US Treasury Yields Soar, Pressuring Stock Market

Notably, the Philadelphia Semiconductor Index fell 2.6%, recording the largest decline.

The S&P 500 index dropped 0.58%, and both the Dow Jones Industrial Average and Nasdaq Composite Index fell by about 0.6%.

Brent crude surged by nearly 8% on this day, highlighting a rise in commodity prices. Amid the rapid increase in international oil prices, Dubai crude surpassed $110 per barrel.

Gasoline prices in the US also rose to $3.43 per gallon, indicating an overall upward trend in energy prices. This contradicts the previous trend where a strong dollar led to falling commodity prices.

This marks a larger increase compared to the 0.1% rise in the previous month.

Headline inflation rose 5.4% year-over-year, while core inflation, excluding volatile food and energy, also remained high at 4.6%.

With this hike, the policy rate increased from 2.40% to 2.65%.

The deposit rate was adjusted to 2.5%, and the marginal lending rate to 2.95%. This demonstrates a strong commitment to curbing inflation in the Eurozone.

The Eurozone economy is showing stronger-than-expected recovery and adapting smoothly to shocks. The European Central Bank has revised its 2026 growth forecast upward from 0.8% to 0.9%.

Especially when factoring in the recently announced Q2 growth performance, there is a possibility that the actual figure could exceed 0.9%. This serves as background supporting the justification for the interest rate hike decision.

He termed this a 'Trump Dividend,' akin to how companies pay dividends to shareholders.

Such political promises of financial distribution create temporary market optimism alongside concerns about long-term economic impacts.

It surged significantly in a short period from the previous 4.84%.

This unstable trend in the bond market is stimulating investors' risk-aversion sentiment.

The US 1-year Treasury yield surged by about 11.9 basis points from 4.17% to 4.29%. This indicates that the policy rate has reached 4.29% and suggests the possibility of two additional rate hikes.

Nevertheless, the US stock market showed strong resilience, recording a decline of less than 1%. This strength in the stock market is attributed to expectations for US economic growth driven by advancements in AI technology.

Currently, the US GDP growth rate, as reported by GDPNow, is exceeding 4%, a very high level. Behind this high growth rate is the strong performance of AI-related data centers.

Oracle's recent earnings announcement also confirmed massive demand for AI data centers, demonstrating that AI is acting as a major driver of US economic growth.

Oracle reported sales of $19.3 billion, exceeding market expectations, and adjusted EPS also surpassed forecasts at $1.92. Notably, its backlog reached $664 billion (over 700 trillion Korean won), proving the company's growth potential.

Cloud infrastructure revenue showed explosive growth of 121% year-over-year, but free cash flow turned negative due to increased capital expenditures for data center expansion.

Microsoft plans to significantly expand its data centers to meet the surging demand for computing power. The company announced its intention to more than triple its current 12GW data center network capacity to 38GW by 2032.

Currently, capacity shortages are leading to the rejection of some business proposals, and OpenAI is also reporting a lack of computing power due to exploding model demand.

The shortage and rising prices of High Bandwidth Memory (HBM) are identified as direct causes.

JPMorgan predicts SK Hynix will continue to thrive in the HBM market for the next five years, anticipating a structural shift in the memory semiconductor market.

In the past, generous incentives such as sales tax exemptions for servers and equipment were offered to attract data centers, but problems arose as accumulated tax reductions significantly exceeded expectations ($1.5 billion).

Moves to curb these tax benefits are spreading in states like Illinois, New Jersey, and Washington.

In some regions, such as Virginia, applications for sales tax exemptions for new data centers have been suspended. Furthermore, some state legislators are advocating for renegotiation of existing tax benefit agreements with tech giants like Amazon, Meta Platforms, and Alphabet (Google).

This appears to be a combined result of tax revenue shortages due to data center industry growth and controversies over special treatment for large corporations.

Cerebras, a nascent memory chip company invested in by Intel and AMD, claims to have developed a new memory chip that outperforms existing High Bandwidth Memory (HBM). The company emphasized that this chip can be produced using existing semiconductor manufacturing equipment.

However, actual mass production is expected to take at least five more years, so its short-term impact on the market is projected to be limited.

An analysis suggests that Meta's AI model 'Movie Gen' could have significant repercussions for the existing online travel industry. 'Movie Gen' can be used for free up to a certain token limit, making it possible for AI to directly perform and process complex tasks such as flight bookings.

This could threaten existing online platforms like Google through an ad-business-based free service model. The possibility of new sales methods combining with shopping and advertising domains in the future is also being raised.

The core point is that by AI models providing direct services to users, the role of existing intermediary platforms could be weakened.

As artificial intelligence (AI) rapidly replaces complex and intellectual tasks, an era is approaching where it will be difficult for humans to surpass AI in certain intellectual endeavors. Accordingly, it is becoming crucial to contemplate the core human capabilities that AI cannot replace.

Planning abilities to gather people and propose new ideas, as well as creative and relationship-oriented activities, are expected to be important factors that differentiate humans in the age of AI.