Trump Threatens Iran ‘Economic D-Day’; Treasury Bond Fix JPMorgan Warning

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1:29Bloomberg Audio Studios, podcasts, radio, news. Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the latest effort to bring the Iran war to an end. President Trump has announced plans for an economic D-Day against Tehran, writing on social media, quote, this will be economic warfare and isolation on an unprecedented scale. The president says the plan could include more sanctions. Well, we have things that we could sanction. We have very draconian sanctions and we'll see what happens right now. The strait is open. President Trump spoke to reporters at the White House.

2:11Bloomberg Middle East correspondent Abir Abu Omar has more from Dubai. We don't know exactly what President Trump says when he says economic D-Day or when he says that Iran is going to face the most pain when it comes to these economic measures that are going to be taken against it, because he didn't clarify much beyond that truth social post that he had about that promise, essentially. What we know for the time being is that it could be some kind of further sanctions. And again, Iranian oil is sanctioned. China, the biggest buyer of that oil, of course, if it is targeted, that could bring up the conversation about retaliatory tariffs or even bigger kind of tensions between China and the United States.

2:49Bloomberg Zabir Abu Omar reports President Trump is demanding all countries stop providing any economic lifeline to Iran. The president's plan got a boost yesterday when the United Arab Emirates cut its economic ties to Tehran. Nathan, while President Trump is putting pressure on Iran, he's looking to boost relations with North Korea. You can't let Iran have a nuclear weapon. And I know Kim Jong-un very well, and he's going to be fine. And the president says he hopes to have a meeting with North Korea's leader this fall and that Kim has responded to that request. But Kim's powerful sister, Kim Yo-jong, says there's been no direct communication and the U.S.'s, quote, hostile policies against her country haven't changed.

3:31President Trump says North Korea has 57 nuclear weapons, but South Korea puts that number at anywhere from 80 to 120. And this morning, Japan's Yonhap News Agency reports North Korea fired around 10 short-range ballistic missiles. Japan's Coast Guard has confirmed at least one projectile fired outside its economic zone. And there are new developments this morning, Karen, in the war in Ukraine. At least 12 people were killed, dozens more wounded in a Russian missile attack targeting Kiev. Ukraine's military says Russia launched more than 40 ballistic and cruise missiles, as well as 168 drones overnight.

4:07Ukrainian President Vladimir Zelensky says as long as his country does not have enough anti-ballistic defense, Russia will not consider peace seriously. Nathan, Canada and the U.S. have moved closer to finalizing a trade agreement. Bloomberg News has learned the Trump administration is poised to reduce tariffs on automobiles imported from Canada to 15 % from 25 % as part of a broader deal that would see the U.S. neighbor drop retaliatory trade measures. Here is U.S. Trade Representative Jameson Greer. We feel confident that we've reached an agreement that will not only continue to protect American workers, American jobs, American supply chains, but really strengthen the North American economy.

4:47U.S. Trade Representative Jameson Greer, the tariffs on about$20 billion worth of Canadian imports have been postponed until midnight Saturday. Now, Karen, a Bloomberg News exclusive. China is closing the gap with the United States in the race to develop artificial intelligence. A Bloomberg analysis suggests by several key metrics, Chinese AI models are even taking the lead. Bloomberg Asia Tech Managing Editor Edwin Chan says it's about more than just lower costs. When it comes to the Kimi K3, as well as a plethora of other AI models that were released around the same time, including ZAI as the GLM and Alibaba's Quinn, they demonstrated that the gap in performance also was rapidly closing.

5:31And I think that was what really triggered this year's debate in the U.S. about whether Washington should do more to try and curb that ascent. And I think it encouraged within China a domestic push to promote more open-weight models to push adoption rapidly while they have the momentum. And Bloomberg's Edwin Chan adds that the Trump administration could face backlash from American businesses in any attempt to rein in adoption of Chinese AI models. Nathan, reaction still pouring in this morning to Treasury Secretary Scott Besson's surprise effort to curb long-term borrowing costs. Yesterday, the Treasury said it would at least double the size of its bond buybacks to provide greater liquidity support.

6:14And here's former St. Louis Fed President Jim Bullard. Market reaction suggests that this is an important tactical move from the Treasury, a little bit unexpected, so you're probably getting an outsized reaction right now. But I don't think it changes the fundamentals of big fiscal deficits and a Fed on the sidelines, which is what's driving longer term yields higher. And former St. Louis Fed President Jim Bullard, JPMorgan Chase strategists are warning that markets may view the Treasury's decision as lacking credibility, potentially pushing up the term premium and yields over time. And checking Treasuries right now, taking a look at the 10-year yields are at 4.67 percent.

6:54The yield on the two-year, 4.17%. The 30-year yield, 5.22%. And Karen, the minutes from the Fed's last policy meeting revealed several officials favored a rate hike last month. And many indicated that policy tightening would be necessary if inflation did not decline. Here's Bloomberg's Michael McKee. I think what the minutes show is that the committee was much more divided than people had anticipated. The counting words that they use, the adjectives for how many people were on one side or another, are much more in evidence in this set of minutes than I think I've ever seen, especially the words some and several.

7:31Bloomberg's Mike McKee says ultimately the Federal Open Market Committee voted 9-3 to hold the federal funds rate steady. Let's turn to company news now. Nathan, it was a historic day for Moderna. The stock soared 177 % yesterday. After it was disclosed, a personalized vaccine developed by Moderna and Merck reduced the recurrence of melanoma in a large late-stage trial. This raises expectations for treating the deadliest form of skin cancer. Madison Muller covers the pharmaceutical industry for Bloomberg. Investors are really excited about this, and they do see this as a breakthrough for mRNA technology beyond the COVID-19 vaccines that we all know it so well for.

8:12the technology has been successful in other infectious diseases. But in terms of a business opportunity, I mean, this is something that is potentially really transformative, potentially really big, and brings Moderna into a new area beyond infectious diseases into potentially oncology. And that is a pretty transformative moment, I think, for the company and for science. Bloomberg's Madison Muller says Moderna added$44 billion in market value yesterday. Right now, shares are giving back some of those gains, they are down 10.5%. Finally, Karen, Prince Harry, Meghan and their two children are reportedly moving back to the UK later this month.

8:48We get the story from Bloomberg's Tiwa Adebayo in London. It's been over six years since Meghan Markle and Prince Harry left the UK and stepped down as working royals. The years following have brought us documentaries, a bestselling memoir, and even a line of signature jams, all from the Sussexes' California home. But according to the BBC, the couple are set to shift their base back to the UK in the coming weeks. The news, first reported in the Sun and the Daily Telegraph, is thought to be a surprise to King Charles, who was told about the move last Sunday. No change to the official status of Prince Harry and Meghan as private individuals is expected, and their children are enrolled to start at a British school in September.

9:31In London, Tiwa Adebayo, Bloomberg Radio.

9:37Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Trial is expected to resume today for Lindsay Clancy. The Massachusetts woman is charged with killing her three young children in their Duxbury home in 2023. But the defense argues Clancy did not get proper postpartum psychosis treatment. So far, the defense has called eight witnesses. Psychologist Paul Zeisel testified that Clancy, who is hospitalized, has bad days and worse days and remains a suicide risk.

10:12But she had bipolar disorder with postpartum psychoses. In addition, she was unable to conform her behaviors to the rule of law. Audio courtesy of WCVB, prosecutors contend that the killings were premeditated. Yesterday would have been Nolan Wells' 19th birthday. The Mississippi teen went missing on July 4th after going on a boat trip with friends to a barrier island about 10 miles from the Gulf Coast. His body was discovered there two days later. On Wednesday, his parents held a vigil at the National Action Network with the Reverend Al Sharpton. And the fanfare's over. You've got an empty bed in your house.

10:53And I want us to pray on his birthday that you should have been giving him cake and candles, that God would give you strength to go through this. Wells' family has been calling for a thorough investigation into their son's death. A safari helicopter crashed Wednesday in a remote part of northern Kenya. Seven people are dead, including five Americans. In Pennsylvania, a police helicopter and a small airplane collided in the skies during a training exercise at Carlisle Regional Airport. Lieutenant Colonel George Bivens with the Pennsylvania State Police. The one known occupant of the Cessna 150 did not survive the crash.

11:36We're not prepared to release information on that individual yet. The two Pennsylvania State Police troopers on board the helicopter are expected to survive. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg Heron. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in Dan Schwarzman. Baseball scoreboard. The Yankees win their third in a row, knocking off the Orioles 5-3. Mets double up the Padres 4-2. Rays slip past the Blue Jays 7-6. Red Sox fall to the Diamondbacks in 10 innings 7-6. Nationals shut out the Rangers 6-0, while the Cubs get shut out by the White Sox 3-0.

12:12The Tampa Bay Buccaneers and hold in defensive tackle Vita Vea have agreed to a one-year contract extension that'll add$6 million to this year's salary with a two-time Pro Bowler set during an additional$27 million next season. A three-team trade in the NBA as the Nuggets have sent Peyton Watson to the Cavaliers, with Max Truce going to the Clippers, while Denver receives a first and second round draft pick in later drafts. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. Bloomberg Daybreak U.S. Edition is brought to you by OTC Markets Group.

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13:28As 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.com slash podcast offer to learn more. coast to coast on bloomberg radio nationwide on sirius xm and around the world on bloomberg.com and the bloomberg business app this is bloomberg daybreak good morning i'm nathan hager economic d-day is the latest push from president trump to try to get iran to surrender as he says the situation in the strait of hormuz is under control a lot of boats are coming through people aren't reporting that and that may slow down a little bit at some point but right now a lot of boats are coming through.

14:13President Trump speaking from the White House. Joining us from Istanbul is Bloomberg Middle East breaking news editor Patrick Sykes. Patrick, we've been anticipating ever since Secretary of the Treasury Scott Besson said more economic measures were coming against Iran. What do we know about this so-called economic warfare plan the president's talking about? Good morning. Morning. Yeah, the few specifics we've had from the president point to it being targeted against Iran's oil trade. He's mentioned things like exchange houses, cash transfers and ship registries in particular. That would, I think, point attention to China being obviously Iran's main buyer of crude oil.

14:52But more broadly, you've got countries like the UAE, you've got Turkey, where I am, that are close to Iran, have longstanding historical links and have spent a long time navigating the complexities of sanctions, but do have longstanding trade in the UAE. There's a lot of financial contacts. There's a lot of food trade here in Turkey. There's an important gas contract that brings natural gas to Turkey. So it will be hard, I think, to unpack all of this. But the main culprit, I think, from Trump's perspective will be China. And that raises a question then about what that could mean for the U.S.-China relationship as President Trump is, of course, getting ready for this summit next month with Chinese President Xi Jinping.

15:35Indeed, and we had the first official response to Trump's comments from China just an hour or so ago. They were basically saying that sanctions are not going to solve this underlying issue. I think that's fairly consistent with China's position throughout the war. They've been trying to advocate for diplomacy without coming out publicly too much in support of Iran and obviously advocating the opening of the Strait of Hormuz. But I think fundamentally, without buy-in from those jurisdictions, and most importantly, from China, it's hard to see how this rhetoric gets translated into some kind of real change on the ground.

16:16In our last minute, Patrick, we did hear the president say that oil is moving through the Strait of Hormuz. And there have been reports as well that the U.S. has been escorting some shipments through the waterway as well. What more do we know about that? Yeah, so we know the past sort of couple of months, the U.S. has basically been trying to use the military to reassure shippers that it is safe. Those shippers who are happy to take the risks involved, assure them that it is safe to transit, at the very least, to transit that short distance in and out of the strait before then handing off, transferring the cargo onto a much wider fleet of tankers.

16:54It is still risky. Those ships are still worried about mines in the area. And we still fundamentally don't have clarity on a deal between Iran and Oman to manage the Strait of Hormuz in the longer term, which had seemed like the very first foundational stepping stone that would be needed in order to get a wider ceasefire and peace agreement with the U.S. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify or anywhere else you listen. You can also listen live each morning starting at 5 a.m.

17:36Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston and nationwide on Sirius XM Channel 121. Plus, listen coast to coast on the Bloomberg Business app, now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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