Washington, DC

1. Bond market surges
2. No new energy deals
3. Summer airfares spike
4. China not buying Nvidia
5. AI hacking threat
6. Cassidy’s uphill battle

US 10-year bond yields ▲ 14 basis points — the sharpest weekly rise since the tariff shock last April.

Inflation fears drives bond yield surge

The bond market ended the week with yields surging — a signal that investors fear inflation will keep rising as the Strait of Hormuz remains closed. The dynamic could mean that Kevin Warsh, who started his new job as chair of the Federal Reserve this week with a mandate from Trump to cut rates, may have to do the opposite. One of his colleagues raised the specter of rate hikes Wednesday. This week the government released two worse-than-expected inflation reports, driven by rising oil prices. Global reserves, which have cushioned the economic blow of the war in Iran so far, are beginning to dwindle. And there’s little reason to hope for an imminent end to the oil shock: As the US and Iran remain locked in a stalemate, leaders in Tehran have begun to assert a firmer claim to a new definition of the strait.

Beijing talks ends without new energy deals

Trump’s visit to Beijing ended with a lot of talk about energy, but no concrete deals. Trump told Fox News on Thursday that Xi Jinping “agreed they want to buy oil,” but China’s readout from the summit made no mention of an oil purchase commitment. “Expressing interest in buying oil from the US is a way to please Trump without actually making a firm commitment,” Erica Downs, of Columbia University’s Center for Global Energy Policy, told Semafor. Likewise, there was no progress on US access to China’s critical minerals, a key US objective. Today US Trade Representative Jamieson Greer described a deal from last year in which China agreed to pause severe export restrictions, and told Bloomberg, “if this continues to work out well for each country, to continue that and to extend this ability to make sure we’re getting rare earths.”

— Timothy McDonnell

Summer air travel prices fly higher

Travelers booking summer flights are in for a sticker shock — and airlines are warning it could get worse. Summer domestic roundtrip airfare prices are up 27% compared to last year, and flights to Europe are even higher — up 45% to London and up 20-40% to Dublin, Paris and Rome. Airlines are raising prices in response to higher jet fuel prices, which surged 56% in March from February, according to Transportation Department data. Industry executives have warned the Trump administration that a prolonged conflict with Iran could squeeze strained carriers. Americans are still booking flights, but airlines are tightening operations: raising fares and baggage fees, cutting routes, and limiting perks. Airlines have canceled tens of thousands of flights globally, and budget airline Spirit has gone under. Other US carriers worry that they could be next.

— Lauren Morganbesser

China still isn’t buying Nvidia’s chips

For all the attention on Nvidia CEO Jensen Huang’s presence on Air Force One, Trump ended his Beijing trip without breaking the logjam over the company’s stalled China sales. The US has greenlit the sale of Nvidia’s H200 chips to Chinese firms, but Beijing still isn’t buying them. “They want to try to develop their own,” Trump told reporters on Air Force One, though he added that the issue came up and “something could happen on that.” For its part, the Chinese government is pouring money into Huawei with hopes of revving its own domestic chip industry to challenge the US. The lack of a deal on the H200 will actually play better at home for Trump, who has caught flak from lawmakers in Washington who don’t like the idea of selling American chips to the Chinese — or any US tech, for that matter.

— Morgan Chalfant

Our coverage brings together reporting and analysis on how the summit will shape energy markets, business, policy, and the broader US-China relationship.

With US and Chinese leaders meeting at this week’s summit in Beijing, Semafor’s newsroom breaks down what’s at stake — from the durability of Trump’s China deals, to Washington’s rare earths Achilles’ heel, to China’s wider geopolitical calculus.

AI hacking era ‘is here’

A hypothetical cyber threat became real this week: AI hacking, Semafor’s Lauren Morganbesser writes. A report yesterday revealed Anthropic’s new model, Mythos, cracked MacOS during testing. On Monday Google’s Threat Intelligence Group said it thwarted the first known case of cybercriminals using AI to discover and target a “zero-day vulnerability,” which gives developers no time to respond. “There’s a discussion now that says, ‘It’s coming, right?’” Google Threat Intelligence Group Chief Analyst John Hultquist told Semafor. “That’s a misinterpretation of facts. The new era is here.” Senate Minority Leader Chuck Schumer is urging new Homeland Security Secretary Markwayne Mullin to step up readiness at the Cybersecurity and Infrastructure Security Agency, imploring him in a letter to push the president to nominate a permanent director and asking him to present a plan to fight “frontier AI-enabled hacking” to Congress by July 1.

Cassidy an underdog in his own primary

Sen. Bill Cassidy could be eliminated from the Louisiana Senate GOP primary on Saturday if he doesn’t finish ahead of Trump-backed Rep. Juilia Letlow or former Rep. John Fleming in the three-way race. As his campaign accuses the state of intentionally confusing voters, senators and aides believe even if Cassidy advances to a runoff, he’ll be an underdog — facing a referendum on his 2021 vote to convict Trump of impeachment, no matter who his opponent is. If he survives, it would be a huge upset. Senate Majority Leader John Thune and the National Republican Senatorial Committee backed Cassidy, but many GOP senators did not. Several this week declined to even discuss the race on the record. A Cassidy loss would open the chair of the Health Education Labor and Pensions committee: Sen. Rand Paul, R-Ky., is next in line, though he chose Homeland Security this Congress.

—Burgess Everett

He was first labeled a teenage chef prodigy. Fast forward to today, Flynn McGarry is trying to answer the question: What actually gets people to show up to a restaurant? On this week’s episode of Mixed Signals, Max and Ben ask the Chef and Cove owner how early media attention shaped his identity and what he’s learned about the social media content that actually drives traffic to his restaurants. Plus, how he missed years of TV development deals — including one with White Lotus creator Mike White.

White House

• President Trump announced that West Potomac Park in DC would be the site of his proposed installation of statues honoring “American Heroes.”
• Trump purchased between $500,000 and $1 million worth of Nvidia stock in January, a week before the Commerce Department approved the sale of some Nvidia chips to China. — NOTUS
• The new acting head of the Food and Drug Administration is rushing to assure anti-abortion activists that he supports them, after news reports revealed he previously served as outside counsel to Planned Parenthood of Florida for three years. — Politico
• The Federal Aviation Administration ruled that Palm Beach International Airport’s code will change, along with the airport’s name, to DJT on July 9.

National Security

• A commander of an Iran-backed militia in Iraq has been charged in federal court with plotting to attack Jewish sites in the US, and he’s accused of plotting 18 attacks across Europe and Canada in retaliation for the US and Israeli strikes on Iran. — NYT
• Government officials believe Iranian hackers may have caused fuel gauges at US gas stations to incorrectly display the amount of gas remaining in storage. — CNN

Society

• A religious gathering known as Rededicate, set for Sunday on the National Mall under the aegis of the Trump-backed Freedom250 effort celebrating the US’ 250th birthday, will include scheduled remarks by Secretary of State Marco Rubio, Defense Secretary Pete Hegseth, and Speaker Mike Johnson.

Business

• EY withdrew a study on loyalty rewards programs after it was discovered that it linked to a McKinsey report that did not exist. — FT

Congress

• The father of Rep. Tom Kean Jr., R-N.J., who has been absent from Washington for two months without explanation, told CNN that “he’s under the care of a doctor” with “a real illness” but declined to offer more details.
• Rep. LaMonica McIver, D-N.J., revealed she’s pregnant with her second child, as she faces up to 17 years in prison if convicted on charges of assaulting officers outside of an immigration detention facility. — People