Flagship

Bond yields rise on darkening outlook

US bond yields rose to their highest level in nearly two decades on Thursday, as persistently high inflation readings and fresh energy disruptions darkened the global outlook. The European Central Bank raised interest rates and predicted “longer-lasting” inflation, while traders on Thursday priced in a 70% likelihood that the US Federal Reserve hikes rates next week. But the ECB’s only job is to manage inflation, whereas the Fed has a “trickier dual task of managing both prices and employment,” Semafor’s Liz Hoffman wrote: While central banks would “prefer to move their interest rates together to avoid warping investment flows,” inflation and slower growth “have upset that lockstep instinct” as policymakers tend to their own economies first.

Houthis capture key Red Sea port

Houthi rebels captured a key Red Sea port on Thursday from Yemen’s Saudi Arabia-backed government, strengthening the Iranian proxy’s hold on one of the region’s two critical waterways. Reuters reported that the sweeping offensive was powered by arms and advice from Tehran. It puts the militia one step closer to controlling “arguably Yemen’s most strategically valuable real estate” near the Bab el-Mandeb Strait, an expert told The New York Times. A drawn-out Middle East conflict could permanently damage oil demand, Semafor’s energy editor argued, as alternative energy sources proliferate; oil prices hit $108 a barrel Thursday for the first time since May.

NATO allies foil Russia plot

A joint operation between the US, UK, and Norway foiled a Russian operation to cut undersea cables near the Arctic’s Svalbard archipelago this spring, Reuters reported. The operation involved a “secret weapon” used to sabotage cables without evidence, preserving the Kremlin’s plausible deniability. Russia’s Vladimir Putin told US President Donald Trump in a phone call Tuesday that Moscow doesn’t intend to attack Europe, sentiments Trump has echoed: “Putin is not looking to attack NATO territory,” he said last week. Western officials have expressed concern that the Kremlin is ramping up covert operations against Ukraine’s backers as Russia’s battlefield progress stalls — fears heightened by the discovery of a bomb-packed drone at a German airport last month.

US lawmakers plan AI legislation

A bipartisan group of US lawmakers could introduce legislation to regulate AI as soon as next week, Semafor’s Ashley Gold reported, as warnings about an “AI doomsday” reach a new fever pitch. The politics of AI are “heating to a boil,” Semafor’s Ben Smith reported, uniting Democrats around regulation while scrambling conservatives: At a hard-right forum across town from the Republican midterm convention, one anti-AI activist compared data centers to immigration, likening rogue AI agents to “algorithmic immigrants;” Palantir co-founder Joe Lonsdale countered that rhetoric, suggesting it was driven by “psyops from China.” The US has only had “data center politics” so far, Bloomberg’s Joe Weisenthal noted: But with “anti-AI politics,” model development could “become a live topic in public discourse.”

New terrorism threats from AI, drones

The global jihadi movement is fractured 25 years after the Sept. 11 attacks and lacks the capacity to launch similarly sophisticated operations, analysts said, but societies face equally dangerous terrorist threats today from advanced technologies. Much as the 9/11 Commission Report lamented the “failure of imagination” preceding the attacks, the West today should consider how its “innovations are continuously misused by terrorists against it,” experts argued in Foreign Policy, adding that AI, encrypted messaging platforms, and drones “can serve as force multipliers” for bad actors. AI has already been used to plan deadly attacks on US soil, and the “gap between the drone threat and the response is significant and… remains unaddressed,” Council on Foreign Relations experts warned.

Moonshot to join wave of Chinese tech IPOs

Leading Chinese AI startup Moonshot is reportedly exploring going public in Shanghai and Hong Kong, reflecting both the lab’s need for cash as well as concerns over a congested IPO pipeline in Hong Kong. China’s AI startups raise far less than their US peers, with top Chinese firms often bringing in (mere) single- and double-digit billions of dollars, leading them to seek efficiencies and rely on less compute. But more Chinese tech companies are going public: Zhipu and MiniMax listed in Hong Kong earlier this year. Beijing is concerned that the rush of tech IPOs is fueling a bonanza that could burn investors. Regulators warned bankers this week not to flood the market with “low-quality” companies, the Financial Times reported.

Mubadala takes stake in China’s Luckin

Abu Dhabi sovereign wealth fund Mubadala has taken a stake in China’s Luckin Coffee, adding to the growing economic ties between the two nations. The $1 billion investment will give Mubadala a significant minority stake in China’s biggest coffee chain, continuing its run as one the world’s most active sovereign wealth funds, despite the Iran war. Mubadala has invested more than $20 billion in China across more than 100 deals since 2015, and earlier this year Abu Dhabi’s crown prince visited Beijing for talks on expanding economic and diplomatic relations. While Chinese investment flows are growing, the US still accounts for 44% of Mubadala’s $385 billion of assets under management, Semafor’s Gulf team noted.

Young people are facing unprecedented challenges to their mental health and wellbeing. Rising rates of loneliness, anxiety, and depression underscore an urgent need for solutions that address the full range of factors shaping youth wellbeing.

On September 16, at the Youth Wellbeing Forum: Building Resilient Generations, Semafor journalists will lead conversations about the tools, policies, and partnerships that can help young people thrive. Speakers including Jaymes Black, CEO, The Trevor Project; Rep. Suzanne Bonamici, D-Ore.; Rep. Kevin Kiley, I-Calif.; and Dr. Jon Kole, Medical Director and Senior Director of Psychiatry, Headspace, will explore how to build lasting resilience for the next generation.

Washington, DC | September 16 | Request Invite

EV carmakers add gas engines

Automakers are adding gasoline engines to their electric cars in an attempt to appeal to US consumers leery of EVs’ short range. “Extended-range EVs” flip the idea of hybrids: An internal combustion engine drives a generator, not the wheels. Americans like big trucks, and pulling heavy loads drains batteries quickly, pushing prices up and ranges down. Manufacturers — including Ford, Hyundai, and Stellantis — hope EREVs, which can offer up to twice the range of a typical EV, will overcome those concerns. It’s an uncertain bet: EV sales are still down in the US since the White House ended subsidies, and consumer behavior is tough to change. Drivers won’t “buy what they don’t understand,” one analyst told The Wall Street Journal.

Debate over Trump’s childcare plan