Morning Bid: Existential risks

By Mike Dolan

Sept 29 (Reuters) - As the bond market ‌squeeze tightened further and ​dragged on ​equities, there was a flurry of news overnight surrounding the leading lights of the artificial intelligence boom.

Anthropic's prospectus for its planned IPO, now expected sometime after the November US midterm elections, doubled down on CEO Dario Amodei's warnings ‌about the tech's potential "existential risks to humanity," while also setting out eye-popping spending plans.

It detailed how the AI ⁠lab would need to spend more than half a trillion dollars on cloud infrastructure over the coming years, despite making a net loss of $42 billion only last year. ‌That's the math behind a company aiming ‌for a $2 trillion market valuation.

Meantime, rival OpenAI - which has already delayed its IPO to next year - shelved its latest ChatGPT model over safety concerns. And against that backdrop, chip giant Nvidia was one of the few market gainers on Monday after it outlined ​up to $150 billion of share buybacks ahead.

With the third-quarter earnings season fast approaching, the strength and durability of the AI theme have once again become the centrepiece. And it's the sheer strength of the AI capex boom that's driving underlying economic growth and ⁠spooking the bond market.

Aggravated by the continued advance in oil prices due to the Iran war impasse, US Treasury yields pushed ever higher on Monday to near 20-year highs - and ​the relentless moves are starting to rattle stocks too.

Australia's central bank became the latest to lift interest rates on Tuesday, pushing its policy rate to a 15-year high and warning of inflation being too high.

A ​nervy last two days of the quarter lie ahead, with hawkish central ‌banks also seeing a shakeout in the gold price. Federal Reserve futures now see almost a three-quarters chance of another rate hike in October and there are four increases priced over the coming year.

Fed Governor Lisa ⁠Cook was the latest to sound hawkish on Monday, saying the robust labor market looked strong enough to absorb any tightening ahead.

The September payrolls report is due on Friday, but we'll see August job openings data later today as one of the appetizers.

Chart of the day

Anthropic reported a net loss of $42 ⁠billion in 2025, yet it also plans to spend $518 billion on cloud, computing and infrastructure obligations in the coming years, according to its IPO prospectus.

The public ​sale, which could value Anthropic at more than $2 trillion, seeks to capitalize on the rapid rise of the AI startup lab that only came into existence five years ago.

The risk? Anthropic also plans to caution potential investors in its IPO that advanced AI could pose "catastrophic or existential risks to humanity" - an ‌extraordinary warning by a company seeking to profit from the same technology.

Today's events to watch

• US August JOLTS job openings (10 a.m. EDT), September consumer confidence (10 a.m. EDT)

• Fed's Michelle Bowman, Michael Barr and Christopher ‌Waller and regional Fed presidents Austan Goolsbee, Alberto Musalem and John Williams all speak

• ECB President Christine Lagarde speaks

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and ‌freedom from bias.

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