U.S. 10-Year Treasury Yields Fall… AI Sector Shows Strength

On the day of the Federal Reserve's (Fed) Federal Open Market Committee (FOMC) interest rate hike, the market showed high volatility, but afterward, Wall Street reassessed that the market had somewhat misunderstood the FOMC's decision. Some experts analyze that the resolution of this market misunderstanding largely contributed to the decline in long-term interest rates, despite the FOMC's hawkish decision.

The market is currently welcoming today's rally but is cautiously reacting to whether this uptrend can be sustained.

If AI infrastructure investment continues, upward pressure on oil prices is expected to persist. In this market situation, investors are employing a 'barbell strategy,' investing simultaneously in the AI and energy sectors to hedge against volatility. This strategy anticipates increased energy demand due to AI infrastructure expansion and rising oil prices, presupposing co-growth in both sectors.

Investors need to move beyond vague fears about the initial interest rate hike and spend more time monitoring economic growth forecasts, corporate earnings, and inflation. It is now more important to build a portfolio suitable for a high-interest rate era than to predict further rate hikes.

It is more important to monitor oil price trends, a key variable for inflation, than to predict the number of additional interest rate hikes by the Federal Reserve (Fed). In a high-interest rate environment, one should focus on stocks with strong corporate earnings that can withstand the conditions and generate growth. Historically, the U.S. stock market has tended to rebound within 3 to 6 months after the first interest rate hike.

He explained that the Fed's tough stance might be a temporary message to calm the market, and gradual easing is expected in the future, assuming macroeconomic stability. This suggests a potential shift towards a more dovish market direction.

If this trend repeats, an analysis suggests that 10-year Treasury yields could reach 5-6% in the medium term. Experts point to a potential additional rise of 50bp over the next 6 months and 110bp over 12 months, emphasizing the need for medium-term preparation.

Morgan Stanley also forecasts two additional hikes before Q1 2027, indicating that institutional market consensus continues to shift in line with the Federal Reserve's (Fed) hawkish moves.

According to an Axios report, former President Donald Trump stated that a 'major decision' regarding Iran is imminent. The core issue is whether large-scale military operations against Iran will resume, raising the possibility of heightened tensions in the Middle East ahead of the UN General Assembly next Tuesday.

Repeated threats by Iran to blockade the Strait of Hormuz have led to the assessment that geopolitical conflict prediction models have reached their limits. Consequently, many analysts are ceasing to update market forecasts.

In contrast, the United States previously rejected a similar request, which is expected to act as a new variable in U.S.-China relations. This issue may emerge as a major agenda item at the U.S.-China summit scheduled for September 24.

This raises the possibility of AI being trained to possess independent will, emerging as a technical issue in the development process of next-generation models like 'Astra'.

This signifies that leading U.S. AI companies hold a dominant position in the global AI market. OpenAI, in particular, is widening this gap through B2B market expansion.

These remarks are expected to act as a positive catalyst for memory-related stocks.

Coreeive's stock price fell due to the decision to issue convertible bonds, despite a positive market atmosphere. Despite the fundraising purpose, the market reacted negatively due to concerns about shareholder value dilution.

News of eased regulations on tokenized stocks came from the U.S. Securities and Exchange Commission (SEC). The SEC is showing positive movement, approving conditional trading exemptions for certain platforms. These changes are expected to benefit related stocks like Robinhood.