86% Probability of September Interest Rate Hike Reflected

News of OpenAI's IPO being called off this year negatively impacted investor sentiment, leading to a decline across semiconductor-related stocks. The futures market also showed a notable downturn in semiconductor-related issues. Some interpret OpenAI's IPO postponement as a regulatory strategy to block latecomers from entering the market.

Recent agreement among AI leaders to slow down development is viewed from two perspectives: external justification and actual strategy. Analysis suggests a hidden intention to create entry barriers to prevent latecomers from entering the market. Doubts are also raised that market restructuring through standardization could be the underlying objective.

There are many opinions that it is unclear whether the agreement to slow AI development at corporate and national levels will actually be upheld in practice. The prevailing view is that while outwardly expressing agreement, there is a high possibility that internal technology development will continue. This analysis suggests it may be largely symbolic, much like peace declarations between superpowers.

With the FOMC and BOJ meetings identified as key variables this week, the current probability of an interest rate hike is reflected at 86%. Despite a rebound in the U.S. market, the relative weakness of the semiconductor memory sector persists, increasing investor anxiety. The market is closely watching the results of major economic meetings.

Export data from September 1st to 10th recorded an all-time high, showing surprising strength. The majority of this export boom originated from the semiconductor sector. However, stock prices have been stagnant relative to performance, leading to increased frustration among investors.

A period of fluctuation is expected to continue until October, when third-quarter corporate earnings reports are scheduled. Market participants need to manage risk through position adjustments and derivatives plays in this situation.

The recently released headline CPI met expectations, but core CPI exceeded expectations at 0.3%. Some in Wall Street interpret this as being driven by surging energy prices and telecommunication service costs, rather than a broad rise in prices. This creates a conflict between those who see it as a temporary factor due to war and those who believe overall prices are rising.

Some argue that this interest rate hike could actually be positive for the market. They claim that if the Fed demonstrates a clear commitment to controlling inflation through a proactive, insurance-like rate hike, long-term bond yields will fall. This is based on the expectation that it could lead to renewed market confidence in the Fed's independence.

The 2-year Treasury yield reached 4.64%, showing a 100bp higher figure compared to the current interest rate. Analysis suggests this reflects four additional rate hikes. Experts raise the possibility that the market is overreacting and 'overshooting'.

It is pointed out that if a September rate hike is decided, it reflects that the current interest rate level is incorrect, and therefore, a single hike cannot solve the problem. Statistics also show that there has been only one instance since 1990 where the Fed ended with a single rate hike. This raises the possibility of an additional hike in October if one occurs in September.

Analysis suggests that if there are no overly hawkish remarks, meaning comments that hint at further rate hikes, the market may not be severely impacted. The market appears to have already factored in the rate hike itself to some extent.

After hitting its lowest point in 2023, the bond market has continued its unfavorable trend. This is interpreted as a structural problem that cannot be resolved by short-term policies.

Despite falling on Friday, the KOSPI market continued its solid attempt at a rebound. On a weekly chart, efforts are underway to move higher, but it is currently at a crossroads, fluctuating without a clear direction. The market appears to be exploring its next move at an important turning point.

This means securing more time to respond to overseas markets, such as the U.S. pre-market. Investors can strengthen risk management and seek additional investment opportunities through this.

HD Hyundai Heavy Industries announced plans to expand its business by increasing engines for land-based power generation and data centers. When the expansion is completed in May 2028, sales are projected to double. Furthermore, the company announced investments in SMR (Small Modular Reactors) and collaboration with Hyundai Engineering & Construction, securing new growth momentum combining AI and nuclear infrastructure.

It is essential to closely monitor the supply and demand trends of foreign investors and pension funds. Until a clear market direction is confirmed, a strategy of 'observing from half a step behind' is necessary.