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Bonds continue to rally, the Biden administration limits investments in Chinese tech, and large banks face stringent mortgage capital regula [View in browser]( [Bloomberg]( Bonds continue to rally, the Biden administration limits investments in Chinese tech, and large banks face stringent mortgage capital regulations. — [Tiffany Tsoi]( Bonds Rally Bonds rallied for a second day as traders bet global central banks are nearing the end of an aggressive streak of rate increases, following last week’s data which showed cooling US price pressures. And while the deeply inverted yield curve has stoked anxiety among investors about the prospect of a recession,[Goldman Sachs Group Inc. has a different message: stop worrying about it.]( “We don’t share the widespread concern about yield curve inversion,” Jan Hatzius, the bank’s chief economist, wrote in a note Monday. Hatzius stands in opposition to most investors who point out that the curve inversion has an almost impeccable track record of foretelling economic downturns — according to Hatzius, as inflation cools, a “plausible path”  is opened for the Fed to ease up on interest rates without triggering a recession. China Tech [The Biden administration’s plans to restrict investments in China]( will be narrowly focused on cutting-edge technology, only new investments, and likely won’t go into effect until next year as the policy grinds through Washington’s bureaucracy. Officials are aiming to wrap up a proposal by the end of August for the long-delayed program to screen and possibly prohibit investment in China’s semiconductor, quantum-computing and artificial intelligence sectors, according to people familiar with the plans. US Treasury Secretary Janet Yellen highlighted the limited scope of the plans in an interview with Bloomberg Television on Monday, saying the restrictions would be “narrowly targeted.” Mortgage Rules US bank regulators are set to release their plans next week for a sweeping overhaul of capital rules, with the latest draft including[requirements for large lenders’ residential mortgages that go beyond international standards](. For big banks, the agencies wanted to go above the global standards for residential mortgages, as well as some business loans, to avoid giving those lenders a competitive advantage over smaller peers, according to a person familiar with the proposal. The Fed wanted banks of different sizes to treat comparable residential loans the same, this person said. The industry will almost certainly criticize the proposal as another onerous measure to “gold plate” US requirements by making them more stringent than global standards. Lackluster markets Contracts on the S&P 500 are trading nearly unchanged while Nasdaq 100 futures have drifted lower, as of 6:25 a.m. in New York. Treasury yields have declined across maturities, while the dollar weakened. Gold and oil prices have increased, whereas iron ore is down slightly. Coming up… US June Retail Sales data is due at 8:30 a.m., June Industrial Production data is due at 9:15 a.m, and May Business Inventories along with the July NAHB Housing Market Index at 10:00 a.m. At 11:30 a.m., the US is selling $50 billion 42-day CMBs. US May Cross-Border Investment Inflows are released at 4:00 p.m. Federal Reserve Vice Chair for Supervision Michael Barr is speaking in Washington at 3:00 p.m. Federal Reserve Director of the Division of Supervision and Regulation Michael Gibson is testifying about climate change, also at 3:00 p.m. This week, the MLIV Pulse survey is asking: What's next for the big banks? Which bank CEO would you most like to work for? Are you expecting more job cuts in the finance industry? Share your views [here](. What we’ve been reading Here’s what caught our eye over the past 24 hours: - How [eyedrops blinded and killed Americans]( - [BlackRock names CEO of world’s biggest oil producer to its board]( - Jim Ratcliffe’s [bidding war for Manchester United]( - UK sees more [housing weakness]( ahead of inflation data - [Europe braces for record temperatures]( as wildfires hit Greece - More Americans are getting [turned down for loans]( - [The tragedy of Oppenheimer]( And finally, here’s what Tracy’s interested in this morning… One of the most surprising things about the recent AI boom is that tech giants who would just a few months ago have been classified as the boring incumbents seem to have (so far) come out on top. Few would have expected that the company behind Clippy (the annoying virtual assistant from Microsoft Office), for instance, would take the lead in incorporating generative artificial intelligence. In an industry all about 'disruption' and start-up culture, the fact that big incumbents have managed to get to the 'next big thing' first is pretty different. The way they're doing this is pretty different too. Instead of buying AI companies outright or developing many of the models in-house, the largest tech giants are purchasing equity stakes and striking cloud contracts with specialized AI firms. Earlier this year, Google invested some $300 million in AI start-up Anthropic, while Microsoft has famously invested $1 billion in OpenAI (the company behind ChatGPT) as part of a "multi-year partnership." It's a point brought up in the [latest episode of the Odd Lots podcast](, featuring [Josh Wolfe](, the founder of venture capital firm Lux Capital. As he points out, the structure of these deals benefits incumbents in two significant ways. First, it gives the biggest of big tech a chance to grow more influential in a strategically-important area while possibly avoiding additional regulatory scrutiny. And secondly, it allows them to basically recycle cash so that what they spend on acquiring a stake basically gets 'spent' back into the incumbent through cloud contracts and so on. "A lot of these deals are interesting because what happens is the company gets a giant equity investment," Wolfe says. "In this case, I think Anthropic got about $300 million from Google, but that money sort of round trips, Google gets equity, Anthropic gets cash. That cash then goes back to Google and is spent on compute. So they get to book it as revenue in Google Cloud." It's an interesting twist in tech world, and one that could in theory help the big incumbents get even bigger. Since hyperscalers like Google and Microsoft are still the biggest source of compute, and since AI needs so much of it to work, it intuitively feels like Big Tech has a pretty large advantage in the space. But Joe Weisenthal and I will have an episode specifically on that topic out later this week. Follow Bloomberg's Tracy Alloway on Twitter @[tracyalloway]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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