US Treasury May Deploy General Account Balance… Tightening Economic Sanctions on Iran

Concerns are growing that the US Treasury's potential deployment of its General Account (TGA) balance could clash with the Federal Reserve's (Fed) tightening stance. The Treasury's liquidity provision has the effect of injecting money into the market, which, while different from the Fed's quantitative easing, could provoke similar market reactions. This could introduce a complex variable into the Fed's efforts to raise interest rates for price stability.

The market believes that if the Treasury's liquidity provision rekindles inflation, the Fed might undertake further interest rate hikes. However, at the same time, the Treasury's policy diverging from the Fed's monetary policy direction adds doubt to the market's confidence and predictability regarding the Fed's rate decisions.

Stifel analyzed that Fed Chair Jerome Powell will likely find it difficult to provide clear signals at the upcoming Jackson Hole meeting. Given the complex macroeconomic situation, including the Treasury's potential liquidity provision, any premature remarks from Chair Powell could confuse the market.

Consequently, there are predictions that the Jackson Hole meeting might end inconclusively, contrary to initial expectations. This could raise more questions about the Fed's future monetary policy direction rather than resolving market uncertainties.

The US is strengthening economic sanctions against Iran, targeting five key sectors. By blocking access to digital asset technology, gold, aviation, and shipping, the US intends to economically isolate Iran. This could lead Iran to face 'economic expulsion,' being completely excluded from the international financial system.

These sanctions include a strong warning that not only Iran but also third countries assisting Iran could be excluded from the US dollar system. The US expresses a strong will to comprehensively block Iran's economic activities, maintaining a hardline stance to close off all leakage routes.

Such US actions are likely to further escalate geopolitical tensions in the Middle East and impact the global economy, including international oil prices.

The US is pursuing a plan to impose additional 7.5% tariffs on China, citing China's overcapacity. Some experts point out that the justification is unclear and interpret these actions as diplomatic maneuvering between the US and China.

These measures heighten economic tensions between the two countries while also leaving room for relations to ease through working-level dialogue. However, the impact of additional tariffs is noteworthy as they could affect global supply chains and lead to higher consumer prices.

SoftBank announced plans to issue a record $6.3 billion (approximately 8.7 trillion KRW) worth of bonds to expand its investments in artificial intelligence (AI). This demonstrates SoftBank's strong commitment to securing a competitive edge in the AI sector.

SoftBank's bond issuance starkly illustrates how significantly bond yields and macroeconomic conditions influence large-scale corporate investment decisions. Its aggressive fundraising for AI technology advancement, even in a high-interest rate environment, is attracting significant market attention.

Recently, as bond yields have risen, the dividend yield of S&P 500 companies has fallen below the 10-year Treasury yield. This is a factor causing investors to shift capital from the stock market to the bond market, which offers more stable and higher returns.

Consequently, the comparative advantage of the stock market has weakened, and capital is flowing into the bond market. As investors prefer the stable returns of bonds over the volatility of stocks, long-term capital is expected to further flow into the bond market.

Rising interest rates place a significant burden on companies operating with debt, raising concerns that they could weaken AI investment momentum. Wolf Research analyzed that rising interest rates are becoming an increasing short-term risk factor for AI companies.

The outflow of long-term capital into the bond market also makes it more difficult for AI companies to secure funding. This suggests that investment in AI technology development and expansion may shrink, and vigilance regarding the financial health of related companies is increasing.

The large-scale selling by hedge funds last week was the largest since President Trump's tariff policy announcement in April 2025. This indicates that market participants are highly cautious about the current market situation.

Trump's administration's tariff policies caused significant market shock at the time, and the fact that this selling spree is comparable to that period suggests that the contraction in investor sentiment is significant.

As the dollar index continues to fall, investors are seeking alternatives to the dollar. In this trend, a dispersion of supply is prominent not only in traditional safe-haven assets like gold and silver, but also in digital assets such as Bitcoin and Ethereum, and in commodity markets.

Bitcoin and Ethereum, in particular, are showing sharp short-term increases, benefiting from the weakening dollar. This is interpreted as investors' attempt to diversify risk across various assets amid macroeconomic uncertainty.

Morgan Stanley is also recommending investment in the energy sector, highlighting commodities as an alternative investment. If dollar weakness continues, capital inflow into these alternative assets could accelerate further.

This phenomenon brings important changes to global asset allocation strategies, breaking down the boundaries of traditional financial markets and creating new investment opportunities.

Nvidia's stock has recently fallen for seven consecutive trading days, increasing market tension. In the past, Nvidia's stock has tended to decline in 6 out of 8 cases after earnings reports, making investors even more keenly focused on this earnings announcement.

While this downturn could be interpreted as a short-term correction, some also suggest the possibility of a sharp rebound if short covering (buying shares to close short positions) occurs after the earnings release.

Nvidia is collaborating with SpaceX to integrate its 'Vera CPU' into AI agents. This is a key partnership demonstrating Nvidia's effort to strengthen its technological capabilities in the CPU (Central Processing Unit) sector, beyond its primary GPU (Graphics Processing Unit) business.

The fact that SpaceX's AI will utilize Nvidia's Vera CPU on the ground is interpreted as Nvidia's strategy to expand the influence of its CPU technology in various AI application fields.

Nvidia is discussing a multi-billion dollar investment in Perplexity, a promising large language model (LLM) startup. This is interpreted as part of Nvidia's strategy to expand its 'Nemotron Alliance' to build its own LLM ecosystem.

Nvidia is forming an alliance in the open-weight sector and intends to include Perplexity in this alliance to strengthen its competitiveness in the LLM market.

Despite some concerns, the sustained rise in Graphics Processing Unit (GPU) prices is strong evidence that demand for Artificial Intelligence (AI) remains robust. Even with increasing capital expenditure, the pricing power of GPUs is deemed sufficient to offset cost increases.

The market still sees much more evidence of enormous AI demand, with little movement questioning the fundamental demand for AI itself.

This suggests that the growth momentum of the AI industry remains strong, and it is likely to maintain its long-term growth trajectory despite short-term external variables.

Reports suggest that the Trump administration might allow Apple to use DRAM from ChangXin Memory and NAND flash from Yangtze Memory in China. This is interpreted as a diplomatic gesture from the US to China ahead of the September summit.

However, market reactions to these developments are somewhat negative. Concerns are raised that it could negatively impact the profits of US semiconductor companies, and there are criticisms of increased uncertainty due to political circumstances.

Netflix is pursuing a strategy to integrate rival streaming services within its own app. This is interpreted as Netflix's intention to position itself not merely as a content provider, but as a 'platform' and 'streaming hub' encompassing all streaming services.

This strategy provides convenience for users while potentially strengthening Netflix's market dominance and creating new revenue models.