Hormuz Deadlock Drags On, Oil and Rates Surge; Nvidia's $500 Billion Raise Fuels AI Overheating Fears

Tensions in the Middle East are rising, adding uncertainty across the US economy. Experts say the US is deeply involved in these geopolitical issues, making a quick resolution unlikely.

Investors appear to place more trust in Bessent's approach than in Trump's unpredictable policies. The shift produced a particularly large move in the bond market, which contributed to broader market stability. Analysts attribute the much larger stabilization compared with the Trump era to investors' expectations for Bessent.

Gold prices are surging as the dollar and yen weaken together. This suggests confidence in global currencies is broadly declining. The flow of funds into gold, a safe-haven asset, is read as a strong signal that investors are worried about the stability of major currencies. The gold rally is likely to persist alongside this underlying erosion of currency confidence.

Gold acts as a hedge against currency depreciation, while higher oil raises production and transport costs, adding broad upward pressure on prices. Both rises are read as strong signals that inflation is being stoked, increasing uncertainty about price stability ahead.

If CPI and PPI come in higher than expected, that would signal persistent inflationary pressure and could influence the Federal Reserve's decision on further hikes. With oil climbing and inflation worries overlapping, markets are on edge for this week's price data.

The main reason Bessent has stepped in is to prevent further increases in US interest rates and keep them stable. The US economy now needs massive capital to accelerate growth, led by artificial intelligence. If rates keep climbing, borrowing costs for companies will rise, which could hamper key industries such as AI. Bessent is therefore focused on creating a stable rate environment to support economic growth, which is analyzed as the reason for his appearance.

Iranian Foreign Ministry spokesman Esmaeil Baghaei stressed that reopening the strait depends on the actions of the US and Israel, and argued that the US should compensate for every past violation of ceasefire memoranda. Iran's demands are a major obstacle to international efforts to resolve the current geopolitical risk and signal that negotiations may drag on.

Such remarks show US voters a forceful defense of national interests and are part of a strategy to win support. Trump has often used foreign policy for domestic political purposes, and this remark on Iran appears aimed largely at projecting an image of a decisive leader to Americans. It reflects a facet of Trump's politics of using diplomacy as a domestic tool.

Given Trump's past pattern of statements, such vague phrasing often signals that little progress has been made or that talks have stalled. Iran negotiations are therefore likely to face prolonged difficulty, and their resolution is hard to predict.

US Treasury yields have risen again, with key benchmarks climbing noticeably. The 10-year yield reached 4.7%, and the 30-year yield climbed to 5.25%. The 2-year yield jumped nearly 6 basis points, reflecting broad upward pressure on rates. The 1-year yield also continued to rise steadily, and the 30-year yield is approaching 4%, indicating that long-term inflation and rate-hike concerns are being priced in. Such rising yields could tighten market liquidity and raise corporate borrowing costs, drawing attention to their ripple effects on the broader economy.

Over the weekend, US local media reported that the Bank of Japan governor strongly hinted at a rate cut as early as September. Such remarks have raised concerns that yen weakness could persist. The market had expected Japan to raise rates in September, but the governor's comments have weakened that expectation. This erodes investor confidence in the yen and raises the likelihood that yen weakness will deepen.

From 1988 to 1990, the Bank of Japan began raising rates to stop excessive gains in real estate, stocks and other assets. When asset prices kept climbing despite the hikes, the BOJ pushed rates into the 6% range in a forceful response. The hardship for individuals deepened, and Japan's economy fell into a long stagnation dubbed the 'Lost Three Decades.' The case shows that rate hikes do not always produce positive outcomes.

Speculators betting on yen weakness are confident that because Japan has released a lot of money and kept rates low, yen weakness is a foregone conclusion. Despite short-term swings, they show strong conviction that 'it will go back up' and are holding speculative positions on continued yen weakness. These speculators judge that the yen's direction has hardened into weakness and, like the US market, expect a rebound after a correction. They believe that even after a sharp pullback, prices will rise again if they can hold on, suggesting the yen's weakness is unlikely to reverse easily.

Normally, higher rates strengthen a currency and push gold lower, but that traditional relationship is breaking down. This shows investors doubt the stability of major currencies such as the dollar and yen and increasingly favor gold as an inflation hedge. With Treasury yields rising again and the yen unable to escape weakness, gold's rally is emerging as a key point in global financial markets.

The news raised market concerns about Apple's supply chain management and cost efficiency, leading to the drop.

The funds will mainly be used to build data centers for AI infrastructure investment. The partnership shows how aggressively Nvidia is building the core infrastructure of the AI era, raising expectations for the growth potential of the AI market.

The fact that large private equity firms such as KKR, Brookfield and Blackstone are actively investing in data center construction bears this out. These firms are adept at squeezing out returns and tend to invest only when profitability looks certain. In the US, data centers are now seen as a highly promising business, similar to Korea's logistics warehouses a while back, where immediate investment can yield large returns. This is because demand for data processing and storage is surging alongside advances in AI.

Nvidia's $500 billion investment has amplified investor concerns about an overheated AI market. Just as Amazon and Microsoft were giving confidence in the profitability of AI data centers, news that Nvidia too is raising huge funds to invest led some investors to doubt an AI industry that looks like a 'machine that endlessly spends money,' causing semiconductor stocks to fall. For Korea's chip industry, however, the news is not bad at all. Nvidia cannot build data centers without high-bandwidth memory (HBM), so this is read as a strong signal that HBM demand will keep growing without limit. Nvidia's investment is therefore expected to create enormous supply opportunities for Korean chipmakers and act as a positive factor.

The high cost of AI services is a heavy burden for users, and there are concerns that Chinese low-price offensives could disrupt the market. For example, Anthropic's service costs about 300,000 won a month, a burden for every individual to afford. If Chinese companies offered AI services at around 30,000 won, the market could change dramatically. Still, chipmakers are securing substantial safety margins. Even if Chinese companies provide low-cost services, it would be impossible without powerful computing, meaning demand for high-performance chips such as HBM and DRAM remains solid. With factories not built in time to meet unexpected demand growth, chip prices keep climbing, providing chipmakers with a secure earnings base.

In the recent semiconductor stock market, investment willingness and capital were both abundant in June and July, driving sharp gains, but now questions are being raised about which of these two factors is lacking.