TBPN

High Interest Rate Phenomenon

September 15, 2026

Happy Tuesday.

We’re live on YouTube and 𝕏.

The current thing in tech and business is ten-year treasury yields hit 5% for first time since 2023.

Today’s Lineup

Axios Co-Founder & CEO Jim VandeHei at 12:00 PM
Malibu Boats CEO Steve Menneto at 12:15 PM
Jack & Jill Co-Founder & CEO Matthew Wilson at 12:30 PM
AIUC Co-Founder & CEO Rune Kvist at 12:40 PM
Activision CMO Tyler Bahl at 12:50 PM
Former Late Show Host Stephen Colbert at 1:25 PM
Scripto CEO Josh Kline at 1:25 PM
Profound Co-Founder & CEO James Cadwallader at 1:45 PM

Run of Show

High Interest Rate Phenomenon

The yield on the 10-year Treasury note broke 5%, not a great indicator of economic health. Bad for the US government, bad for the prospective American homebuyer, it’s even bad for AI companies with ungodly amounts of money who need ever more to finance the buildout of massive super computers. So headline reason is a war with no end in sight, you don’t exactly need a PhD in statistics to see the correlation here:

War doesn’t always cause interest rates to spike, the underlying issues here are energy prices and inflation. Energy, specifically oil transported through the Strait of Hormuz, is a key pressure point for control of the conflict, and that drives up inflation, which hurts the value of Treasury bonds, causing yields to spike.

It doesn’t always go this way. During Gulf War 1, there was a textbook oil shock. Iraq invaded Kuwait on August 2nd of 1990. The U.S. military buildup began basically immediately, with the Desert Storm offensive starting January 17th, 1991. Interest rates spiked from 8.29% to 9.05% in less than a month, but 6 months later, they were lower than the start of the war, sitting at 8.03%.

The Afghanistan war played out in reverse. Immediately before the invasion, the 10-year was 4.52%, and yields fell to 4.22% in the first month of the offensive. But 6 months into the war, the 10-year hit 5.25%, up significantly from the start of the offensive.

So now Warsh is in a tough spot, the market expects a rate hike to help bring inflation back to target. August consumer-price inflation was 3.4% year over year. The Fed’s preferred inflation measure, the PCE price index, was 3.7% in July, or 3.3% excluding food and energy. Inflation is clearly spilling over from energy into other parts of the economy and it’s complicating the Fed’s case for aggressive easing.

AI is also part of the problem, but could be a piece of the solution. Today, AI creates investment demand before productivity benefits arrive. Data centers require financing, construction capacity, equipment and electricity. That spending happens today, but broader productivity benefits take longer to diffuse. Economists describe AI as a source of upward pressure on real rates (and potentially prices) during the compute buildout. There’s also an interesting indirect effect where the AI-related stock-market boom supports consumer spending (people who make money on SanDisk spend that money in the real economy).

Apollo has an interesting view of what might happen long term with rates given various AI outcomes:

Not an open and shut case by any means, but I don’t find it hard to imagine deflationary effects playing out as things get cheaper to produce. Rough moment right now though for sure. Hard to be optimistic about the future if you can’t afford a house.

Clip Spotlight: Ross Perot nearly owned 70% of Home Depot, a stake that would be worth roughly $230B today, but the deal fell apart because Perot didn’t want the founders driving Cadillacs.

"When [Ken Langone], Bernie, and Arthur were starting Home Depot, Ken took them to Ross Perot and was like, 'We'll just get my buddy Ross to finance this thing.'"

"There was a deal on the table and Ross Perot is going to own 70% of Home Depot and bankroll the whole thing, which today would be worth about $230B."

"The whole thing blew up because Ross tried to dictate the type of car that Bernie and Arthur were going to drive."

"They drove Cadillacs and Ross said, 'My guys don't drive Cadillacs. They drive Chevrolet. If you're going to drive a Cadillac, that's going to be a problem for me.'"

"So the Home Depot guys walked away."

Headlines

FT: Ten-year Treasury yield hits 5% for first time since 2023

WSJ: The Stagnant Housing Market Is About to Face a 7% Mortgage

TIME: The AI Tipping Point

Colossus: Profile of Mark Zuckerberg

WSJ: The People Get a Vote on AI Safety

Bloomberg: OpenAI Says It’s Working With Anthropic, Google on AI Safety

Effort News: A Single Firm is Behind OpenAI, Anthropic, and Meta Hacking Scandals

Jack Dorsey: open the frontier

Bloomberg: Attorney General Blanche Opposes AI ‘Regulation by Prosecution’

WSJ: OpenAI Buys Startup Developing Smartphone Camera

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