U.S. Treasury Yield Surge Hits Emerging Markets; Nvidia Launches AI Agent Safety Tool; AMD Acquires World Labs

Market News

The surge in U.S. Treasury yields is hitting emerging markets. U.S. Treasury yields climbing to near two-decade highs, oil prices swinging higher, and continued uncertainty over the Strait of Hormuz are putting emerging-market bonds on track for their worst monthly decline since the Iran war broke out. On Monday, the MSCI Emerging Markets equity index fell 1.1%, and almost all developing-country currencies weakened against the dollar ^[1]. Last week, the $13 billion BlackRock iShares JPMorgan Emerging Markets USD Bond ETF recorded $610 million in outflows, the largest weekly outflow since March ^[1]. The 10-year Treasury yield broke above 5.20%, a near two-decade high; the 30-year Treasury yield also climbed last Thursday to its highest level since 2004 ^[1]. Separately, analysis showed that the 10-year U.S. Treasury yield breaking above 5% has made bonds' appeal relative to stocks the highest in about 25 years, with the S&P 500 earnings yield now below the 10-year Treasury yield ^[3].

Macro Developments

Federal Reserve Governor Lisa Cook said on Monday that large-scale data center investment has pushed up electricity and water costs by about 5%; only a small portion of the $2 trillion in AI capital expenditure pledged by companies has been spent so far. She believes the productivity gains from AI cannot offset short-term inflation pressure in time, and said the Fed's rate hike earlier this month was necessary to address high inflation. Fed funds futures show about a 70% probability of another rate hike in October ^[4]. European Central Bank President Christine Lagarde said on Monday that a significant rise in long-end rates will slow economic growth and dampen the pass-through of energy prices into overall inflation to a greater extent than the ECB's September forecast. Traders reduced bets on ECB monetary tightening, with the market-implied probability of an ECB rate hike in October now falling below 40% ^[6].

Company News

Nvidia launched the Open Agent Safety Platform, building a multi-layered security mechanism through open-source software and specialized hardware; Anthropic is partnering with Nvidia to connect Claude Managed Agents to the related security framework. Nvidia also launched a Sentry security layer running on the BlueField-4 DPU, saying it can block suspicious agent activity in milliseconds ^[2]. AMD announced it will acquire AI startup World Labs in an all-stock deal worth about $8.2 billion; World Labs was co-founded by Fei-Fei Li, who serves as CEO. After the deal closes, Fei-Fei Li will join AMD as executive vice president and chief scientist, reporting directly to CEO Lisa Su. The deal is expected to close by the end of 2026 ^[5].