Global financial jitters about what are referred to as non-bank banks or private credit. Despite wholesale inflation coming in hot this morning, investors are still buying U.S. government bonds this morning. The benchmark 10-year interest rate is now below 4 percent, but analysts say it's a move toward a safe haven. But why now? Christopher Lowe is chief economist at FHN Financial in New York. Hey, Chris. Hey, David. So U.S. government bonds, People are buying those because they're worried about something else. The something else is coming out of London. What is it? It's private credit. It's specifically MFS, which is a big lender making risky loans, the kind of loans that banks don't want to make. And they do it by borrowing from investors and from banks and securing capital, which they then pledge as collateral. They've been accused of double counting collateral. And as a result, the banks have pulled funding, and MFS is in the British equivalency of bankruptcy this morning. All right. Well, we'll see if those accusations are borne out. But we do see evidence. There are published reports that some of the banks that are creditors are exposed to some of these losses. This sounds familiar to that auto subprime lender, Tricolor, that ran into trouble late last year. That's right. And people are starting to think it might be a bigger pattern. And so what we're seeing in the broad market today, treasuries lower in yield. That's people fleeing to quality. And high-yield debt, what we affectionately know as junk bonds, those yields are rising. When junk spreads rise, it's a signal to the entire industry, credit industry, that lenders are nervous and pulling back from what they perceive as the most risky parts of the credit markets All right we continue to monitor this Christopher Lowe Chief Economist FHN Financial in New York Thank you Thank you David And this will remind many of a comment made last fall by the CEO of the biggest of banks Jamie Dimon of JPMorgan Chase, after that private credit auto lender Tricolor went bankrupt. His quote, when you see one cockroach, there are probably more. Transcription by CastingWords Shopify is made for entrepreneurs like you. Call us for your test period of 1 euro per month on shopify.eu. like its chatbot Claude, not be used in mass domestic surveillance or fully autonomous weapons. The Defense Department is insisting it be allowed to deploy AI for, quote, any lawful use. In a post on X, Chief Pentagon Spokesman Sean Parnell says the military has no interest in using AI to conduct mass surveillance of Americans and doesn't want to use AI to develop autonomous weapons. Parnell says Anthropic has until 5 or 1 p.m. Eastern time today to decide. Otherwise, the Pentagon will terminate its partnership with Anthropic and label the company a supply chain risk. Anthropic would be blacklisted, and its partnerships with other firms could be severed. Anthropic still says its strong preference is to continue to serve the Pentagon with surveillance and autonomous weapons safeguards But a senior Pentagon official tells Marketplace the Defense Department sent Anthropic its last and final offer Wednesday night I Nancy Marshall for Marketplace Time to take the Marketplace economic pulse, views on the economy from a wide range of perspectives. Today, a check-in on what we used to call a lobster fisherman when I grew up in Maine. Now that I live on the other coast, I have to say lobster professional. In 2024, Maine's Commercial Fisheries did about $700 million in business with lobsters, accounting for the largest share of that total. Sonny Beal is a lobsterman and board member of the Maine Lobstermans Association. He's on an island wicked down east. Mr. Beal, welcome. Thank you for having me. I guess it's like actors who never say the name of the Scottish Shakespeare play because bad things will then happen. What is it that lobster folks stay away from the precise number of how their catch was? We're usually pretty secretive on what we catch, you know, because if somebody finds out that you're doing good, they might move in on your territory and stuff. So we try to keep it kind of hush hush. Yeah. And as it refers to your business, what's the vibe? The catch was down a little bit this season. It was down about 30% statewide. We can't have record years every year. So, you know, we kind of just take it for what it is. The price is down a little bit from last year, but last year was a record price. So we're still chugging along, you know, when we have good years and bad years and, you know, we take it as it goes. Now, when you're out in the ocean doing your work, it is not a free-for-all. Some of it is strict custom, you know, you don't mess with anybody else's traps. But some of it is formal government regulation. And I know that is something that people in your business have to plan around and compensate for and sometimes has costs. Yes, that's correct. 20 years ago or so, we had to switch from floating ground lines to sinking ground lines the ground lines are the are the lines that are in between your traps on bottom and also you know the the rope doesn't last as long where it's chafing on bottom so you know it's rope that we have to buy every single year we have to buy breakaway devices for our buoys so if a whale gets caught in a buoy you know the device breaks the buoy pops off the wheel doesn't get entangled we now have to put breakaway links plastic links in our lines so you know if the buoy doesn break then the line will break And actually they said that now that we have the link in our line we don need the link in our buoy So it just you know they going right around Robin Hood barn kind of a deal We also have to put colored tracers in our lines. Like where I fish, I have to have a purple tracer. And then when I fish out in federal waters, I have to have a green tracer on my line. And I have to have three of those from buoy to trap. So we're highly regulated, that's for sure. You've been doing this since you were a kid. I think you have two children, a teenager and maybe college age. I have two boys, 18 and 20 years old. Yes. So what do they think about getting into this business? It's one of those things when they say, you know, you got salt in your veins. That's really a thing. I was kind of, you know, disappointed, not disappointed, but when my youngest son didn't go to college and now my oldest son wants to come home and go fishing. I always told him, I said, I wish you guys would use your brain and not your back. And my wife said, you know, she says, you can't raise these guys fishing and being on the ocean and expect them not to do it when they get older. Sonny Beal is a lobstering professional from Maine. Thank you very much for the briefing. No problem. You're very welcome. Beal is a big name up there. I had another Mr. Beal as my stern driver's ed instructor in high school. Look, signal and look, young fella. David Brancaccio, Marketplace Morning Report from APM, American Public Media. Hey, David Brancaccio here. I hope you're well and that your passport is up to date because I am hosting a trip to Italy this fall. And you, you are invited. Stay at a world-class Tuscan villa and step into the world of the Medici, the formidable family whose influence and power helped give rise to the Renaissance and the art we still celebrate today, not to mention the banking system. We're going to visit the world's oldest bank, swim in the thermal spa waters in Monte Catini, and take in the art of the Uffizi. All of this, and then we'll try to put it all into context with great conversation over even better meals and wine tasting. Please join me and know this, buying into this trip will provide essential support for public media. Discover more about this fall's Tuscany adventure at marketplace.org slash travel to reserve your spot today. That's marketplace.org slash travel. Thank you.
