US Treasury Yields Re-surge, Oil and Bitcoin Rise Together

U.S. Treasury yields have again risen sharply. The 30-year Treasury yield increased by 5 basis points (bp) to 5.24%, and the 10-year yield rose by nearly 5 bp to 4.7%. The 2-year Treasury yield also climbed by over 1 bp to 4.196%.

Despite the U.S. Treasury's buyback operations, Treasury yields temporarily fell before rising again. Although the Treasury purchased short-term bonds to stabilize the market, macroeconomic factors such as rising oil prices and the U.S. debt surpassing $40 trillion are believed to have had a greater impact on the market.

International oil prices surged due to heightened geopolitical risks. West Texas Intermediate (WTI) rose 2.52% to $87.99, and Brent crude also increased 2.13% to $93.57. This is attributed to growing concerns about supply disruptions from the Middle East after President Trump signaled strong economic sanctions against Iran and warned supporting nations.

Positive news also emerged in the virtual asset market, leading to a surge in Bitcoin. President Trump urged the U.S. Congress to pass the CLARITY Act, which is expected to support the cryptocurrency industry. This is interpreted as hinting at the possibility of the government purchasing Bitcoin, and Standard Chartered Bank released an optimistic forecast that Bitcoin prices would reach $100,000 by year-end.

Walmart's stock price fell despite the company raising its annual outlook. Although second-quarter revenue of $187.94 billion exceeded market expectations, same-store sales growth was 2.6%, falling short of the market's anticipated 3.5%. This fueled concerns about slowing consumer spending.

Chinese e-commerce giant Alibaba saw its net income plummet by 75% despite a 45% surge in revenue. This is mainly attributed to increased costs from expanding investment in artificial intelligence (AI). Alibaba is pouring substantial funds into strengthening its competitiveness in the AI sector, experiencing short-term profitability deterioration as a result.

OpenAI appears to maintain its core dominance, accounting for approximately 70% of Microsoft's total AI revenue in the most recent fiscal year. Despite the emergence of competitors like Meta, OpenAI's technological prowess and its collaboration with Microsoft solidify its important position in the AI market.

New jobless claims announced by the U.S. Department of Labor decreased to 206,000 this week. This indicator shows that the U.S. employment market remains stable, coming in below expectations and suggesting a robust economy.

The U.S. Treasury's recent buyback is sometimes interpreted as a 'Treasury Operation Twist.' This policy intent aims to lower long-term interest rates by selling short-term Treasury bonds and buying long-term ones, a move similar to the Federal Reserve's past Operation Twist, hoping for analogous effects.

The virtual asset industry is reportedly engaged in strong political lobbying. According to Public Citizen data, of approximately $517 million spent on politics by the virtual asset, tech, and online gaming industries over the past 15 months, about $300 million was from these sectors. This is interpreted as an effort to expand political influence for regulatory easing.

The Chinese Ministry of Foreign Affairs expressed criticism of U.S. sanctions against Iran. Spokesperson Lin Jian emphasized in a briefing on the 20th that sanctions and pressure do not help resolve issues, and urged relevant parties to take responsible actions and resolve problems through diplomatic and political means. This revealed China's dissatisfaction with the unilateral U.S. sanctions.

U.S. sanctions against Iran are targeting large Chinese banks that provide payment systems to Iran. Despite the Chinese government's policy of refusing to comply with sanctions, Chinese state-owned enterprises tend to adhere to U.S. sanctions due to concerns about being cut off from the dollar payment network. This is because the blockage of dollar payment channels could cause severe damage to Chinese finance and trade, with the past case of Kunlun Bank sanctions supporting these concerns.

Concerns are spreading that the U.S. policy of weaponizing the dollar could boomerang in the long term. As dependence on the dollar as a sanction tool increases, central banks worldwide are reducing the proportion of dollars in their foreign exchange reserves and pursuing dollar diversification. The dollar's share of global foreign exchange reserves decreased from 62.7% in 2017 to 57.8% in 2024.

Nvidia is expanding its AI data center brokerage business. Recently, it has secured Nvidia GPUs in Northern Europe and is now acting as an intermediary, connecting companies that need space to install these GPUs with data center operators who have secured power and space but need clients. This strategy suggests that Nvidia aims to secure GPU utilization and sales channels by building an ecosystem, not just selling GPUs.

Northern Europe is rapidly emerging as an ideal location for AI data centers. AI data centers require immense power consumption, and Northern Europe's cold climate conditions are highly advantageous for cooling data centers. This geographic environment synergizes with Nvidia's strategy of prioritizing speed to secure GPU utilization and sales channels.

Up to 1,800 data center projects in Texas have been halted. This decision was made by the governor due to growing concerns about the massive power consumption of data centers and infringement on residents' living areas. Such political uncertainty could exacerbate bottlenecks in data center infrastructure expansion.

Capital inflow into ETFs listed on the U.S. stock market is projected to exceed $2 trillion this year. This represents a 40% increase year-over-year, with active ETFs accounting for over 35% of total inflows. The current number of U.S.-listed ETFs surpasses the number of individual company stocks, indicating the rapid growth of the ETF market.

The ETF market is expanding its importance as an investment infrastructure, emerging as a core investment tool. An average of $320 billion in transactions occur daily, and the proportion of ETF trading tends to rise to as much as 40% when market volatility increases. Goldman Sachs evaluated ETFs as a core investment tool, emphasizing their role in helping investors respond flexibly to market conditions.