5:00 A.M. in New York City, 10:00 A.M. in London. Let's get you set up for the day. Global stocks near records, the Treasury stabilizing somewhat.
The latest wave of multibillion-dollar funding in the AI sector, with OpenAI and DeepSeek in the spotlight. And Yemen's government claimed to have regained territory after battles with the Houthis. Let's get a check on markets around the world now. First off, Winnie Hsu has the latest from Asia. Winnie:
We are seeing Asian stocks edging higher today as oil prices fall lower. When it comes to the stocks picture, actually, a bit of a mix, because interestingly, we are seeing investors rotating away from some of these big chipmakers and into the equipment makers. Perhaps that is why you are seeing the Kospi down nearly 1% after returning from a holiday, while Japan's Nikkei 225 leading gains today.
We are seeing Asian bonds tracking losses in the U.S. Treasuries overnight, but interestingly, we also had earlier today the JGB 10-year bond auction seeing pretty solid demand, topping 3% being seen as quite attractive for buyers. The Japanese yen weakened a little bit against the dollar today, given that we haven't heard much when it comes to GPIF portfolio allocation in their meeting last month, so that is perhaps trimming some bets when it comes to the pension fund actually buying more of these domestic assets.
Winnie, thank you so much. That is Winnie Hsu with the latest from Asia. Let's take a look at Europe, where we are seeing a rebound across the board. Everything is doing well in Europe right now, particularly healthcare, utilities and the banks. The Stoxx 600 up nine-tenths of 1%.
A little bit of catch-up to yesterday's rally as well. Some stabilization in France. We just got the budget from Marine Le Pen. The market does not seem to be taking that too seriously. She says the budget deficit will be at 3% by 2027 if it follows her plan. Nonetheless, we are seeing stabilization, with the 10-year yield down 12 basis points today.
And we have the euro just ever so slightly stronger today at 1.1244. The budget debate doesn't begin until next week, so perhaps the market feels it has gone a little too far, too fast. Let's take a look at oil, because this idea that perhaps the Yemeni government is making inroads against the Houthis may be bringing some relief to this market. New York crude is well below that, up about four-tenths of 1%.
Bitcoin as well, for what it's worth. We are seeing stabilization, particularly in the belly and the long end. First of all, futures pointed higher after yesterday's nice gains. The Nasdaq actually reached a record — it had its first record as well since May, and that also helped the S&P 500 as well.
In fact, the equal-weight S&P has risen for three straight days. Back to Treasuries, we do have auctions in Treasuries. As you can see, the long end down about three basis points apiece, but we are still pretty elevated. That two-year yield isn't going anywhere. Let's get to some individual premarket movers now. Justina:
Good morning, Vonnie. We had a spate of deal news yesterday, and we can add to that. Option Care Health reporting that McKesson, along with a private equity firm, is going to bid for the company at about $5 billion. And we can see here the infusion services company is up 22% in premarket trading today.
Next up, Constellation Energy. Today it's Google, with Alphabet also reaching a deal of about $1 billion to purchase nuclear energy from this company. Of course, again, it is all about having that source of energy to power a lot of that AI boom.
Lastly, more bad news for Nike, which is already on its worst year on record. Berenberg further downgrading the company to a sell, saying there could be another downside. We all know that the sportswear company is still struggling with increasing competition, its positioning in that market, and of course, China. We can see further declines for Nike today.
The bad news just keeps coming. Thank you so much. Coming up this hour, we speak with Henrietta Pacquement. Let's take a look at global stocks. Even in the face of warnings about the Treasury market, warnings about the debt, warnings about the midterms, we have stocks climbing higher. What is going on? Paul:
Good morning, Vonnie. Climbing higher is about right. It is not booming higher or anything, but the steady gains continue to lift the market, mostly driven by belief in the AI and the digital transformation trade. People are getting their hopes up before the earnings season. Of course, that's what they've been waiting for for quite a while now, to see whether we are going to continue to get those very upbeat forecasts in terms of revenue and profit growth, and how that is going to feed into the equity stack.
What we heard in Asia: an extraordinary amount of IPO and fundraising activity plans going on, all the way from Chinese tech stacks to Singaporean data centers and beyond. Still confidence in going to the market to raise money for the AI trade. Investors still willing to buy even at these levels. We have seen valuations come down because projections continue to rise, even though the stock market has kind of flatlined a while now. Right now the market seems to have a little more confidence in that risk-on trade.
Paul, Ray Dalio has a long-standing relationship with China and is warning that China and Japan may move back from Treasuries. How seriously should we take this warning? Paul:
He has written a bit recently on how countries go broke, and he was here in Singapore earlier talking with my colleague about why he sees the U.S. in a difficult situation right now. The U.S. is spending more, borrowing more than it is bringing in with revenue, so that is growing at the moment. That can become unsustainable. His concern is that that is the case, particularly when you get into these situations where there is political risk entwined with it.
So if China doesn't really want to continue to accumulate U.S. assets, it's going to have to find other buyers for those Treasuries, or some restrictive means on the budget. We heard from Scott Bessent overnight talking to the idea that the U.S. can carry on, bringing in a little bit more austerity as well. That hasn't been the case so far, but do we stabilize in the mid-fives, or do we carry on going higher from here?
Paul, thank you so much. OpenAI is said to be in talks with BlackRock and multiple UAE funds. Sources tell Bloomberg the funds could put in as much as $10 billion. Let's bring in Bloomberg Tech anchor Tom Mackenzie, who is at the tech conference in London. We will be hearing from him a little bit later from there. On tech right now, this idea that more money is going to OpenAI even as we await an IPO. What are they going to do with the next round of funding? Tom:
And further evidence that investors are still lining up to put money to work in these frontier labs. And today the focus on OpenAI, that they have indeed been in these conversations. You mentioned that $10 billion number. Potentially that is coming from funds including MGX over in the Middle East, based in the UAE, with BlackRock playing a role as well as public syndicated fundraising.
This latest round, a total of about $30 billion is our understanding, which would put the market valuation at around $1.4 trillion U.S. for OpenAI. That compares to about $852 billion back in March. This is a reminder that this is a company, despite all of the challenges and focus on risks, and the fact that some of the models have been caught meddling with U.S. websites, it is still able to raise capital at pace. If they secure this fundraising, it would tide them over at least into the IPO.
OpenAI looking to raise $30 billion, but DeepSeek is looking to raise $12 billion, which, when you think about it, is an earlier funding round, so it is quite a chunk of change. Huge companies will be participating in this, according to our reporting. What is DeepSeek going to do with the cash?
Within the context of China, that $12 billion is notable in terms of the number coming through for DeepSeek. They were oversubscribed, so they are able to raise a lot more than maybe even the company themselves were targeting. Also within the context of the company, really a frontier in China in terms of producing these very cheap models, and with a plan potentially to list an IPO in 2027 in Hong Kong.
We also get news from our team over in Asia that Moonshot, the maker of many parts of the AI ecosystem, they are looking to raise at a valuation of about $50 billion, also with an eye on an IPO. So again, it is a reminder that this capital raising isn't just happening for the frontier labs in the U.S., but also those companies at the forefront of China's push to close the gap with the U.S. The ability to fundraise in China is also very much there.
As much anticipation in Hong Kong as there is here. Tom, thank you so much. That takes place at 9:00 P.M. New York time, 2:00 P.M. London time. Turning to the Middle East now, Yemen says it has regained control of the Red Sea city after violent battles with Iran-backed Houthis. Paul, set the scene for us. Give us an idea of what the forces had to do in order to beat the Houthis.
Well, the Saudi-led coalition forces are claiming to make pretty significant advances in the last 48 hours. They announced an offensive to recapture territory taken since early September, and a certain city that the Houthis took, and the Saudi-led coalition is saying it is back in their hands now. All these claims are very hard to verify at the moment.
We should say that the Houthis are at the same time firing pretty regularly now, and they claim to have targeted a site in Riyadh last night. The Saudi government, only about two hours ago, announced that the airports in the cities which sit quite close to the border were actually hit by Houthi projectiles, so fighting is intensifying. I think for the coalition, even if they manage to hold the ground they've taken in the last day or two, it's going to be a problem for them to advance further.
They've got quite lofty goals. They say they want to actually eliminate the Houthis, and that's going to be very difficult for them given how entrenched they are in places like the Yemeni capital and a key port on the Red Sea. I think we are going to see fighting continue in quite an intense way for at least the next several days, if not several weeks.
Thank you very much for bringing us up to speed. Other top stories: Moonshot AI has closed its IPO at about $50 billion. The Hong Kong-based company is heading toward an IPO in the first quarter of 2027. Citigroup taking the top spot for underwriting in global IPOs. According to data, Citi is just ahead of Goldman Sachs.
OpenAI is attending a hearing on AI, reiterating its apology after its AI models breached Australian government websites. OpenAI is also pledging to work on preventing similar incidents and responding faster if it happens again. This is Bloomberg.
This is "Bloomberg Brief." As the selloff in government bonds drives up borrowing, Ray Dalio, founder of Bridgewater Associates, spoke to Bloomberg about a potential U.S. debt crisis.
Within the next three years, what we have is that issue of that squeezing it out. So when you take a look at literally what that means, and then what the impact of that is going to be on asset prices and interest rates matter. So you have a boom which is concentrated in one area that is heavily debt-financed. It used to be equity, but you can see as that cycle happens, what happens is increasingly where it used to be equity, now you have to go to debt, and that plays a bigger role.
You've got to wonder if 6% is just a psychological level. Would 6% bring a lot of macroeconomic risk? How might that play out, and is 6% actually the ceiling? Might we see 6.5%?
I think you don't look at the interest rate, but what I mean is you look at what is the amount of savings, what is the total amount of capital, and what is the demand for capital. And when you get that imbalance, that supply-demand imbalance, then you have to have the price of it go up until you ration that demand.
So you have to ask yourself what is it that is going to be rationed. And so then we are dealing with — it's not going to be government deficits because they are elastic. In other words, in fact, if you had a worse economy, that would increase. So then you find out what other sectors get squeezed out. Is it housing? But with such a large difference in financial conditions between the wealthy and the poor, you are going to see that happening more at the lower end of that spectrum. Is it auto loans? Is it those kinds of loans that get squeezed out first? Something like data centers comes later.
So that is why you start to have more of a wealth conflict, because then the people who have less get squeezed the most in that part of the cycle.
Take a look at Europe, France in particular. We saw the massive selloff, and some are concerned that we could see contagion risks on the back of that. Do you see that happening?
The European situation is the same, because there is a lack of adequate — imagine in Europe and most parts of the United States, you've lived on the margin. Then when you reach your borrowing limit, as France has done, there is a bind, because then you cannot continue to add to that. You have to start to run budget deficits, because you almost get to the point where you have to pay back. In other words, if you borrow, you have to pay back. And when that happens, you have a situation very similar to that.
So now you've seen a desire for greater taxation. You see people leave. You see whether they are from France or from parts of the United States, they leave. And then that creates a problem.
That was Ray Dalio of Bridgewater Associates speaking with Haslinda. The New York Times says union leaders are joining student-led protests in France. We have a look at your front-page news, next. This is Bloomberg.
This is "Bloomberg Brief." It is time now for your front-page news. First up, The New York Times on nationwide student protests in France. Union leaders pledging to join high schoolers who have spent two weeks blocking schools over understaffing, overcrowding and dilapidated buildings.
Next up, The Washington Post on President Trump's reversal of his stance on using taxpayer dollars to pay for ads promoting himself and his policies, amid backlash from Democrats and some Republicans. A White House official didn't say whether Trump would reimburse the government for the ads that have already aired.
And finally, the Financial Times: the bond selloff reverberating across corporate America, forcing companies to overhaul borrowing plans and even raising the specter of defaults among businesses. Borrowing costs for the lowest-rated companies hit 17% this month. This is your picture as we head into the Tuesday trading session.
We have futures higher after a nice rally in the United States yesterday, which is reverberating around the world today — a rally across Asia today and also across Europe. It looks like we might start in the green. Bear in mind we are already close to the S&P record, and we are at a Nasdaq record. Also, the equal-weight S&P has been rising for three days as well, so back to the rotation trade as well.
A tiny bit of weakness to the U.S. dollar, primarily thanks to the euro, which is rebounding ever so slightly today. 10-year yields down about three basis points, seeing just a little bit of a rebound — not everywhere, and not at the front end of the U.S. curve.
Crude helping out in this regard, back below $99 a barrel now, and $88 on New York crude, so quite the spread, and it is even as we go out further. Gold rebounding slightly as well. Coming up, we are going to speak Treasuries with Henrietta Pacquement of Allspring Investments.
It is 5:30 A.M. in New York City, 10:30 A.M. in London. I am Vonnie Quinn with your "Bloomberg Brief." Global stocks near records, Treasuries stabilizing somewhat. Ray Dalio warning that the Treasury market remains vulnerable. The latest wave of billion-dollar funding in the AI sector, with OpenAI and DeepSeek in the spotlight.
Yemen's government claims to have regained territory after battle with the Houthis. That may be providing relief to the oil market. Brent crude continues to decline, well below $100 a barrel now, down 1.7%. Quite the spread on WTI as well, $88 a barrel. But look at European gas futures, going in the opposite direction, close to 77 euros per megawatt hour.
This as we are heading into heating season, with inventories much lower than they typically are this time of year. A little bit of trepidation in the gas futures market. Not so much for equities, pointing to another day of gains after a nice rally in the U.S. sent the Nasdaq to a record and helped the S&P very much as well, up almost 1%. Nvidia also hit its first record since May. The equal-weight S&P back in rally mode.
Yields not budging out the front end, 4.80 and change. A 10-year auction tomorrow and a 30-year auction Thursday. Let's get the individual premarket movers now. Justina Lee has those in London. Justina:
Good morning. Starting with deal news. The FT reported yesterday that McKesson and a private equity firm is near an offer to buy Option Care Health for about $5 billion. You can see the company that provides a lot of infusion services and therapy centers is up a staggering 23% in premarket today.
Next, a different kind of deal. We talked about this stock last week when Amazon also had an agreement to purchase some of its nuclear power, but Constellation Energy up another 3% after Bloomberg News reported Alphabet is also near an agreement to buy nuclear energy over the next few years from Constellation for about $1 billion or more.
Lastly, more bad news for Nike. Berenberg downgrading the stock from hold to sell, saying there may be another 19% downside for the sportswear company. The analyst is saying he is still seeing concerns with the positioning of Nike and also with sales in China. We can see further declines for Nike, possibly when the market opens later, and this stock already set for the worst year on record.
Tough day, week and month for Nike. Markets are seeing some relief as bonds climb. Henrietta Pacquement of Allspring writing: "The tectonic plates in global bond markets are shifting. Price volatility is elevated, and yields are high. It is never one factor that drives bond prices, but the interplay between several." She is head of global fixed income at Allspring and joins us now. So what is taking priority now? What is the market most focused on? Henrietta:
I think there are three key factors markets are looking at at the moment. Obviously, that is the impact of energy prices, so we are seeing that, and that explains some of the rally we have seen this morning on the bond market. Then you have got the fiscal deficit story. Depending on the country you are looking at, that is another driver. Then this year, supply and issuance, some of it coming from the corporate sector and the AI story in particular. Those are the three big ones. Depending on the day, you can see more of an impact of one or the other.
The move higher in yields — are we in a new semi-permanent regime now, or does any of this repricing reverse at all?
You need to start addressing some of the causes of these elevated yields. There are reasons for that. We have not really seen the kind of progress that is really going to make a dent on these high yields in the future. I think now, if you look at market participant behavior as well, they are looking for the weaker links in the market, France being an example of that, for instance.
Backing up a little bit today, but certainly France has had a tough few days. When Treasury Secretary Scott Bessent says he is confident we can bend the debt curve with growth above 3% and that it could happen very quickly, does the market take him seriously? Is it a reasonable hypothesis?
