Bloomberg Audio Studios. Podcasts. Radio. News. This is the Bloomberg Daybaker podcast. Good morning. It's Wednesday the 6th of May. I'm Caroline Hepker in London. And I'm Stephen Carroll in Brussels. Coming up today, pressing pause again. President Trump puts US efforts to guide ships through the Strait of Hormuz on hold in a bid to secure a deal with Iran. Anthropic takes aim at Wall Street and the City of London with new AI tools for the financial industry. Plus, guilty displeasure, UK bond yields hit their highest level since 1998 as markets fret over the outlook for Britain. Let's start with a roundup of our top stories. 48 hours after Donald Trump announced a plan to loosen Iran's chokehold on the Strait of Hormuz, the US president is reversing course. Writing on social media, Trump said he is pausing the operation dubbed Project Freedom to see whether the U.S. can reach an agreement with Iran to end the war. The president cited great progress toward a deal, but did not provide details on what, if any, negotiations are underway. Bloomberg's senior editor Derek Wahlbank says it's hard to assess where things go from here. Even though the U.S. is pausing on this idea of running ships through the Strait of Hormuz, they are saying that the blockade against ships that are going to Iranian ports is going to be maintained while we look for this deal. Now, are we anywhere closer to a deal? That's much harder to say. Remember, we've seen comments from Iran that say that the United States' asks are well beyond its own red lines, as well as the United States sticking to red lines that Iran has previously not been willing to reach. Derek Holbank was speaking after the U.S. military said it helped two vessels exit the Strait of Hormuz on Monday, repelling multiple attacks by Iran. The move also came just hours after U.S. Secretary of State Marco Rubio told reporters that offensive operations against Iran have ended. The operation is over. Epic Fury, as the president notified Congress, we're done with that stage of it. OK, we're now on to this project of freedom. As far as a negotiation is concerned, I think the president's been clear that part of the negotiation process has to be not just the enrichment, but what happens to this material that's buried deep somewhere that they have still have access to if they ever wanted to dig it out. That has to be addressed. Those comments from America's chief diplomat came as Iran's semi-official Fars news agency said the country's president, Masoud Pazeshkin, had dismissed American demands to resume talks as impossible. Yesterday, Anthropic unveiled new AI agents specifically designed to handle financial services tasks. The new tools are part of the company's push to win over Wall Street. Primbeck's Tiwa Adebayo has more. Drafting pitch decks, reviewing financial statements and escalating cases to compliance. All hallmarks of a junior financial career. But could AI be about to change that? Claude maker Anthropic is releasing 10 tools which it says can do all those things and more aimed at professionals across banking, insurance, asset management and financial technology. The news comes as the firm competes against rival OpenAI to prove its technology can handle a wide range of valuable tasks in other industries. Yesterday, CEO Dario Amadei proved that commitment speaking at an Anthropic event in New York attended by banking leaders, including JP Morgan CEO Jamie Dimon. There, he said Anthropic's technology is moving faster than the businesses it seeks to transform. The firm is set to deepen its ties in the financial industry through a new joint venture with firms including Blackstone and Goldman Sachs to deploy its software further. In London, Tiwa Adebayo, Bloomberg Radio. British government bond yields reached a 28-year high as concerns about political stability step up. The combination of globally high interest rates, stagnant growth and a weak prime minister has pushed the yield on 30-year gilts to 5.78%. The BlackRock Investment Institute's chief UK investment strategist Vivek Paul says markets are bracing for Labour to do poorly in local elections tomorrow. If those losses are perceived as kind of worse than expectations, and remember, like you say, the expectations are already pretty bad, so if they're perceived as worse, then that ramps up the pressure on the Prime Minister and his core team So it not to do with the local elections itself it to do with whether or not the market perceives the UK is going to go down a different path in terms of its fiscal sort of sustainability etc That will be the thing to watch. Vivek Paul adds that he sees the moves in GILT so far as being due to interest rate expectations, not political ones. Bloomberg's MLive strategists think the market may be overpricing the risk of Bank of England rate hikes, given the UK's weaker labour market. Well, the Bank of England Governor Andrew Bailey has issued warnings on the private credit sector. Writing in the FT says it raises potential financial stability risks even as it supports economic growth. Bloomberg's Freddie Fulston has more. In an op-ed for the paper, Bailey says private credit remains, quote, untested in a severe or prolonged economic downturn. He cites rising geopolitical risks, a weaker growth outlook and higher debt servicing costs. He adds that valuation challenges and redemption risks could trigger broader losses of confidence and that regulators and market participants need greater transparency. In London, Freddie Fulston, Bloomberg Radio. Germany's government is facing questions about its political stability. Chancellor Friedrich Merz has ruled out forming a minority government or calling fresh elections after reports of divisions in his coalition with the Social Democrats. A year after taking office, Merz's plans to kickstart Germany's economy have been upended by the Iran war. The Chancellor recently said the US was being humiliated by Iranian negotiators, sparking a high-profile feud with President Trump. French President Emmanuel Macron has nominated his former Chief of Staff Emmanuel Moulin as head of the country's central bank. Moulin left his job at the Elysee on Monday. He'd previously served in top positions including head of the French Treasury and Chief of Staff to the Prime Minister and Finance Minister. His appointment, still subject to parliamentary approval, has been criticised by opposition groups accusing Macron of placing loyalists in top jobs before next year's presidential election. The European Union says it wants the key parts of its trade deal with the United States to be enforced by July. At a meeting in Paris, the EU's Trade Commissioner, Mara Shevchovic, urged his US counterpart, Jemisin Greer, to honour Washington's side of the pact. It comes after President Trump threatened to slap 25% tariffs on cars and trucks. That's a marked increase from the 15% rate agreed between the two sides last summer. Here's EU Commission President Ursula von der Leyen. A deal is a deal, and we have a deal. And the essence of this deal is prosperity, common rules and reliability. Now we are both implementing this deal while respecting the different democratic procedures we have on both sides. Van der Leyen went on to say that the EU is prepared for every scenario. Trump has frustrated that the EU is taking months to formally ratify a trade deal the two sides initially reached last July. But the EU insists it's simply going through its legislative process and aims to approve the agreement next month. And those are our top stories for you this morning. Looking at the markets, Brent crude futures falling by 1.6%. We now trade at $108.10. That cooling of oil prices has helped to support stocks. The S&P 500 hit a record yesterday. The MSCI World Index has hit a record high. So has the MSCI Asia Pacific Index, which is up 2.5% this morning. And look at the KOSPI, up 6%, boding well also for European tech. Eurostox 50 futures are up 1%. We have had some earnings out from Deutsche Lufthansa, a narrower loss in the first quarter for that airline. They've also talked about their full year outlook being significantly above last year's figure. they've hedged 80% of their fuel needs for 2026. But that is a risk factor in terms of fuel. As for the rest of the market, so bond yields, a holiday in Japan means no cash treasuries trading. But the US 30-year went below 5% yesterday, even as we see the pain in the UK, the 30-year yield will begin trading at 5.74% today. The dollar weakens and the yen jumps as much as 1.1% today. In a moment we'll bring you more on the prospects for ending the Iran war plus what Anthropik's new AI tool means for the financial industry. But another story we been reading this morning on public art installations and their temporary nature Finn Jennings has been writing about this for Bloomberg Pursuits about plans for the Pont Neuf in Paris So the French artist JR is going to unveil his work next month, which will transform the bridge into a rocky cave using an inflatable structure that's 17 metres tall at its highest point. It'll be in place for three weeks. And it's a tribute to the 1985 installation Pont Neuf Wrapped, which saw the same bridge wrapped in golden fabric. that only lasted for two weeks. But I can promise you, Caroline, people are still talking about it more than 40 years later. Now, Phil writes, this has become a blueprint for public art. It wasn't funded by public money. And the fact that it's temporary is something that perhaps means it lasts longer in people's consciousness. Do you walk past a statue every day that's been there forever and you don't take any notice of it? Or are you more likely to take a notice of something that's short term? Yeah, I think that it does attract visitors, doesn't it? It's meant to kind of revitalise areas, maybe areas that are not so well known. I mean, obviously, Banksy's putting up, you know, temporary art installations all over London all of the time. But to me, it also does feel a bit like, you know, the Instagram age. It's the opposite, isn't it, of a kind of Vanitas painting, you know, the ones with the spoiled fruit meant to remind you of like the brevity of life. It's just so ephemeral. It passes so quickly. This too will pass as we're all thinking at certain hours of the morning. We'll put a link to that piece in our podcast show notes. Let's bring you up to date then on events in the Iran war. Donald Trump says that he's paused efforts to get ships through the Strait of Hormuz while he pursues efforts to end the war. Stuart Livingston Wallace runs our coverage of the Middle East, North Africa and Russia. And he joins us now for more. Stuart, Donald Trump says great progress is being made. What more do we know about these diplomatic efforts? Yeah, good morning. I mean, it continues to be operating in obscurity. So we know, look, Pakistan is the lead mediator, it would seem, on this. We know it's been working hard. We're also pretty certain that lots of other countries are involved just simply because of the global economic impact that this is having. However, in terms of tangible progress that we can actually point to and say here are the two, three key points where they seem to be moving closer together, there's a total absence of information. And again, it's revolving around the same things that have been on the agenda now for months, if not years, which is the nuclear file, the missile program, support for proxies. And now, of course, you know, since the war started, the reopening of Hormuz. And I would argue that reopening of Hormuz is probably preeminent amongst them just in terms of, again, global interest, global impact and the effects that this will have on every country on the planet going forward, presumably for months. well what is the latest on the Strait of Hormuz now should we be surprised that the US isn't pursuing this project to try to reopen the waterway for now I mean I think the surprise was how fast they u-turned on it I mean this was announced on Monday withdrawn on Tuesday you can understand the the motivation behind it because you've got something like 1500 plus commercial ships that is you know tankers cargoes dry bulkers and so on stuck in the Persian Gulf That's a huge part of the global shipping fleet. On top of that, you've got a very serious humanitarian issue because those ships have something like 22,000 crew members on them that have been stuck there for weeks, and that's an awful situation for anyone to be in. But beyond that, this is crippling the economies of lots of exporters, lots of importers, lots of industries. So I think it was surprising that the decision was taken so rapidly that it wasn't necessarily working. I think largely what drove it was a surprise at the scale of the response that you had from Iran. I mean, Monday was a very jumpy day. You know, we had our first missile alerts here for the better part of a month. You had several ships attacked. And I think it was clear that Iran was prepared to escalate pretty much to any point that it fancied in order to counteract this project. So, you know, it's disappointing for sure. But as things stand this morning, it's the same phrase we've been using for weeks now. the Strait of Hormuz is effectively shot. Okay, Stuart, thank you very much. Stuart Livingston-Wallace there, running our coverage of the Middle East, North Africa and Russia. Stay with us. More from Bloomberg Daybacube coming up after this. As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting sharp analysis and powerful tools that help you connect the dots Visit Bloomberg slash podcast offer to learn more Now the financial services industry is set for further disruption from artificial intelligence as Anthropic has unveiled this set of new AI agents targeting the common tasks that are undertaken in the sector. The announcement sparked a sell-off in shares of companies that provide financial research and data. Tom McKenzie, who hosts Bloomberg Tech Europe on Bloomberg TV, joins us now for more. Good to speak to you, Tom. What are these new agents doing and how much of an advance is it? Well, it is an advance and it's worth pointing out that it is an advance on previous plugins that Anthropic announced and released in around February of this year that also led to a sell-off for some of those software names. So it's building on that. These are 10 additional tools now with agentic capabilities that Anthropic is releasing, specifically, as you say, targeting the financial industry. So asset management, insurance, and of course, banking and financial services as well. These tools can do things like put together a pitch deck for you. They can alert compliance around certain risks. They can do and read financial statements and do analysis on financial statements. Those are the kind of things that these tools will allow financial professionals to do. And it's a reminder that Anthropic is pushing very deeply into enterprise and into business. and they are laser-focused specifically on financial services. They clearly see potentially significant gains from financial services if financial services is asset management, if the insurance industries adopt these tools at a rapid pace. Because Anthropik's been working with financial firms on these tools, so I suppose in a question of disruption, how disruptive could they be? Well, that really depends on how quickly and how willing those financial services companies and institutions are to adopt these tools. And of course, this is a space that is highly regulated and to which, of course, data and privacy and cybersecurity are absolutely top of mind for executives. But look, this is a company, you're nodding to this, which is that this is a company, Anthropic, that is working very closely now. We saw Daria Amode, who's the head of Anthropic, on stage with Jamie Dimon, of course, the CEO of JP Morgan, at an event that Anthropic hosted in New York yesterday. Bloomberg has reported that Anthropik is working with the likes of Blackstone and Goldman Sachs on a joint venture, specifically aimed at encouraging and working with the financial industry to adopt these tools. So it will come down to adoption and how widely these tools are diffused. But they appear to be making progress and appear to be winning over at least some key executives in that space. Well, doesn't that image of Amaday and Diamond speak volumes on the stage together? What does it mean for Anthropic, though, and its rivalry with OpenAI? Well, that rivalry is red hot in a year when both of these companies could be listing, could be going for those IPOs. Current reporting suggests Anthropic could be valued at around 900 billion US dollars as of today. We could be looking at a trillion dollar IPO potentially for Anthropic. Anthropic is seen as winning in the enterprise space. That is offering tools specifically for businesses and enterprises, whereas OpenAI has won over the general consumer. It's worth noting OpenAI have come through with updates in recent days and weeks that position it much better in the enterprise space as well. They are not giving up that market, certainly. But Anthropic has about 300,000 corporate customers right now, enterprise customers right now. And they clearly want to drive revenue streams. And they see finance as one area to do that before that IPO. OK, Tom McKenzie, thank you very much for joining us. Anchor of Bloomberg Tech Europe. And the next episode of Bloomberg Tech Europe is on air this Friday with Tom McKenzie. The race for driverless cars and the rivalry between Waymo and Wave. You can watch it on Friday morning on Bloomberg Television, but also at Bloomberg.com slash video. This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond. Look for us on your podcast feed every morning on Apple, Spotify and anywhere else you get your podcasts. You can also listen live each morning on London DAB Radio, the Bloomberg Business App and Bloomberg.com. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa, play Bloomberg 1130. I'm Caroline Hepker. And I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak Europe. Transcription by CastingWords
