The article explores how round numbers, like a 5% yield on 30-year U.S. Treasury bonds, can spook investors despite having no technical significance. The recent rise in American long-term borrowing costs—linked to high deficits, political instability, and Donald Trump’s expansive budget—has sparked global concern. As the U.S. economy influences global capital markets, other countries are also seeing rising yields. Germany’s are increasing due to growth-boosting spending, while in Britain and Japan, persistent inflation is the main culprit. Meanwhile, traditional buyers of long-term bonds, such as pension funds, are retreating after locking in favourable returns, further pushing up borrowing costs. If these trends persist, long-term debt could become even costlier worldwide.

The article examines how the United States and China are taking diverging approaches to artificial intelligence (AI). In Washington, AI is viewed as a strategic arms race, with leaders such as Vice-President J.D. Vance and OpenAI’s Sam Altman portraying it as vital to national dominance and future global power. The U.S. is investing heavily in AI infrastructure, with a strong focus on achieving artificial general intelligence (AGI). In contrast, China’s government appears less interested in AGI as a superhuman, self-improving force and more focused on practical applications that drive economic growth and industrial efficiency. Rather than competing head-on, China aims to undercut U.S. dominance by rapidly deploying open-source models, fostering mass adoption, and developing alternative AI architectures. While China may trail the U.S. in AI’s economic impact due to a smaller services sector, its pragmatic, application-led strategy could shift the global AI balance in the long term.

The future of TikTok in America is uncertain, as Congress has ordered its Chinese parent company, ByteDance, to sell the app’s U.S. operations or face a ban, with the current deadline set for June 19th. The platform, which earns an estimated $15bn annually in U.S. advertising revenue, plays a central role in online commerce and influencer marketing. TikTok has revolutionised retail and branding, especially through features like TikTok Shop, which blends entertainment with shopping. Its media-impact value in America is growing faster than on rival platforms like Instagram and YouTube. A potential ban would disrupt brands and influencers who rely on it, though much of the ad spend might shift to American alternatives. Regardless of the outcome, TikTok's influence on digital marketing and social media is likely to persist.

President Donald Trump has delayed imposing 50% tariffs on the European Union until 9th July, offering a temporary reprieve after an unexpected threat to enforce them from 1st June. The delay follows a call from European Commission President Ursula von der Leyen, who requested more time for negotiations. Trump had previously criticised the EU over trade issues, including value-added taxes and regulations on U.S. firms, and expressed frustration over stalled talks. Although both sides appear willing to resume discussions, key disagreements remain—particularly over baseline tariffs and alignment on China policy. The extension now gives negotiators just over a month to reach a new trade agreement.

Despite a volatile market and ongoing trade tensions, American investors have poured a record $437 billion into exchange-traded funds (ETFs) so far this year, signalling growing preference for these low-cost, tax-efficient investment vehicles over traditional mutual funds. Much of this surge has gone into equity ETFs, particularly Vanguard’s S&P 500 fund, which has become the world’s largest ETF. Investors have also flocked to short-term Treasury ETFs, reflecting a defensive stance amid interest rate uncertainty. Actively managed ETFs are gaining popularity too, especially among retirees, now capturing a disproportionately high share of new assets. With regulators considering allowing mutual funds to offer ETF share classes, the trend towards ETFs is expected to accelerate further.

Harvard University is engaged in a growing legal and political battle with the Trump administration, which has escalated efforts to punish the institution. President Trump has withdrawn billions in federal funding, threatened its tax-exempt status, and moved to block it from enrolling international students—prompting Harvard to file two lawsuits. The U.S. Department of Homeland Security accused the university of failing to protect Jewish students and demanded extensive information on foreign students, later revoking its certification to enrol them. A federal judge has temporarily paused this move, but the conflict continues. Harvard warns that losing international students—who make up around a quarter of its population—would be devastating, impacting teaching, research, and campus life. The situation reflects broader attacks on elite universities by Trump and his allies, who accuse them of fostering anti-American and antisemitic sentiment.

While many schools in England ban smartphones, Estonia—Europe’s top performer in international education rankings—actively encourages their use in classrooms. From September, Estonian students will receive personal AI accounts as part of a national initiative, “AI Leap”, which aims to integrate artificial intelligence into education. The country, known for its strong digital infrastructure and openness to technology, plans to equip 58,000 students and 5,000 teachers with advanced AI tools by 2027. Education Minister Kristina Kallas argues that digital literacy is essential for civic engagement and future learning, with mobile phones seen as integral to education rather than a distraction. Estonia’s approach reflects a broader cultural embrace of technology and a commitment to preparing students for an AI-driven future.

A dramatic drop in holiday bookings to Japan from several Asian countries is being linked to a manga called The Future I Saw, first published in 1999. The graphic novel, based on the prophetic dreams of its author Ryo Tatsuki, correctly predicted the 2011 earthquake and tsunami and now forecasts a major disaster on 5 July 2025. Despite lacking scientific evidence, the prediction has sparked widespread social media alarm, especially in South Korea, Taiwan and Hong Kong, causing flight reservations to Japan to fall sharply—by up to 83% for some periods. This decline contrasts with Japan’s post-pandemic tourism boom and has prompted officials to urge the public to ignore unfounded rumours. Experts stress that while Japan is earthquake-prone, accurate predictions remain impossible, and Tatsuki herself advises not to take her visions literally but to heed expert advice and prepare responsibly.

Rachel Reeves will centre the upcoming spending review on a £113 billion boost in capital investment, emphasising that this funding for homes, transport, and energy projects would only have been possible under a Labour government. This investment, enabled by Labour’s changes to fiscal rules, is intended to drive growth, jobs, and private sector investment, despite concerns over government borrowing. The review will also address public discontent by signalling a shift away from unpopular policies like the winter fuel payment cuts and include commitments on child poverty. Key beneficiaries are expected to be health, defence, and major infrastructure projects such as the Sizewell C nuclear plant and East West Rail. Reeves and Labour officials aim to stress that this significant capital spend is a political choice unique to Labour, setting it apart from the Conservatives and Reform UK.

In March, the US imported a record $53 billion worth of pharmaceutical products, as companies prepared for potential tariffs from President Trump’s administration. This marked a 160% increase from the previous year and a near doubling from February. While Trump has not yet imposed tariffs on pharmaceuticals, there are concerns following a national security review on the sector. The US and UK have agreed to negotiate preferential tariff treatments for drugs, contingent on a security review and supply chain compliance. A significant portion of the imports came from Ireland, which is home to many US pharmaceutical manufacturing plants. In response to the tariff threat, several US pharmaceutical companies, including Eli Lilly and Johnson & Johnson, have announced plans to expand domestic manufacturing. However, concerns persist that tariffs could lead to drug shortages. European pharmaceutical firms, such as AstraZeneca and GSK, are also increasing their investments in the US to mitigate the risks.

Big investors are increasingly diversifying their bond portfolios away from the US amid concerns over rising public debt and the impact of Donald Trump’s trade war. The recent passage of Trump’s tax bill, expected to significantly increase the US deficit, has unsettled Treasury markets, which have recently failed to act as a safe haven. While the US dollar remains the global reserve currency, investment managers highlight the benefits of allocating funds internationally, particularly to European, Japanese, and Australian bond markets offering attractive yields. Rising US government borrowing and fiscal indiscipline have led investors to seek diversification, with some viewing the traditional dominance of US Treasuries as potentially weakening in the future.

Opec+ members, including Saudi Arabia and Russia, have announced a second consecutive monthly increase of 411,000 barrels per day for June, despite a decline in oil prices due to concerns over oversupply and economic weakness. This decision follows an unexpected increase last month and marks a shift in strategy, with Opec+ aiming to regain market share after years of production cuts. The move comes as tensions grow within the cartel, particularly with Kazakhstan, and as Saudi Arabia seeks to unwind its production curbs. While the strategy could lead to lower oil prices, its impact remains uncertain, with concerns over whether members will adhere to the new quotas.