreciate your time today. Thank you. All right Scott I'll send it back to you. Okay Leslie. Thank you so much. Leslie Picker, Brian, our thanks to you as well. Up next, all over the action and the tenure today. Its impact on the market as well as we head towards the close. The market zone next. We're now in the closing bell market zone. Mike Santoli and Renaissance macros, Jeff DeGraph,

are here to break down these crucial moments of the trading day. Oliver Renick standing by live from the CBO global markets in Chicago. Diana Ollick is watching a big move in mortgage rates for us as well as so much focus remains on the bond market, which is where I'll begin with you, Mike, because that is what we need to focus on. For sure. Look, the bond market keeps repricing to ration capital to governments and huge companies that have tremendous demand for it. And the knock-on effects are other parts of the markets and the economy feeling that pressure. Right now, the stock market continues to kind of distribute that pressure in a pretty, I guess, efficient way in a way that's not across the board. That's really the areas that are most directly in sites of it, such as consumer cyclicals, anything close to the consumer,

getting hit pretty hard right here. The angle of assent on bond yields may be looking a little bit aggressive. I guess we have to argue as to whether it looks like a little bit of a seller's capitulation here or not. But it does seem like it was an exaggerated move based on some of the macro inputs today, but maybe that tells you all you need to know about the market. I know there's a big debate in here. The index is catch down to what the average stock's doing, or can you have an oversawed condition in the average stock that gives you some relief rally?

I don't know. I mean, it can go either way, and it actually has gone either way over the last couple of months. Well, that's where I wanted to go next, because you have to look at the average stock, not the S&P, when you say, well, look, hey, the market is holding up so well. Yes, to a point, part of it is, but a lot of it isn't. That's right. And, you know, and there's different things to infer from that. One of them is, you know, we had the stealth correction. People calling for a big pullback, well, you kind of had it where you needed it. On the other hand, does sometimes make the action a little bit maybe erratic and unstable, and it could create some of these aggressive flows that maybe is going to leave no safe place to hide even in big tech.

So I think that's what we're waiting to see right here. Obviously, you've seen multiple compression for a while. Credit spreads are not screaming that something nasty is going on. So I think all those things factor into the picture. We'll see in less than four minutes when we look forward to that. That's Mike Santoli. Oliver, what's going on in Chicago? Go.

Options traders are mostly betting the bond market beating will continue, Scott. Call selling dominated trading in the long-term Treasury, ETF, TLT, and there was very bearish trading in the high-old corporate fund, HYG, despite outperforming gear-to-date. Options volume and H-YG was double the 30-day average, and traders bought upwards of 10 times as many puts as they likely sold. Now, you'd think that action would be similar in, investment grade, which has done worse than high yield this year. But someone in the LQD

ETF bought a string of upside calls. Some of them spreads on volume that pushed the ETF to four times its month-long average and accounted for at least a third of all the trading today, betting that this is as bad as it gets. Oliver, thank you. That's Oliver Renick in Chicago. From your vantage point, Diana, as you watch housing, what do you see today? Well, look, After falling back a little bit Monday and Tuesday, mortgage rates shot higher again today. Following that big gain in bond yields, the average rate on the 30-year fix jumped nine basis points to 7.26% according to mortgage daily. The highest level since May 2024, rates are now almost a full percentage point higher than they were a year ago. We saw the result in last week's mortgage applications. Nearly 10% of apps were for adjustable rate loans.

Riskier, but offering lower rates, consumers are just willing to take that risk to make their money. monthly payment lesson. Of course, stocks are the big builders. They are not loving this at all. Down on the day, despite KB Home beating on the top and bottom lines in their earnings yesterday. All right, Diana, thank you so much for that. Jeff DeGraf, what stands out to you? Well, you hit the nail on the head with these rates, and I think the important thing is utilities. Utilities are weaker around the rates, and that makes sense as a bond surrogate. But if we're at the point where the 10-year yield is going to start reflecting the tightening out of the Fed and the flattening of the curve, then you'd expect utilities to actually start to rally.

catch a bid on a relative basis, and that's just not happening. They're the second worst performing group today. You know, so even, you know, from a microscopic standpoint of what's happening day to day, you know, there's still weakness. So I think we're in for this continuation of the bond bear market. We've got a lot of support at 475 on the 10-year. But, you know, really you broke out. And once you broke out, you know, the trends were confirmed.

I think that's really important as we look to the future here. What are you thinking about the financials as they seem to be caught up in this move as well? Well, that's the first part of it, right? So you have to worry about the financials and then we would look to the utilities. So those are two of the same kind of trade. We're just not seeing it in the utilities yet. So I think the risk is in financials and the deterioration there. There seems to be a little bit of reversion back to the old momentum names, you know, as of about a quarter ago.

And those are holding up for now. but we'll see how well that plays. The only groups that had 20-day highs that were meaningful over the last, you know, call it the last week or so, healthcare, tech, and comm services. So, you know, that's a pretty defensive, not too terribly sensitive to the rates grouping. And I think the market is distributing that capital efficiently

as it looks at these rates. A couple different things today. Obviously a red stock market. But it's the green that we see.