I'm Taylor Riggs, and it is September 30th, 8 a.m. on the East Coast. Take a look at futures after yesterday's losses. The Nasdaq cons, but the S&P tries to pop up in the green. Oil this morning is higher but actually still relatively low when you think about WTI at $90. The gas and diesel this morning still hits hard for many Americans: $4.43 for a gallon of regular, $6.441 for a gallon of diesel. And take a look at the yield story. Big move yesterday with yields up the high since 2002. The 2-year yield climbs again another basis point to 4.88. The 10-year Treasury yield down 1 basis point to 5.24.
Meanwhile, let's get to this. There's the Alliance for Critical Infrastructure is announcing an expansion effort to boost America's cyber resilience. The move is bringing together nearly 50 business leaders across several different industries, all to help minimize A.I. risks as it becomes embedded into our critical infrastructure. Joining me now is Citi Chair and CEO Jane Fraser. Ms. Fraser, thank you for joining us this morning on this important announcement. What are you seeking to accomplish with this new forum?
Well, good morning, Taylor. Thank you very much for having me. A.I. can unleash tremendous opportunity. There's a lot of upside potential here: economic growth, health outcomes, etc. But it's happening so fast. And when something is innovating at speed, you have to manage the risks at speed as well. And that's what's behind ACI. And A.I. is also happening and arriving in a world that's very intersected. And when the risks cross industries, the defenses have to cross industries as well. By putting together these six different critical industries across America and the 50 companies involved, we're able to put the resources, the expertise to identify the risks and the vulnerabilities, put practical solutions together to address them, and make sure that this cascades down to companies of all sizes and to the broader economy — not just for us. And this very much builds on a lot of what the President has done and the administration in the executive orders. So it's the private sector building on that and doing our part.
Some of the risks in A.I. that economists are also talking about is the risk to the banking sector in general. If I'm, for example, signing up for Muse, and I'm just using that as an example from Meta because it made a big splash in the last few weeks, and it can easily find me an alternative, a fintech company that's offering me close to a 4.5–5% yield on my deposit, that may create a run on the banks. How are you thinking about the way that agentic A.I. can be helpful but also create some serious risks for your sector?
Look, I believe — and this is one of the things I think is so powerful about America — we build what we need. And if we have to disrupt ourselves in the process, we do so. It's a real strength of this country and the entrepreneurs in this country. And that's precisely what the banking sector is doing. We're adopting the different technologies that are there — different technologies, be they in digital assets, in A.I. — applying them at scale but also responsibly. And one of the most important pieces that the banks can do is not only move fast, but also to make sure that we retain trust as we do so. And we've got huge experience in terms of cyber defenses, helping give protections against fraud and a lot of the different risks that are out there. So that is how we will be acting.
One of the bigger issues as well around cyber defense was when Mythos was released, and there were a lot of concerns about hacking into financial information, bank accounts, just general information that we thought was secure that may not be anymore. What is Citi doing in particular to make sure that we are safeguarding against some of the hacks that may come?
Look, I think one of the important pieces of the large banks: we do not compete on cyber. We collaborate and we work together to make sure that there is security and confidence in the financial system and in the banking system for all Americans. So we do a lot of work together in identifying, for the last decade, where there are vulnerabilities, make sure that we're sharing these across our other peer banks. And again, cascading that through the whole system. And it's a real spirit of responsibility here amongst us, together with billions of dollars of investments made over many years. So you never feel in cyber comfortable, but I do feel good about the defenses that are being put in place over years and the fact that once again we're back on the front foot, building on everything the administration has been doing here.
But a lot of people are worried because China may not be on board with us, and A.I. doesn't have borders. We're hearing reports that Chinese A.I. agents have reportedly learned how to bypass restrictions and lie, similar to what U.S. models are doing. You were at the Trump-Xi summit, the big state dinner, and you've got to China with the President. What are you hearing about A.I. and China?
Look, the President is absolutely right. We are in a competitive race with China, and that's both on the innovation dimension, balanced with making sure that we are providing the resiliency and the defenses against bad actors or offensive actions being taken against America and the economy here. And I'm proud of what this country is doing and what we're all doing to make sure that that innovation and that race is won here and not run by China. But the President is absolutely right: this is a race.
I want to talk about the yield story. High, you know, a flattening yield curve, and our audience is smart, but we'll sort of break it down for them. Higher interest rates on the short end and a lower interest rate on the long end leads to a flat yield curve. It impacts your net interest income and margin. How are you preparing right now? We're at about 35 basis points' difference between the 2 and the 10-year yield. Historically, it's been steeper, and I believe your business does better when it is steeper. How are you preparing for a flattening of this yield curve?
Look, I think we are prepared for all different macro scenarios, as you can imagine, for a bank of our size and our globality. You have to be ready for the unexpected as well as the expected, and the main thing is to support clients for the different environments they're in. So we're helping support clients who look at capital raising. The capital markets are very constructive at the moment, particularly in the investment grade space. And similarly, more clients that need to be building up more of their equity base in preparation for a lot of the growth that we see ahead in the economy. I'm quite bullish around what the medium, long-term prospects are for America given our structural advantages —
