Banks, fintechs and lenders are therefore facing more than a repayment target. They also need to bring operating costs down, keep customers’ trust and make sure every action can be reviewed later.

AI and advanced analytics make that possible by changing what collections is for. Rather than a pressure-based final stage, it becomes a strategic capability linked to the full credit lifecycle: approval, account management, early risk warning and fair repayment support. That joined-up view is what end-to-end credit management is about.

Why the Traditional Approach to Collections Is Running Out of Road

Older systems rely on lists of people to call, generic reminders and the same steps for everyone. In doing so, they ignore the factors that count: the point in the month when a customer has money available, the channel they actually answer on, their real ability to repay and any early signs of financial strain.

Contact rates stay low, promises to pay prove fragile and complaint risk rises. This is most visible with digital-first customers, who are far more comfortable with apps, messaging and self-service than with taking a call at a bad moment.

A modern debt collection system should help a lender decide who to approach, at what moment, over which channel, with what wording and with which repayment option, and it must be able to explain and evidence each of those choices.

Replacing Pressure With Well-Targeted Communication

With AI, financial institutions can stop broadcasting to everyone and start communicating in context. Machine learning models draw on payment history, the latest account activity, engagement signals and cash-flow patterns to group customers with much greater precision than before.

The same message no longer has to go to all customers. Frequency, tone, channel and payment options can be tailored to each person’s situation.

One customer may react best to an in-app alert containing a one-click payment link. Another may want to look at an instalment plan first. A third may be showing signs of financial difficulty and needs to be passed to an agent who already has the full picture.

This is the gap between a basic debt collection program and a payment collection platform: the latter is built to help customers reach a solution, not to send more notifications.

Using Automation Responsibly in Collections

Debt collection automation is not about removing people from the process. It is about automating tasks that follow a clear pattern and keeping humans involved wherever judgement, understanding and empathy are needed.

Everyday steps such as verifying identity, communicating the amount owed, reminding customers of due dates, exploring payment plan options and confirming payments can be handled through self-service, chatbots or voicebots. If the system picks up a sign of affordability problems, vulnerability, a dispute or a hardship case, the case should go to an agent along with all relevant context.

Keeping a human in the loop lets automated debt collection be efficient and fair at once. Repetitive work is handled by the system and costs per case fall, leaving agents free to concentrate on the complex cases that call for careful negotiation.

Explainability: Why It Cannot Be Optional

Decisions about credit and debt recovery have real consequences for people, so each one needs a clear rationale. Whenever a customer is offered a certain payment arrangement, contacted through a particular channel or placed higher in a queue, the system should be able to show the reason.

In a regulated financial business, the ability to trace decisions, be transparent and provide reason codes is critical. A well-designed system logs the key drivers of each decision, retains communication records and makes internal review and regulatory oversight straightforward.

Viewed like this, a collection system does more than support day-to-day operations. It forms part of the institution’s wider governance framework.

Collections Belong Within the Full Credit Lifecycle

Debt management should not start only after an account has gone into arrears. Lenders that take responsibility seriously are linking collections with the earlier phases of the credit lifecycle.

At onboarding, the customer is given clear repayment terms and a suitable limit. While the account is being managed, early-warning indicators can flag financial stress before arrears build up. And if the customer does miss payments, the same system should guide the choice of communication approach, payment plan and case handover.

That joined-up thinking is the foundation of end-to-end credit management. When underwriting, servicing and recovery share one set of logic and data, the institution has a single view of the customer from the initial credit offer through to the final settlement of the debt.

Loxon’s collection SaaS platform supports this model, keeping customer communication, self-service payment plans, audit trails and human review together in one process.

Taking Friction Out of Paying

In many cases a customer does not pay because the process is too awkward, not because they refuse to. Quick-pay links, digital wallets, instant bank transfers, transparent fee information and reminders sent at the right time are small touches that can make a real difference to payment rates.

An effective payment collection solution, such as a collection SaaS platform, puts customers in control. They can see their payment plan upfront, move a payment date within policy, update their contact details and check how their plan is progressing, all without phoning the contact centre.

Cloud based debt collection and a digital-first collection app make this practical at scale. For lenders with large portfolios, a centralised digital workflow keeps channels, teams and customer segments working in a consistent way.

Governance Has to Be Designed In, Not Added Later

Collections deals with customers who may be vulnerable, which means governance needs to sit inside the workflow from the very beginning. That includes consent, communication preferences, quiet hours, opt-outs, data minimisation and hardship pathways.

The same applies to content governance. Pre-approved messages, version control, permissions based on role and unambiguous escalation rules help ensure that customer communication follows policy and can be audited.

It is not just a question of compliance; it is a question of brand trust too. Approaching debt management with respect for the customer cuts complaints, improves the experience and safeguards the relationship over the long term.

The Outcomes a Good System Should Track

An effective collection system debt strategy shouldn’t stop at the number of customers contacted. It should measure results that are meaningful for the business and for customers alike, for example:

• Improved contact rates and cure rates
• Reduced collection costs
• Firmer promise-to-pay conversion
• A lower volume of complaints
• Quicker resolution of hardship cases
• Greater audit readiness
• Better insight into portfolio risk

For a lender, the system’s value is not limited to operational efficiency; it also strengthens the resilience of the portfolio. Strategies can be adjusted as customer behaviour, the economic climate or the risk signals within a given segment evolve.

Final Thoughts

When it is used responsibly, AI need not make collections colder or more forceful. It can make debt collection more intelligent, more transparent and more focused on the customer.

The most robust model brings together predictive insight, automated outreach, self-service payment tools, explainable decisions and human review of sensitive cases. That combination moves collections away from being a rigid end-of-process tool and makes it part of end-to-end credit management.

For banks, fintechs and lenders, the long-term prize is stronger debt recovery, less operational friction, better compliance and customer relationships founded on trust instead of pressure.

The post How AI Is Reshaping Debt Collection As A Customer-Centred Banking Function first appeared on FinanceTwitter.

Almog Italie was flying home from a vacation in Japan with his wife and two teenagers, casually snapping pictures of irrigated circles of farmland in the desert below, when the plane suddenly went into a steep nosedive. “It started dropping as if there was turbulence, but crazy. Twenty, 30 seconds of a crazy free fall. It then stabilized and then again started falling,” – said Italie, an Israeli e-commerce worker.

What Italie couldn’t see from his seat in Row 20 on Flight 1073 was a desperate fight unfolding in the cockpit. The co-pilot had stabbed the plane’s captain, who fought back and opened the cockpit door. Seeing a commotion, a small group of passengers and crew members rushed to the front to regain control of the plane.

One passenger, Yaniv Hayun, described how he and another man found the door was unlocked but blocked by the fallen pilot, so they shoved it open. Inside, he saw the injured captain on the ground as the attacking pilot hovered over the controls. Hayun put the attacker, who was trying to disable the plane, in a chokehold before other passengers helped pin him down.

Hayoun said he then grabbed the plane’s controls to help bring it back under control, admitting his move was inspired by watching a TV show which reconstructs real-life air disasters. “I watch Air Crash Investigation, Mr. Prime Minister – really. The plane started to level out a bit, and then the pilot told me he was taking over the controls from there,” Hayoun told Israeli PM Netanyahu.

Afterward, the two pilots lay on the floor of the kitchen area receiving medical care, blood smearing their uniforms and the walls. One passenger looked on in shock, a rivulet of blood running down the middle of his forehead. “They attacked us right now, in this plane,” – he said in a video posted on social media. “They tried to murder the pilot, and we took over.”

Two other pilots who were aboard to operate the next flight assumed control of the plane. Flight data shows they fought for five minutes to stabilize the jet as it pitched up and down amid the unsettled situation aboard and the damage done by a rapid dive during which the plane lost 15,000 feet of altitude in less than a minute.

Once they had it under control, they issued a Squawk 7700, a radio signal indicating a general emergency. Seven minutes later, they changed the alert to a code signaling unlawful interference – used to describe attempts to jeopardize the safety of the airplane, like hijacking or hostage taking. The pilots then steered the plane to an emergency landing in the Saudi city of Tabuk.

The attacker, reportedly an “Omani” co-pilot, was arrested in Saudi Arabia and is expected to be transferred to the United Arab Emirates (UAE), where the plane took off from. The stabbed pilot, Indian national Captain Smit Machchhar, is in hospital in a stable condition, and has been hailed a “true hero” by Israeli Prime Minister Benjamin Netanyahu and India’s leader Narendra Modi.

“Despite being stabbed and seriously injured, he fought back, resisted, opened the cockpit door, and enabled passengers and crew to overpower the attacker – preventing a catastrophic mid-air disaster,” – Netanyahu wrote on X. Modi praised the pilot’s actions, writing on X – “In the face of the gravest danger and despite being seriously injured, he showed immense courage and an unwavering resolve to protect the lives of others.”

Netanyahu told CNN Israel did not have any warning or advance intelligence about the incident on the plane, which was flying 174 people to Israel. However, preliminary findings from a separate Israeli investigation suggest that the attacker intended to crash the plane. The source said the investigation – led by Israel’s intelligence agency Mossad – interviewed passengers after they arrived in Tel Aviv to establish what had happened on the plane.

Israeli Defence Minister Israel Katz called it an “attempted jihadist terror attack“, and praised the Indian captain – “There was a huge miracle and huge bravery and we are grateful to the Indian pilot who was such a hero.” Meanwhile, U.S. President Donald Trump said he had spoken with Netanyahu, and said it seemed as though the attacker was “perhaps a terrorist” or there were other reasons behind the attack.

Saudi authorities had the first crack at interviewing the passengers and crew. They initially assessed that the co-pilot tried to deliberately crash the plane. But they said they don’t yet have a theory about a motive or whether others might have been involved. FlyDubai said it would suspend flights to and from Israel while the investigation into the incident continues.

Interestingly, Oman and Israel do not have formal diplomatic relations, and it is not yet clear how the Omani pilot would have obtained clearance to fly to Israel. Foreign airlines must obtain approval from Israel’s Aviation Security Operation Center before they can operate to and from the country’s airports. Israel’s internal security agency, Shin Bet, is supposed to vet all airlines’ personnel flying into Israel from the UAE.

Israel enforces some of the strictest aviation security protocols in the world, after facing a history of hijackings and terminal attacks. Departing passengers are required to undergo pre-screening and questioning, in addition to multiple passport checks, advanced baggage scanning, and, sometimes, full-body screening.

Benjamin Netanyahu said he sees two possible ways in which the attacker in the Flydubai attempted plane hijacking may have obtained the weapon used to attack the pilot. The co-pilot may not have been required to pass through a metal detector before boarding the plane. “Passengers go through a metal detector but I’m not sure that pilots always do. Then he could have carried a knife, or an axe,” – he said.

Alternatively, he may have used an axe that was already on the aircraft. “He might have gotten an axe from the equipment that might be standard on this aeroplane,” – Netanyahu said. He added, “We’re looking into that, we can’t draw conclusions yet.” The Israeli PM said it has been established that the attacker “underwent Islamist radical indoctrination.”

Netanyahu added that it was clear the attacker had been suicidal. After being pinned down by passengers including a plumber who intervened to thwart the co-pilot’s alleged attempts to jam the plane’s instruments, he called out “kill me,” according to Netanyahu. The Omani national had only been working for Flydubai for eight months before carrying out the attack.

The incident hit one of the most robust links between Israel and the outside world. While many Western carriers have repeatedly cut flights to Israel during the years of conflict, the U.A.E., which signed a diplomatic accord with Israel in 2020, has provided steady connections, with several flights each day between Tel Aviv and the international aviation hub of Dubai.

The scenario echoed other air disasters like the crashes of EgyptAir Flight 990 into the Atlantic in 1999 and Germanwings Flight 9525 into the French Alps in 2015, which some regulators attributed to actions by their first officers. The latter led to requirements that two crew members be in the cockpit at all times. 

“The protocols to try to stop these things from happening in general work very efficiently. But when insiders are involved, inherently, the risk of bypassing protocols is there,” – said Matthew Borie, chief intelligence officer and co-founder of Osprey Flight Solutions. “The vast majority of these post-9/11 security measures in the aviation industry are meant to deal with passengers – to stop people from being able to access the cockpit.”

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The post Terror Hijack – Inside Cockpit Stabbing Of FlyDubai Flight 1073 first appeared on FinanceTwitter.

Justice Noor Ruwena Md Nurdin made the order of discharge and acquittal after allowing an application by deputy public prosecutor (DPP) Ahmad Akram Gharib, who told the court that the prosecution did not intend to proceed with the case in accordance with Section 254(1) of the Criminal Procedure Code. The judge said the prosecution did not disclose the reason for withdrawing the case.

Muhyiddin, however, still faces three charges of using his position to obtain an RM25.3 million bribe for his party – Bersatu – from Nepturis, Mamfor, KCJ Engineering and its director, Azman Yusoff. Still, it’s a huge victory after the scope of his corruption charges was reduced from RM200 million to just RM25 million, and a lesser offence of power abuse rather than corruption and money laundering.

And you know Anwar-led Pakatan Harapan coalition is – shamelessly – preparing to re-unite with Muhyiddin-led Bersatu or the Malaysian United Indigenous Party when the Prime Minister denies speculation of such cooperation. Yes, when serial liar Anwar denies working together again with power-hungry Muhyiddin, you know the reverse is true.

In Malay politics, hypocrisy, flip-flopping, double-standards, double-talk, treachery, betrayal, backstabbing, lies, corruption, and whatnot are breakfast in political theatrics for power. For the right price, both Anwar and Muhyiddin have no problems selling wives and daughters. Integrity, accountability, honesty, consistency, principle, and ethics are not in the dictionary of these politicians who lack shame.

It was an insult to the intelligence of the voters that after more than three years since Muhyiddin was first charged, the Attorney General’s Chambers (AGC) suddenly woke up and realized that it cannot proceed with four charges against Muhyiddin Yassin because continuing the case posed litigation risks that could compromise its remaining corruption charges against him.

Even if everyone in the AGC had been sleeping on the job for the past 3 years, surely the Malaysian Anti-Corruption Commission (MACC), whose recently retired chief – Azam Baki – was repeatedly praised by PM Anwar for showing so-called extraordinary courage in tackling large-scale corruption, could not be that stupid in his decision to charge Muhyiddin if indeed there was no case to begin with. 

When criminal charges are brought against any individual, the standard expectation is that the prosecution has thoroughly evaluated the evidence and established a strong basis to proceed. Therefore, even if the MACC under Azam Baki was tremendously foolish and corrupted, the prosecution under the AGC cannot and should not be so incompetent and clueless.

But Judge Noor Ruwena, in granting a full acquittal to ex-Prime Minister Muhyiddin, revealed that no witnesses or evidence related to these charges had been presented to the court. In other words, the charges by the prosecution were flawed and defective – conveniently at a time when Anwar’s Pakatan Harapan had lost state elections in Sabah, Johor, and Negeri Sembilan.

It’s not rocket science that Mr Anwar has again interfered – secretly and deliberately – to “free Muhyiddin”, the same way he had freed UMNO president Ahmad Zahid Hamidi when kingmaker Barisan Nasional backed Anwar as the 10^th Prime Minister after the November 2022 General Election produced a hung parliament. Zahid received a DNAA (discharge not amounting to an acquittal) for his 47 corruption charges in September 2023.

The only difference this time is Anwar has become slightly smarter. Instead of instructing his appointed Attorney General Dusuki Mokhtar to throw away all charges on Muhyiddin, like how all 47 corruption charges on Zahid were dropped, three charges are being kept to keep Muhyiddin on a leash. Anwar’s mistake saw how Zahid led Barisan Nasional in backstabbing and ending ties with Pakatan Harapan.

Despite Anwar’s denial with chest-thumping statement that Pakatan Harapan (PH) does not believe in a political relationship where parties “divorce and remarry”, hilariously, the same forked-tongue PM also said PH is currently open to discussions with any party ahead of the upcoming Melaka state election, including Bersatu. Muhyiddin was the same man who had previously betrayed the PH government in 2020.

The infamous Sheraton Move in February 2020 caused the collapse of the Mahathir-led Pakatan Harapan (PH) federal government after key factions from Bersatu (led by Muhyiddin Yassin) and a faction from PKR (led by Azmin Ali) withdrew from the coalition. Mr Muhyiddin became the first “backdoor Prime Minister” after officially announced withdrawal from Pakatan Harapan, ending the 22-month-old administration.

Con artist Anwar’s trick now is pretending to maintain a high moral ground by rubbishing a return to a political relationship with traitor Bersatu, but at the same time tasked Amirudin Shari, who is Selangor Menteri Besar, PKR vice-president, as well as PKR election director, to hold “open discussions”. No prize for guessing who Amirudin will discuss with.

Prime Minister Anwar, who is also PH chairman, knew that Amirudin was Azmin’s protégé for over a decade. Traitor Azmin groomed Amirudin within Parti Keadilan Rakyat (PKR) and strongly backed his appointment as the 16th Menteri Besar of Selangor in June 2018 when Azmin moved to the federal cabinet under the Mahathir administration.

Make no mistake – the only reason why Amirudin did not follow Azmin in the Sheraton Move was because he was not even a member of Parliament, thus making his defection useless. Despite a change in their relationship – from mentor relationship into a political rivalry following the 2020 Sheraton Move – both have been quietly maintaining their friendship behind the scenes.

And it’s no coincidence that all the three state seats in the Gombak parliamentary seat, currently represented by Amirudin Shari, are controlled by “three good friends” – Gombak Setia (Bersatu – Muhammad Hilman Idham), Sungai Tua (PKR – Amirudin), and Hulu Kelang (Bersatu – Azmin Ali). Hilman was Azmin’s speechwriter who eventually served as his political secretary and right-hand man.

While there are no permanent friends or enemies, only permanent interests, it would look very bad on Anwar Ibrahim and his Parti Keadilan Rakyat (PKR or People’s Justice Party) if he makes a spectacular U-turn and embraces Muhyiddin, what more his former deputy-turned-traitor Azmin Ali. That’s why he is using Amirudin as a scapegoat to discuss with Bersatu about a potential alliance.

Desperate times call for desperate measures. Both PH and Bersatu are desperate after their respective partners kicked them out. PM-obssessed Anwar thought that by surrendering all concessions demanded by UMNO, including freeing crooked ex-PM Najib Razak, he could remain PM for another 5-year term with support from UMNO. However, UMNO has a different plan.

Power-crazy Muhyiddin, meanwhile, thought he could continue to extract blind support from Islamist party PAS, only to be betrayed – and kicked out – by PAS President Abdul Hadi Awang from the Perikatan Nasional alliance founded by Muhyiddin himself. Without PAS machinery and grassroots, Bersatu was practically wiped out in Johor and Negeri Sembilan state elections.

With UMNO and PAS forming an alliance that is expected to win the next 16^th General Election, most likely capturing all the 112 Malay-majority parliamentary seats, PH and Bersatu would end up as the opposition. While PH lacks the critical Malay votes, Bersatu could tap on PH’s non-Malay votes if both could join forces to give UMNO-PAS alliance a run for their money.

A revival of the previous national cooperation between UMNO and PAS, glorified as “Muafakat Nasional” under the pretext of Malay-unity, would certainly win the next national polls. What is less certain though is whether both Malay-centric parties fighting for the same pool of Malay voters could survive a full 5-year term without breaking up again.

But a PH-Bersatu cooperation isn’t about winning the next general election. They simply can’t form the next federal government because UMNO-PAS would corner at least 80% of Malay votes. The reason why Anwar’s PH is desperate to work with Bersatu is to retain its crown jewel- Selangor. After losing Negeri Sembilan to Barisan Nasional, PKR is left with Selangor as its only power-base.

Yes, not only PH under the arrogant and racist leadership of Anwar would lose power in the federal government, but it could also lose Selangor. In the 2023 Selangor state election, PH won only 34 out of 56 seats, a drop from 45 seats. Azmin led Perikatan Nasional (comprising Bersatu and PAS) to capturing 22 seats, a huge jump from just 5 seats in the 2018 general election. Like it or not, Azmin was still influential.

The Malay votes which Anwar desperately wanted – but fails to win over in the past 4 years – could be delivered by the Malaysian United Indigenous Party (Bersatu). Sabah, Johor and Negeri Sembilan state election results prove that the Malay community does not trust the chameleon despite Anwar’s endless – and melodrama – whining, crying, and bitching about Palestinians, Malays, Muslims, Islam, and whatnot.

Worse, Selangor PH under the same clueless Amirudin leadership happily shot itself on the foot by demolishing Hindu temples, and cracking down on pig farming at a time when the genius PM Anwar unleashed economic havoc such as new taxes, e-invoice system, delayed tax refunds, scrapping fuel subsidies, mandatory EPF contributions for foreign workers, and the list goes on.

If ethnic Chinese and Indians, the core supporters of PH – stay at home or worse, vote for the rivals as part of a protest vote, Selangor is lost. Therefore, Anwar hopes to combine Bersatu Malay votes with PH non-Malay votes to at least retain power in Malaysia’s most developed state. To do that, he has to cooperate again with the enemies who had once betrayed him.

The burning question is when to officially announce a PH-Bersatu alliance. Both would lose their shirts in the upcoming Melaka state election. It could backfire, with PAS and UMNO mocking the return of Anwar and Azmin together – both tainted with sodomy and gay sex video. Hence, it’s a risky business for PH to test the water in Melaka as it can’t win anyway. For now, both Anwar and Azmin have to pretend there isn’t any cooperation.

With 15 months remaining of his administration, Anwar Ibrahim is running out of time. While he has no problem hugging and kissing Azmin again for the sake of power, it would be interesting to see if the Democratic Action Party (DAP) under the spineless leadership of Anthony Loke Siew Fook would similarly – and shamelessly – embraces traitors Muhyiddin and Azmin. Still, a PH-Bersatu cooperation could do more harm than good to PH.

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The post Saving Selangor – Anwar-led PH To Welcome Bersama & Azmin first appeared on FinanceTwitter.

After officials literally rolled out the 100ft (30m) red carpet, Trump and First Lady Melania shook hands with Xi and his wife Peng Liyuan once the Chinese president descended from his plane at Joint Base Andrews, a US military airfield outside Washington. Trump, wearing a long coat and gloves, and Xi then stood side by side on the tarmac as a military band played national anthems.

Ahead of Xi’s arrival, U.S. Treasury Secretary Scott Bessent announced that the U.S. and China will extend their trade truce, which was set to expire 10 November 2026 to January 2027. Even though the three-day summit is expected to be more about spectacle than substance, it shows desperation on the American side to smooth tensions on everything from AI (Artificial Intelligence) and trade to Iran.

The unusual ceremony at the airport demonstrated how much the U.S. leader is seeking to impress his counterpart. In a normal protocol, Trump would wait for Xi to drive up to the White House. In comparison, Chinese President Xi Jinping did not receive U.S. President Donald Trump as he arrived at Beijing International Airport on May 13. Chinese Vice President Han Zheng was there instead. 

It’s not hard to understand why Trump has made it clear he wants to wow Xi, and has very interest in flexing muscles. He has enough on his plate to pick up another round of fights with China. A perfect storm is forming in the financial market – selloff in the U.S. bond market, fighting words from an Iranian official at the U.N., hawkish comments from a Federal Reserve governor and a weak auction of government bonds. 

The 10-year Treasury yield closed at 5.113% on Wednesday (September 23), blowing past the recent highs at levels unseen since 2007. The 30-year U.S. Treasury yield has topped 5.43%, putting it on track for its highest close since 2004. Borrowing costs are surging in Asia and continue to rise in Europe. Oil prices are rising, with the most actively traded Brent contract, for December delivery, trading right around US$100 a barrel.

From an intractable conflict in Iran to a seemingly indestructible U.S. economy, it just “doesn’t make sense to a lot of people to own bonds here,” – said Christopher Sullivan, chief investment officer at the United Nations Federal Credit Union. Even Japan’s 10-year bond yield jumps to highest since August 1996.

Government bond yields, which rise when bond prices fall, have been climbing for months, and their rise is already rippling throughout the economy, impacting everything from mortgage and credit card rates to private-equity firms’ willingness to make debt-fueled acquisitions. At the same time, the uptick in yields still doesn’t seem like it has done enough to broadly slow the economy.

That has only caused yields to rise further, as investors bet that the Fed will have to raise rates even higher than previously anticipated to have any real success in bringing down inflation. Investors now see a 73% chance that the Fed will lift interest rates again next month, according to CME Group data – up from 55% last week and 11% last month.

Looking further out, investors expect hikes to keep coming. Traders see a roughly 50% chance that interest rates will be at least one full percentage point higher around this time next year – a scenario that was barely on their radars just a month ago, thanks to strong economic data, higher oil prices and comments from a Fed governor backing further rate increases.

The bad news for bonds started early on Wednesday, when oil prices spiked in European trading. Traders who had hoped for U.S.-Iran diplomacy during the ongoing United Nations General Assembly in New York were less than thrilled with comments from Iran’s president, who said his country won’t fully open the Strait of Hormuz as long as sanctions remain in place.

The U.S. 10-year yield drifted higher early. Then, at 9:45 a.m. in New York, a monthly business survey that is rarely known for moving markets turned heads. Izaac Brook, U.S. rates strategist at RBC Capital Markets, was on a plane about to leave from New York to Minnesota when the headlines broke about the survey, known as the S&P Global Flash U.S. Composite PMI.

The report, based on a survey of services and manufacturing firms, showed businesses growing at the quickest pace in more than five years and the fastest job growth in more than four years. Brook got a quick glimpse of the market’s reaction – a sharp jump in yields on short and longer-duration bonds – before turning his phone onto airplane mode. 

When he arrived at his destination a few hours later, the strategist said he had “a million” messages from people asking what was happening. “It just is so hard for people to be constructive right now,” – Brook said. “You can look at the levels and say these are really attractive. But we’ve been playing that game for the past six months, and every time we’ve tried to draw a line in the sand somewhere, it just keeps going.” 

The Fed last week raised interest rates for the first time in three years, and the market is anticipating further hikes. That sentiment got further fuel just after 10 a.m. when remarks by Fed governor Michael Barr hit the newswires. “Inflation is above our 2% target and not clearly trending toward target in a timely way,” Barr said in a speech in Chicago.

He noted that risks that could prevent the Fed from achieving its inflation target have risen. The concern among investors is that “the Fed is willing to hike to constrain inflation despite a lot of the pressures coming from supply shocks, which could mean unrelenting hawkishness,” said Dhiraj Narula, U.S. rates strategist at HSBC. 

Meanwhile, traders were waiting for the Treasury Department to announce the size of its planned bond buyback operation set for Thursday. That announcement came – US$6 billion – but had little effect on the selloff. Then at 1 p.m., the federal government’s auction of fresh 5-year Treasury notes was met with weak demand.

The notes were sold at a yield well above what traders had anticipated, and bond dealers that are required to bid at auctions were forced to take down an unusually large share, pointing to a lack of interest from other potential buyers. Investors had little interest in buying bonds right when their prices were tumbling. The poor result only caused more alarm, driving yields still higher.

All in, it was the worst day in nearly 18 months for U.S. government bonds. Major stock indexes also slipped, but not as far as some traders might have expected on a day when debt benchmarks that affect rates on everything from corporate bonds to mortgages soared. 

Few are denying those were contributing factors. But there was also something else behind the scenes, according to market watchers – traders being forced out of their positions. “The move has the hallmarks of a pain trade and forced selling by investors at these more elevated levels and could have further to run,” – said MUFG Bank’s Derek Halpenny in a note today.

Mohit Kumar, chief European economist at Jefferies, had the same assessment – “The main driver was likely stop outs and position unwinds. There appears to be a lot of pain on the street in fixed income.” In recent weeks, many traders had been making a popular fixed-income bet known as a “steepener”, betting that the gap between short- and long-dated bond yields would widen.

Instead, that gap has narrowed as traders have rapidly adjusted their interest-rate expectations. Active traders “either had steepeners or outright longs at the front end of the curve. Some of the positions had been cleared in the last two weeks, but yesterday saw another round of washouts,” – Kumar said. A new round of U.S.-China tariff war would push up inflation even higher.

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The post A Perfect Storm – Something Else Causing Bond Market Havoc first appeared on FinanceTwitter.

China bought around 1 million metric tons of US soybeans just days ahead of Trump-Xi summit. In fact, after Mr. Trump and Mr. Xi met last October, China bought 12.4 million tons of soybeans from the United States in 2025. But that’s about it. Trump had tried – and failed – to bring China to its knees during his first term, and the tariffs war in the current second term has similarly failed spectacularly.

President Xi, meanwhile, has only one priority when he meets President Trump on the American soil – Taiwan. The Chinese leader has already “kautim” Taiwan main opposition party. In April, Cheng Li-wun, chairwoman of the Kuomintang, or KMT, traveled to mainland China for a red-carpet six-day tour, the first such visit in nearly a decade. Cheng also got an audience with Chinese leader Xi Jinping.

His hands were as “soft as clouds,” – Cheng said later after she shook hands with Xi in Beijing. What hasn’t been revealed publicly – months earlier, Chinese officials met with KMT negotiators to hammer out language Cheng would use during her trip. Cheng even shared advance copies of prepared remarks in which she made clear she opposed independence for Taiwan.

The visit set off alarm bells in Taiwan, whose government is suspicious of Beijing’s intentions. It also revealed a new chapter in China’s efforts to win control of the self-ruling island democracy, which it regards as part of its own territory – without ever firing a shot. Xi doesn’t want to bomb Taiwan the same way Trump attacked Iran. Beijing has a different strategy.

Even as China continues to apply military pressure on the island, it is intensifying efforts to drive a wedge through Taiwanese society, courting opponents to formal Taiwanese independence such as Cheng, and sowing doubts about America’s commitment to the island. The goal – to convince more Taiwanese that resistance to Chinese control is futile.

Xi sees an opening because of rising concerns in Taiwan that Trump might be willing to sacrifice support for the island in return for better relations with Beijing. Trump has at times echoed Chinese talking points on Taiwan’s government, and repeatedly accused Taiwan of having stolen the U.S. semiconductor industry, a charge Taipei rejects.

The U.S. president has also withheld approval on a US$14 billion arms sale to Taiwan, describing the package as a good bargaining chip in negotiations with China. A recent Brookings Institution poll found that only 24% of Taiwanese voters consider the U.S. a trustworthy ally, even though Taiwan has begun acknowledging long-concealed U.S. military training on the island.

Taiwan is trying to spend 5% of its economy on defense by 2030, but it will struggle to reach that NATO standard absent faster U.S. weapons deliveries. Taiwan’s internal politics is divided, and a U.S. delay would feed anxiety that America is unreliable and help those on the island who think Taiwan must accept a Hong Kong-style takeover. 

Beijing views Trump’s second term as a “rare window of opportunity” to sway Taiwanese opinion in the mainland’s favour, said Chiu Chui-cheng, minister of Taiwan’s Mainland Affairs Council, the government body that oversees cross-strait policy. “They think Trump’s unpredictability on U.S. commitments gives Xi more room to operate.”

Xi is expected to keep pressing Trump on Taiwan when the two meet in Washington this week. Xi’s aim, Chinese policy advisers say, is to coax Trump into expressing clearer opposition to Taiwanese independence, further narrowing the space for Taiwan to resist. China’s Foreign Ministry called Taiwan “the core of China’s core interests.”

At the same time, Beijing is trying to exert more influence on the ground in Taiwan. One way it hopes to do that is by working with Cheng, a 56-year-old former legislator and TV talk-show host who emerged unexpectedly last year as the head of the opposition in Taiwan and a possible future presidential candidate. She has made warmer relations with Beijing a priority. 

Tall and telegenic, with smartly tailored suits, she has a delivery so forceful that organizers of a press briefing late last year stopped to re-test three microphones before concluding she simply speaks at what local journalists described as “talk-show volume.” Cheng and her supporters say she has no plans to bend to Beijing and simply wants to promote better relations. 

“Many friends in the international media have asked me whether I am pro-China or pro-U.S.,” – Cheng said during a party meeting in Taipei. “I ask in return: Why can’t I choose both? Why must I choose a side?” “We will never forget the friendship and generosity of the United States,” – she added. “But at the same time, mainland China is our family, and we could never bring ourselves to harm our own flesh and blood.”

In addition to courting the KMT, Beijing is flooding digital spaces with content mocking the ruling Democratic Progressive Party (DPP), and amplifying narratives that Washington will abandon the island, leaving China as the only partner Taiwan can trust. Taiwan’s National Security Bureau said in a report earlier this year that Beijing had launched an “all-out” cognitive warfare campaign via online platforms.  

Taiwan has claimed that mainland-generated AI disinformation campaigns have been detected supporting Cheng’s election as chairwoman of the KMT party last year. The officials ultimately determined the campaign helped tilt the election in Cheng’s favor, calling it interference by Beijing in a Taiwanese political party.

Of course, Beijing has long denied involvement in disinformation campaigns. It says Taiwan is an inalienable part of Chinese territory, and it will do whatever it takes to bring the island under mainland control. Military pressure remains a major way for Xi to squeeze Taiwan. In early August, Beijing said it had imposed traffic control measures on ships passing through the strait’s southern entrance.

People familiar with Xi’s thinking say persuading more Taiwanese to reconcile with Beijing could enable him to show momentum, without the dangers of a war. Overall support for unification in Taiwan has fallen to under 8%, from 22% three decades ago, according to a long-running National Chengchi University poll. But about 21% of under-20s held a positive view of China in a poll last year.

Many young Taiwanese haven’t lived through decades of tensions with the mainland, and some embrace Chinese popular culture. Beijing has worked with influencers on YouTube and TikTok, offering them sponsored trips and VIP treatment in exchange for content that echoes Communist Party talking points, according to an Australian Strategic Policy Institute analysis.

Taipei restricted access to one of the most popular Chinese social-media platforms, Xiaohongshu, in December, amid fears it could be a vehicle for soft-power influence. Taiwan is gearing up for elections in November for mayors and other local positions that could bring more politicians sympathetic to Beijing into positions of power. 

While officially opposed to immediate unification, the KMT is generally seen as friendlier to Beijing than the DPP, attracting Taiwanese voters who favor calmer relations over confrontation. When the KMT last held Taiwan’s presidency, from 2008 to 2016, it fostered closer economic and political ties with the mainland, including the start of direct cross-strait flights. 

Cheng, the KMT chairwoman, got her start as a student activist in pro-democracy protests against the KMT, advocating Taiwanese independence. But she left the DPP in the early 2000s and joined the KMT, the more Beijing-friendly party – though her embrace of closer ties with China would come years later. Her history of shifting positions makes her more useful to Beijing.

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The post Rare Window – How Xi Hopes To Swing Trump Against Taiwan first appeared on FinanceTwitter.

This transformation is also changing how investors, engineers, policymakers, and industry professionals evaluate aerospace and security companies. Instead of focusing only on traditional hardware, attention is increasingly moving toward the software, electronics, data infrastructure, and research capabilities that make modern platforms effective. Understanding these technologies provides a clearer view of where the sector may be heading and why innovation is becoming such an important competitive advantage.

Artificial Intelligence Is Reshaping Aerospace Systems

Artificial intelligence is becoming one of the most significant technologies influencing aerospace and security. Modern aircraft and defence platforms can generate enormous quantities of information from radar, cameras, communications equipment, navigation systems, and other sensors. AI can help process this information more quickly, identifying patterns and highlighting potential issues that would be difficult to detect manually.

The value of AI is not limited to autonomous weapons or military applications. Aerospace manufacturers can use machine learning for predictive maintenance, flight optimisation, logistics, quality control, and simulations. Commercial aviation can also benefit from systems capable of analysing aircraft performance and identifying maintenance requirements before they develop into expensive operational problems.

However, the increasing use of AI also creates new responsibilities. Systems operating in safety-critical environments must be reliable, explainable, secure, and carefully tested. Institutions such as NASA and the Federal Aviation Administration have emphasised the importance of rigorous safety practices as automation becomes more sophisticated. Human oversight remains essential, particularly when technology is being deployed in complex or unpredictable environments.

Advanced Sensors Are Creating a More Connected Picture

Sensors represent another major area of aerospace innovation. Radar, infrared cameras, electro-optical systems, satellite imagery, and other sensing technologies allow platforms to gather detailed information across enormous distances. Improvements in sensor resolution, processing speed, and integration are helping turn raw observations into useful operational intelligence.

The next generation of aerospace platforms will increasingly depend on combining information from multiple sensors rather than relying on a single source. This approach, often described as sensor fusion, can provide a more complete understanding of changing conditions. A system may combine radar information with optical imagery, location data, communications signals, and information from other platforms to produce a clearer operational picture.

The importance of these capabilities extends beyond defence. Satellites equipped with sophisticated sensors can support weather monitoring, environmental observation, disaster response, navigation, and communications. As space becomes more commercially important, companies capable of developing reliable sensing and data-processing technologies may find themselves serving customers across several industries rather than relying on a single market.

Cybersecurity Is Becoming Part of Aerospace Engineering

As aerospace platforms become more connected, cybersecurity is becoming inseparable from engineering. Aircraft, satellites, ground stations, command networks, and supply chains increasingly depend on digital systems. Connectivity creates valuable opportunities, but it also introduces additional points that must be protected against disruption, unauthorised access, and data compromise.

Security therefore has to be considered throughout the development process rather than added after a system has already been designed. Secure communications, authentication, encryption, network segmentation, software testing, and continuous monitoring are becoming important components of modern aerospace architecture. The same principle applies to suppliers because vulnerabilities in one part of a highly interconnected supply chain can potentially affect an entire platform.

For investors following the sector, this shift makes technological expertise particularly relevant. Looking at the Elbit stock price, for example, can be one way of exploring how market participants evaluate a company operating within the broader defence technology landscape. However, a share price alone does not explain a company’s technological position. Research capabilities, contracts, product development, financial performance, and long-term demand should all be considered when assessing an aerospace or security business.

Autonomous Systems Are Expanding Operational Capabilities

Autonomous technology is another area likely to influence the future of aerospace and security. Uncrewed aircraft and autonomous systems can perform tasks that may be dangerous, inefficient, or impractical for humans. Their potential applications include surveillance, reconnaissance, inspection, mapping, search and rescue, and monitoring remote infrastructure.

The technology is progressing from simple remote-controlled platforms toward systems capable of responding to changing conditions with greater independence. Improvements in navigation, computer vision, communications, and AI are helping autonomous platforms operate in environments where constant human control may not be practical. At the same time, responsible development requires clear boundaries around decision-making and appropriate human supervision.

Conclusion

The future of aerospace and security will be built on systems that can sense more, process information faster, communicate securely, and operate with greater adaptability. AI, advanced sensors, cybersecurity, autonomous platforms, and space infrastructure are already influencing how the industry approaches these goals.

The most promising developments will not necessarily come from the most visible piece of hardware. They may come from the technologies working quietly behind it, connecting data, improving decisions, and making complex systems more resilient. As these capabilities continue to mature, technological integration will remain one of the defining forces shaping the next generation of aerospace and security.

The post The Technology Behind the Next Generation of Aerospace and Security first appeared on FinanceTwitter.

In the same highly suspense thriller movie – “Birds of a Feather Flock Together” – Anwar Ibrahim initially pretended to be surprised over a sudden move for a fresh clemency for Najib, only to spin that the house arrest – the first of its kind – for Najib does not undermine his government’s principle of taking firm action against all cases of corruption and abuse of power.

The best part of the movie was when the Pakatan Harapan Presidential Council led by Anwar shamelessly screamed that “no one is above the law” despite Najib’s special privilege. Hilariously, it also lectured that “anyone who is convicted of an offence must serve their sentence according to the law as enshrined in the Federal Constitution,” while determined to continue efforts to combat corruption, and uphold the “Reformasi” (or rather “Reformati”) agenda.

For their stunning performances, drama king Anwar and drama queen Hannah have won the “Best Actor” and “Best Actress” respectively. The story, along with stunning flip-flopping, contradictory, treachery, and betrayal were incredibly mind-blowing that the Malaysian movie could give “Spider-Man: Brand New Day”, which overtakes “Star Wars: Force Awakens” as highest-grossing movie of all time, a run for its money.

The suspense saw moviegoers stop munching popcorns when two vehicles from the Prison Department visited the residence of Najib in preparation for the house arrest barely 24 hours later, only for Home Minister Saifuddin Nasution to admit that his ministry has yet to receive a formal order on the Pardon Board’s decision. Worse, he has no clue about the location for Najib’s house arrest.

Saifuddin, who failed to win any awards due to his incompetency, has added more fuel to the fire when he also admitted that the Cabinet had agreed only in principle for the government to draft a House Arrest Bill for tabling in Parliament. In the same context, Saifuddin actually revealed that Malaysia currently had no specific legislation governing the arrangement, which means Najib’s house arrest is absolutely “illegal”.

In a December 2025 High Court ruling that dismissed Najib’s judicial review application over an addendum order to allow him to serve the remainder of his prison sentence at home, Judge Alice Loke had said the house arrest order was not able to be executed under existing Malaysian law. No prisoner in Malaysia has previously been allowed to serve a sentence under house arrest. Najib’s case could open the floodgates.

But Anwar and Hannah were not the only winners. The film also won “Best Supporting Actor”, where Anthony Loke – popularly recognized for his comical role as the Number Plate Minister – had won the category in the 2026 Academy Awards. Hours after Najib’s house arrest was approved, DAP under Loke’s leadership said it will convene (again) an emergency central executive committee (CEC) meeting.

After three hours of meeting, the camera zoomed on Anthony Loke. Under the lame excuse of political stability, Ah Loke said – “After three hours, we decided that the best move was for me to offer to resign as the Transport Minister. It only involves me. As for the others, they will remain in the government.” Does that mean other DAP ministers, deputy ministers, and political appointees agree with Najib’s house arrest?

Sacrificing himself was a clever tactical and psychological move to scam some dumb DAP hardcore supporters that both Loke and DAP still have some principles, even though it was too little too late. It gives them the bragging space, the political narrative, and the cheap excuse that Anthony Loke was not power crazy, and DAP has not betrayed the trust of the Chinese voters.

But Loke’s reluctant resignation has raised a burning question – what happens to Perak DAP chairman Nga Kor Ming’s pledge to resign if UMNO secured a landslide victory in the Johor polls and Najib is freed? In order to cling to power, perhaps DAP spin doctors may argue till foaming at the mouth that Najib’s house arrest does not tantamount to being freed.

Defending his colleague Hannah’s role on the Pardons Board, Loke cracked an amazing joke when he said that Yeoh had consistently articulated the party’s core principles and discharged her constitutional duties candidly in the national interest. In comparison to Prime Minister Anwar, Loke is a rookie. But the Transport Minister is a fast learner in not only apple-polishing the PM, but also in hoodwinking the Chinese community.

Still, Anthony Loke Siew Fook was no match to Hannah Yeoh Tseow Suan. The drama queen praised – even prayed – that Anwar Ibrahim deserves a second term in Putrajaya to continue his work and reforms. When she was criticized by film critics, her blind supporters religiously – and blindly – defended her as the most “hardworking” minister. Indeed, she has been so hardworking that Najib is granted the house arrest.

In fact, had not movie producer replaced Zaliha Mustafa, who played the role as the (former) Federal Territories Minister in the first part – “Indecent Proposal” movie – that saw Najib’s 12-year jail sentence halved to 6 years and fines slashed by 75% to RM50 million from RM210 million, Hannah Yeoh would not have the opportunity to outshine her predecessor, and wins the Oscar.

Make no mistake – even though the house arrest was granted on the condition that Najib pays a RM50 million fine, which is peanut for the billionaire crook, the laughable condition was deliberately designed to reduce the negative impact on Anwar’s reputation and image as a (fake) reformist, as well as to appease angry voters before the next 16^th General Election, which could be called any time soon.

The film also won the “Original Screenplay” award. Under the same pathetic Anwar government, Najib was first gifted with a reduced sentence courtesy of Zaliha, a PKR lawmaker, before being honoured with a house arrest thanks to Yeoh, a DAP lawmaker. Essentially, PM-obssessed Anwar had achieved what his predecessors – Mahathir, Muhyiddin and Sabri – failed to achieve.

In the same breath, hardcore loyalists of Anwar and Loke deserve congratulations for their undivided support, without which Najib may not be able to walk free from the Kajang Prison so soon. For almost four years since November 2022, the mantras – “If not Anwar, who else”, “If non-Malays do not support Anwar, the alternative is worse”, and “Anwar is the best among the worst” – were used to scam ethnic Chinese and Indians.

However, despite being betrayed, Anwar and Ah Loke fanatics are expected to remain loyal. No matter how ridiculous the political theatrics are staged, they could not get enough of movies produced by PKR (People’s Justice Party) and DAP (Democratic Action Party). When new film-makers like Bersama entered the industry to provide options, the new player was quickly condemned as market spoiler.

Now that PKR president Anwar and DAP secretary-general Loke have again “facilitated” – either directly or indirectly – a house arrest for Najib to serve his remaining jail sentence in his luxury mansions, the same gullible loyalists should start celebrating, not complaining about the finale. After all, it was their blind support that has emboldened the PKR and DAP top leadership to kowtow to UMNO’s every demand.

They could cook fabulous excuses in defence of Anwar and Ah Loke by shifting the blame to the King, knowing very well that the monarch is untouchable. Pro-Anwar loyalists, bloggers, propagandists, cyber troopers, YouTubers, and TikTokers would argue that it was the King’s decision to approve Najib’s house arrest, therefore, PKR and DAP top leadership are innocent and should not be blamed.

A congratulation also ought to be extended to Malaysia’s Monarch, a powerful sultan from a southern state, for commuting Najib’s remaining jail term to house arrest in recognition of the ex-Premier’s past contributions to the country – especially in enriching Malaysia with a combined “RM51.4 billion debt”. His role in the script is important as a Malay Ruler cannot be questioned, let alone criticized. 

Competing with the “Birds of a Feather Flock Together” was another film called “Pirates of Malaysia” produced by the United Malays National Organisation (UMNO). While this movie failed to win “Best Actor” and “Best Actress” awards, it easily won the “Best Director” and “Best Picture” awards for persistently fighting for the release of “Bossku” Najib Razak, who happens to be a former UMNO president.

Cash to the tune of RM114 million seized in 2018 from Najib’s children posh apartments – Pavilion Residences – had already been returned to the former Prime Minister as early as 2021. However, UMNO, while celebrating the release of their corrupt leader, must pretend that it is struggling to raise money for Najib to scam its own gullible Malay supporters. That alone won them award in the “Film Editing” category.

Interestingly, Najib was the chief private funder of the Oscar-nominated 2013 hit “The Wolf of Wall Street” starring Leonardo DiCaprio. His stepson, Riza Aziz, co-founded the Hollywood production company Red Granite Pictures, which produced the Hollywood film using at least RM240 million misappropriated from Malaysia’s 1MDB state investment fund.

After “Indecent Proposal” and“Birds of a Feather Flock Together”, there could be a third part to the highly successful film. A new King may emerge to grant a third pardon for Najib’s ongoing 1MDB corruption charges. Anonymous sources say the third film – the final – could be called “The Lord of Corruption: The Return of The Crook”.

Although Najib may have got his wish for house arrest in this latest twist in the saga, there is still the High Court ruling in December 2025 to abide by. Najib had been sentenced to an additional 15 years in prison after being found guilty in his second major 1MDB trial. He was also fined RM11.4 billion, in default of which he would serve another 10 years in prison.

Still, the “Birds of a Feather Flock Together” has left some mysteries unsolved. Why Anwar and his sidekick DAP dramatically succumbed to UMNO’s pressure for Najib’s house arrest, barely a week after agreed to postpone it? At best, Anwar – a royal hand-kissing con artist – was pressured by the Monarch to strike a deal with UMNO to stop the corrupt party from withdrawing support for the Madani government.

At worst, 79-year-old Anwar, sensing a huge defeat in the upcoming 16^th General Election, is buying an insurance in advance by appeasing UMNO with a grand gift. Hedging his bet with UMNO could help him escape prison again. In the eventuality of another hung parliament, Anwar and Loke hope – and fantasize – about another round of unity government with UMNO-led Barisan Nasional alliance.

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The post Najib’s House Arrest – Oscars For Anwar, Hannah, Loke & Fans first appeared on FinanceTwitter.

Despite President Trump’s demands to cut rates, the central bank’s tougher stance on monetary policy comes as the Fed struggles with stubborn inflation, worsened by a recent rebound in oil prices. At his press conference, Fed Chairman Kevin Warsh said that neither he nor his fellow policymakers are happy with the current pace of inflation.

“Our predominant focus is on the price stability side of our mandate,” – he said. “The plain fact is that inflation is too high and has been for too long.” The central bank aims for inflation of 2% over the longer run, measured using the personal consumption expenditures price index. However, inflation has remained above that target for more than five years.

Fresh data has given policymakers reason to remain concerned. The August Consumer Price Index released last week came in at 3.4%. Iran War in the Middle East and Trump’s tariff policies have only added to price pressures. Crucially, the US economy has remained strong enough – continue growing whilst the labour market remains relatively resilient – for the Fed to do something about it.

A stable unemployment rate was another factor which had given the Fed confidence that the economy can withstand higher borrowing costs while it focused on getting inflation under control. When the Fed raises its benchmark rate, borrowing generally becomes more expensive across the U.S. economy. That can mean higher rates on mortgages, car loans and business borrowing.

The committee was more united than it had been in months. At the July meeting, when the Fed held rates steady, three officials dissented in favor of raising them. In June, at Warsh’s first meeting as chairman, the officials’ projections showed a clear split over whether hikes would be needed this year. The unanimity this round reflected a shift in how officials see inflation.

Theoretically, a higher interest rate may see consumers put off big purchases. Companies may think twice about expanding or investing. Eventually, spending slows down. Slower demand can in turn reduce pressure on businesses to raise prices, helping to cool inflation. Of course, the White House under the Trump administration disagrees.

The Fed’s decision to hike interest rates isn’t economically justified and won’t address the main factor contributing to high inflation, White House spokesman Kush Desai said. “Today’s rather unfortunate decision by the Federal Reserve to hike interest rates was not, from the administration’s point of view, backed by a particularly compelling economic case,” – Desai said in a Fox News interview.

“To the extent that we still do have inflation, as the president and others have noted, it’s entirely driven by an energy supply shock, by what’s going on with oil prices in the Middle East,” – Desai said. “These are things that have nothing to do with interest rates and are not affected really by higher interest rates.” Even then, the president was selective about which war was the culprit.

Refused to take responsibility, Donald Trump had claimed two days earlier that rapidly rising global diesel prices were “mostly caused by the Russia-Ukraine War, not Iran War.” Desai argued – “All higher interest rates are going to do right now is stymie the significant economic progress that the United States has made under this president.”

While Treasury Secretary Scott Bessent and other White House officials have said they respect the independence of the Fed and its chairman, Kevin Warsh, they have generally said they don’t see the need for rate increases. President Donald Trump has been more explicit, going so far as to threaten to sever trade ties with some nations if the Fed doesn’t cut.

Regardless of factors or excuses, the problem is that the effects of monetary policy take time to filter through the economy, and raising rates too aggressively carries risks. Higher borrowing costs can weaken economic growth and employment, which is why the Fed has to balance its goal of stable prices with its mandate to support maximum employment.

The calculation facing policymakers is therefore whether inflation poses a greater risk than the potential economic damage caused by tighter monetary policy. Federal Reserve Chairman Kevin Warsh underscored the importance of stabilizing consumer prices to grow the U.S. economy. “Price stability is foundational to economic growth, and I think we took an important step today to deliver it,” – said Warsh.

But the surprise was not about the 0.25% interest rate hike – the first time since July 2023, but rather the unexpected hawkishness of Warsh, so much so he provided guidance on future hikes, which surprised the markets. Higher US interest rates can make dollar-denominated assets more attractive to investors, supporting the U.S. currency and putting pressure on other currencies.

Already, the U.S. dollar skyrocketed to a seven-week high following the Fed’s decision as markets reassessed how high U.S. rates could go. A stronger US dollar can make imports priced in dollars more expensive for Asian economies. It can also tighten financial conditions, particularly for companies and governments with dollar-denominated debt.

If inflation stays elevated and the Fed sees tighter policy as the only remedy, Morgan Stanley said the likely channel is falling asset prices – “The first thing to go would likely be financial prices and then maybe consumption.” With 10-year Treasury yields around 5% and mortgage rates near 7%, housing, car purchases and discretionary spending were already cooling.

Fed tightening campaigns have often continued until something gave way. In 2018, a late-year stock selloff helped persuade officials to end a mild rate-hike campaign designed to pre-empt inflation, which had only just reached 2% after years below it. In 2023, the collapse of Silicon Valley Bank, which touched off a broader regional banking scare, came a year into the Fed’s most aggressive increases in four decades to combat very high inflation.

JPMorgan said investors may need to reassess valuations if the Fed remains hawkish into 2027, particularly for technology stocks that are relatively sensitive to interest rates. Another hike is possible i December, although some analysts bet there could be as many as three hikes this year. Former Treasury advisor Joe LaVorgna sees the Fed hiking “at least four” times while inflation stays well above the central bank’s 2% target.

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The post Inflation Too High, Too Long – Fed Hikes Interest Rate, Another Coming first appeared on FinanceTwitter.

Yields were edging up again on Friday (Sept 11) after briefly dipping following the August inflation report – which bolstered expectations for a rate increase at Wednesday’s Fed policy announcement. U.S. money markets priced an 87% probability that the Federal Reserve will hike rates by 25 basis points on Wednesday – pushing the dollar’s value against a basket of currencies called the DXY dollar index.

The 10-year bond yield was 4.95% around midday Friday, just 5 basis points from the important 5% threshold that represented a danger zone for stocks. It briefly spiked to 4.99% earlier in the day. In early morning Monday (Sept 14), the yield spiked to 4.996. Exactly what makes 5% such a feared threshold among investors?

There’s nothing inherently catastrophic about the number itself, but 5% yield has become the level to watch largely because the 10-year yield has rarely broken through that threshold in recent history. Beyond a short-lived bond market freakout in 2023, the last time the 10-year yield rose past 5% was in 2007, in the months leading up to the start of the Great Financial Crisis.

“Traders look at round numbers, and above 5% means that the next stop could be 5.5% and 6%,” – Jose Torres, a senior economist at Interactive Brokers, said. “And in this post-Great Financial Crisis economy, it’s not a yield that’s tolerable for financial markets.” The 20-year and 30-year yields have already breached the 5% mark, but the 10-year, which most directly influences borrowing costs like mortgages and corporate loans, tends to have more “gravitas” in the eyes of investors.

{ How The U.S. Bond Market Works }

A U.S. treasury bond is essentially the U.S. government packaging up its debt and selling it to investors with a promise to pay interest. Investors can buy bonds that mature at different rates – a two-year note will mean an investor gets their money back quicker than a 30-year bond, but typically with lower interest. Think of it like the interest rate the bank pays you when you keep your money in their fixed deposit.

When it comes to measuring the bond market, investors pay attention to the yield rate for each type of bond. The yield is the rate of return that investors who purchase that type of bond can expect to receive once the bond matures, and it fluctuates based on the price of the bond itself. A higher yield rate means more investors are trying to sell off their bonds and are willing to offer more to get it off their hands.

Activity in the bond market provides an insight into how investors are feeling about the US economy, even more so than the stock market, which can get outsized boosts from industries that are doing particularly well, like AI and tech, even when other sectors of the economy are faring less well. Higher yields in the bond market point to concern about not only rising inflation, but also lack of confidence about the U.S. economy.

{ 5% Means Higher Borrowing Costs }

Markets also consider higher borrowing costs a negative in and of themselves. The 10-year yield hitting 5% immediately draws attention to higher mortgage rates and higher funding costs for businesses. Essentially, Americans who have been grappling with the higher cost of living over the last few years now face another issue – elevated costs are here to stay.

The average 30-year average fixed mortgage rate was 6.76% in the last week, according to Freddie Mac data. The rate has increased 60 basis points this year, marching higher alongside the 76 basis-point rise in the 10-year bond yield. The effective yield on the ICE Bank of America US High Yield Index, a reflection of corporate borrowing costs, also rose to 7.42% in the last week, up 89 basis points since the start of this year.

{ The ‘Danger Zone’ for Stocks }

Higher yields have also historically stoked fears about the impact of higher rates on risk assets, like stocks. In a note to clients earlier this year, HSBC said it believed yields were solidly in the “danger zone” when it came to the impact on equities. If the treasury yield breaks above 5%, it would not only cause stresses, but also potentially cause the risk asset space to fall over.

The 10-year U.S. Treasury yield acts as a primary benchmark for borrowing costs and financial asset values, meaning that rising yields typically pressure stock prices down by increasing corporate borrowing costs and reducing the present value of future earnings. The speed at which yields increased mattered more to the impact on stocks than the actual yield itself.

Therefore, the speed at which the 10-year rose from the 4.5% mark is worrying. Financial analysts use the 10-year Treasury yield as a baseline “risk-free rate” in models that calculate what future corporate earnings are worth today. When this yield climbs, the discount rate goes up, which shrinks the calculated present value of a company’s future profits.

U.S. government bonds – known as treasuries – are supposed to be the most stable type of investment vehicle because they are backed by the U.S. government, making them virtually risk-free. So, when the 10-year yield offers a higher guaranteed return, investors may pull money out of riskier stocks and move it into fixed-income bonds.

But investor concerns over issues including rising inflation, the continuing war with Iran, and the US’s record national debt have shaken the market and slowed demand for US treasury bonds. Loans for homes, cars and credit cards, along with money businesses borrow to keep things running, could get more expensive if the sell-off in the bond market continues.

{ 5% Means Treasurys Could Crowd Out Corporate Debt }

Yields hitting 5% also fuels concerns that Treasurys will start competing with corporate bonds, which could have negative implications on the AI boom, which is being financed in large part with debt. Higher borrowing costs could skew the economics for AI companies plowing money into the technology at a time when investors are already concerned about the return on soaring capex.

Torres said the pressure on government bonds was intense, given ongoing fiscal and inflation concerns. The only things that could meaningfully lower yields at this point are a long-term resolution with the Iran war, or the Fed beginning substantial quantitative easing, such as by adding around US$50 billion worth of Treasurys to its balance sheet, he speculated.

Some analysts saw the potential for yields to climb to 6% in the near future, which would mark the 10-year highest yield since 2000. The danger period of going from 5% to 6%, if that were to happen in the next couple of months, it would be quite difficult for the market. Such rate could mean the beginning of another “Global Financial Crisis” like the 2007-2008.

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The post Financial Crisis – Why 5% Treasury Yield Keeps Investors Up At Night first appeared on FinanceTwitter.

Much to the people’s relief, King Sultan Ibrahim of Johor postponed a decision on a new clemency bid by former premier Najib Razak over his conviction ​in a case linked to the infamous 1MDB (1Malaysia Development Berhad) financial scandal. “His Majesty (Sultan Ibrahim Sultan Iskandar) consented for the application for a pardon by (Najib) to be deferred to a future meeting of the Pardons Board,” – a statement said.

The King, who ‌chaired a Pardons Board meeting on Friday (Sept 11), pardoned 65 inmates, but crooked Najib was not one of them. Former Prime Minister Najib was initially sentenced to 12 years’ jail and fined RM210 million in July 2020 on three counts of criminal breach of trust, three counts of money laundering and one count of abuse of power.

Najib, 73, began serving his jail term in August 2022 after he exhausted all the appeals up to the Federal Court in his charges of transferring RM42 million from SRC International, a former subsidiary of state investment fund 1Malaysia Development Berhad (1MDB), into his personal bank accounts in 2014 and 2015. He began serving his jail term in August 2022.

Even after the partial royal pardon, Najib had insisted that the then-King, Sultan Abdullah of Pahang, had issued an addendum order for him to serve the remainder of his sentence under house arrest. However, the High Court last year ruled that the addendum order was not enforceable because it had not been deliberated in the January 2024 Pardons Board meeting.

From the beginning, the royal pardon has been both controversial and suspicious. The meeting was held just one day before Sultan Abdullah ended his reign as Malaysia’s monarch. At that time, Najib had been a prisoner for about one year and five months (he was jailed on August 23, 2022) only, therefore, he was not qualified to apply for a pardon – regardless of full or partial.

Former Attorney-General Tommy Thomas said that one-third of a prison sentence must be served before any pardon can be considered, which means Najib must spend at least four years of his 12-year prison term first. When it was announced that the ex-premier had indeed been given a pardon – 50% discount of his prison time and 75% of his RM210 million fines – all hell broke loose.

While the king plays a largely ceremonial role in Malaysia, and ​has the authority to grant pardons, he must exercise the power of royal pardon after receiving and considering the advice of the Pardons Board under Article 42 of the Federal Constitution. An amendment to the Federal Constitution in 1994 removed the “absolute discretion” of the Yang di-Pertuan Agong (King) to grant pardons.

Suspicions were raised as disgraced Najib shares a deep-seated, generation-spanning special relationship with the Pahang Royal Family. He holds the “Orang Kaya Indera Shahbandar” title, which he inherited from his late father. The title is one of the four highest ranking nobles below the monarch – hence also known as the “Orang Besar Berempat”, loosely translates as “the four chiefs” of Pahang. 

Voices of frustration, even anger, could be heard among average Joes and Janes that Malay Elites were scratching each other’s back in the stunning partial royal pardon for Najib, whose father was the country’s second prime minister. Till today, the government’s total liabilities linked to 1Malaysia Development Berhad (1MDB) stand at a cumulative RM51.4 billion as of mid-2026, according to the Ministry of Finance.

The U.S.-DOJ investigation results say that over US$4.5 billion was misappropriated from the 1MDB fund, with some of the money used to finance Hollywood films, and buy hotels, private jet, luxury Equanimity superyacht, Picasso paintings, jewellery and real estate. More than US$700 million (hence the infamous RM2.6 billion) from the fund landed in Najib’s bank account.

But there was something more interesting – and suspicious – over Najib’s second royal pardon request. Prime Minister Anwar Ibrahim was reportedly “caught off guard” – even upset – just 24 hours before the King’s meeting on Friday to decide the fate of Najib Razak. Apparently, Mr Anwar had not been notified in advance that the Pardons Board would meet.

“The Prime Minister was very upset as he was not informed that the board is scheduled to meet on Sept 11 and will be chaired by Yang di-Pertuan Agong Sultan Ibrahim Sultan Iskandar. He only got to know on Monday when it was raised at a PH (Pakatan Harapan) leadership meeting,” – said the source, referring to Federal Territories Minister Hannah Yeoh briefing on the matter.

Anwar’s so-called surprise came as UMNO president Zahid Hamidi, who is also the Deputy Prime Minister, said he hoped for the best outcome for his former boss Najib Razak ahead of Friday’s Pardons Board meeting. Exactly how could Zahid know about Najib’s second royal pardon application, but not Anwar, supposedly the most powerful man in the country?

Either the Prime Minister, drunk with power, was clueless and incompetent, or the serial liar had lied again as usual. After all, PM Anwar Ibrahim was the same man who argued on Feb 2024 that the Pardons Board’s decision to reduce Najib Razak’s jail sentence and fine was due to the “mercy and compassion” of the 16th Yang di-Pertuan Agong Al-Sultan Abdullah of Pahang.

So, why Anwar, who shamelessly defended Najib’s first royal pardon in 2024 by condemning critics disagreed with his administration’s decision – so much so he started talking like philosopher Socrates about life journey, life in prison, deeds, and whatnot – is now so terribly upset over Najib’s second royal pardon? What has happened to Anwar’s so-called “mercy and compassion”?   

Assuming the Premier was really clueless, which is hard to believe because it would also mean he should quit for sleeping on the job, it creates more questions than answers. Who tried to sabotage him? Did the King, working with the corrupted United Malays National Organisation (UMNO), try to damage and destroy Anwar Ibrahim, despite his obedience and subservience to both the monarch and UMNO?

Or was it actually con artist Anwar who tried to pull another Najib royal pardon together with UMNO, using the same pathetic playbook of blaming the monarch to zip people’s mouth, only to be discovered by the Democratic Action Party (DAP) and threatened to pull out of the Madani government? Perhaps everyone was involved in the Sept 11 grand theatre.

No reason was given when Najib filed an appeal – but suddenly withdrew it in April this year – to reverse the High Court’s decision last year that the royal addendum order was not enforceable. That suggests that a dirty deal could have been made between Anwar and UMNO to quietly grant Najib his wish to serve jail sentences in a luxury mansion.

However, ⁠Prime Minister Anwar Ibrahim’s multi-coalition unity government went haywire when Zahid led Barisan Nasional to a solo state election in Johor, and subsequently an alliance with opposition Perikatan Nasional instead of Anwar’s coalition in the Melaka state election. UMNO’s betrayal means all bets were off, leading to the postponement, at least “temporarily”, of Najib’s second royal pardon.

Make no mistake – there is no specific provision under Malaysian law for house arrest as an alternative to imprisonment. Sultan Ibrahim knew this, and the king would dirty his hands if he naively bulldozes a second royal pardon for Najib the same way his predecessor Sultan Abdullah did. Even if the monarch was complicit in UMNO’s plot to free Najib, the timing isn’t right yet.

UMNO this week criticised Anwar’s Pakatan Harapan (PH) alliance ​after it issued a rare statement saying individuals convicted of graft or abuse of power should serve full sentences, ​without directly referring to Najib. PH stressed that any decision involving high-profile cases must take into account public confidence in Malaysia’s commitment to its reform and anti-corruption agenda.

But Hannah Yeoh, a DAP lawmaker, and the Anwar-appointed Attorney General reportedly would oppose further clemency for Najib – a retaliation in anticipation that Pakatan Harapan and Barisan Nasional would go against each other in the next 16^th General Election. With Barisan Nasional expected to work with rival Perikatan Nasional, PH is set to return to opposition.

However, no one, including the King, wants to be blamed for triggering a political instability just because of one man – Najib. DAP lawmaker Yeoh, promoted on December 16, 2025 during a cabinet reshuffle as the first Chinese and non-Muslim minister to hold the Federal Territories portfolio since it was created in 1976, would be in spotlight – and a scapegoat – if she agrees lamely to Najib’s pardon.

Likewise, PM Anwar, who is also president of  People’s Justice Party (PKR), would see his popularity plunging if he did not pretend to be upset over Najib’s royal pardon. Having led his party to near annihilation in Sabah, Johor, Negeri Sembilan, and soon Melaka state elections, the forked-tongue prime minister cannot afford to be seen as the culprit behind Najib’s undeserved freedom.

It was not a coincidence that the Pardons Board meeting came in the middle of the UMNO general assembly from September 9 to 12. Shedding crocodile tears, Zahid said – “We are saddened by the decision. Nevertheless, we continue to express our deepest respect to His Majesty the King, and we appeal to His Majesty to use all his wisdom to make the best decision.”

Zahid’s response suggests that Najib’s clemency bid would be granted only after the next national polls. It would be inthe interest of Zahid if his former boss remains in jail. Najib’s lawyer Muhammad Shafee Abdullah said last year his client may return to politics if he is pardoned and allowed out of prison. That would threaten Zahid’s ambition to become the next Prime Minister.

To make matters complicated, Najib faces another lengthy jail term in a separate 1MDB-related case. The High Court in December 2025 sentenced him to 15 years in prison and fined him RM11.38 billion on 25 charges of abuse of power and money laundering involving RM2.2 billion misappropriated from 1MDB. The jail term was due to begin in 2028 after he finishes his current sentence. He has filed an appeal against the verdict and sentence.

It’s not rocket science that everyone would benefit if jailed Najib remains in prison for now. Anwar could use it to trumpet his half-baked anti-corruption rhetoric, while DAP could justify its relevance after keeping quiet for the past four years, including during the period when the PM facilitated Najib’s partial royal pardon. In the same breath, UMNO could weaponize PH’s brutality to rally Malay voters under the pretext of freeing Najib.

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The post Sept 11 Political Drama – Why Najib’s Second Pardon Postponed first appeared on FinanceTwitter.