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Hello, my name is Justina Lee from Singapore. Welcome to another edition of CNBC’s Daily Open.
Following a social media frenzy that AI has the ability to “wipe out humanity,” US AI technology giants are meeting to discuss safety issues and the possibility of slowing progress in model development. However, US President Donald Trump was not satisfied with the AI debate, saying, “The only control or ‘guardrail’ that AI needs is a strong and smart (high IQ!) president, and America definitely has that!”
Meanwhile, the fiscal costs of Middle East conflicts continue to rise, with the nonpartisan Congressional Budget Office estimating that each additional month of fighting costs an additional $2 billion to $3 billion.
What you need to know today
US AI giants including OpenAI, Anthropic and Google are uniting to discuss safety issues, shortly after a researcher caused an uproar on social media by saying there was a more than 10% chance that AI would “kill all humans.”
While these AI giants are fierce competitors, they have faced intense pressure in recent weeks to address growing AI safety and security concerns. Discussions have been ongoing since Google DeepMind Chairman Demis Hassabis published a proposal in July calling for the creation of a U.S.-led “standards body,” a spokesperson told CNBC.
Salesforce CEO Marc Benioff also joined the call, warning of the risks and calling on the AI industry to act responsibly.
However, President Trump expressed his dissatisfaction through a series of social media posts, criticizing AI leaders for calling for a slowdown in AI model development. The administration has taken the position that anything that impedes AI development in the United States is in the interests of its main adversary, China.
In the Middle East, Saudi Arabia’s vital East-West crude oil pipeline has been in the spotlight after an Iranian-backed attack forced its closure. U.S. Energy Secretary Chris Wright said in an interview with CNBC on Tuesday that the shutdown was a short-term interruption that would last several days.
But Andy Lipow, president of Lipow Oil Associates, said in a memo Monday that “judging by the photos online, repairs will likely take months.”
The economic damage caused by the Middle East conflict is also attracting attention. The U.S.-Iran war will cost the Pentagon an estimated $38.1 billion through Aug. 1, and each additional month of fighting could cost an additional $2 billion to $3 billion, according to a report released Tuesday by the nonpartisan Congressional Budget Office.
In the US market, stock futures were little changed on Tuesday night ahead of the Federal Reserve’s all-important interest rate decision. The Dow Jones Industrial Average fell 0.63%, the S&P 500 fell 0.45% and the Nasdaq Composite fell 0.78%. Markets in the Asia-Pacific region closed mostly in the red on Tuesday.
—Justina Lee
And finally…
The 10-year Treasury yield hit its highest level since 2007 as traders said they thought the Fed was close to raising interest rates.
The benchmark 10-year U.S. Treasury yield rose to its highest level in 19 years on Tuesday, amid soaring oil prices due to the Iran conflict and growing expectations that the U.S. Federal Reserve will raise interest rates on Wednesday. The 10-year Treasury yield is the benchmark for consumer loans and corporate funding, so any milestone in interest rates can have ripples throughout the economy.
The move coincided with the start of the Federal Reserve’s two-day policy meeting, with markets pricing in a quarter-point rate hike more likely at the end of Wednesday’s meeting after inflation rose well above the central bank’s 2% target in August. According to the CME FedWatch tool, traders are pricing in a more than 94% chance that the Fed will raise interest rates by 25 basis points at this meeting.
—Li Ying Xiang, Sean Conlon
