US Treasury Tries to Stabilize Rates with Long-Term Bond Buybacks; Fed Shows No Sign of Rate Cuts

This introduces the concept of a "bad put," which originates from the "Trump put," with the Treasury, not the Fed, leading efforts to stabilize rates. In fact, after the expansion of buybacks was announced, the 30-year yield fell from 5.33% to around the 5.2% range.

The Treasury's long-term bond buybacks aim more at controlling the pace of rate moves through supply and demand adjustments than at changing fundamentals. This can be read as a strong message to investors that the government is willing to intervene in the market. However, it is hard to conclude that buybacks alone have fixed a ceiling on yields, and they have clear limits in addressing the underlying factors pushing rates higher.

The main drivers of current US bond yield increases are high inflation and an excessive debt load. The effect of the Treasury's buybacks may therefore be limited, and the market's response needs to be watched closely.

The Fed is currently not in a position to discuss rate cuts; it is debating whether to raise rates. Some assess that this premise itself may be difficult to sustain. US government debt has surpassed $40 trillion, and annual interest costs alone reach $1 trillion, seriously worsening fiscal health. This deterioration could act as persistent upward pressure on US rates.

Checking the July FOMC minutes confirmed the Fed's hawkish stance once again. Many members argued that rate hikes may be needed if inflation does not fall to the Fed's 2% target. In particular, three members reportedly advocated for rate hikes.

This suggests that discussion of rate hikes is more prominent within the Fed at present. A hold at the September FOMC therefore appears the most likely outcome.

Beyond direct market intervention such as expanded long-term bond buybacks, it could delay bond issuance or increase the share of short-term bonds in its portfolio. Such short-term measures can be effective in managing market expectations.

Moderna's personalized cancer vaccine, 'intismeran', met its target in a large Phase 3 trial of 1,137 patients, where it was administered alongside the immunotherapy drug 'Keytruda'. The positive topline result shows that mRNA technology could emerge as a new weapon against intractable diseases, as a therapeutic vaccine aimed at preventing recurrence. The core of this trial result is that the combined therapy of a personalized cancer vaccine and an immunotherapy drug successfully proved its efficacy.

This Phase 3 success clears the first hurdle toward commercialization, but these limitations must be overcome before the market can truly expand.

Moderna's stock fell from a 2021 peak of $497 during the COVID-19 era to $23 last year, a drop of roughly 95%. This Phase 3 success acted as a driver of technical rebound from such excessive declines. In the short term, volatility may intensify due to overheating, but in the long run it could be an opportunity to take Moderna's corporate value up a notch.

Merck is currently running Phase 3 combination trials of Keytruda in more than nine cancer types, including melanoma, non-small cell lung cancer, bladder cancer, and kidney cancer, as it seeks to expand its business.

Google may award Marvell business worth up to $120 billion if certain conditions are met, and has also secured Marvell stock warrants worth $12.2 billion. This is a move to diversify away from the existing supply chain centered on Broadcom.

Marvell is expected to increase its share in XPU-related sub-category chips, so its role is forecast to be relatively limited. The expected supply-chain share is roughly 60% for Broadcom, 25–30% for Marvell, with MediaTek taking the remainder.

Nvidia's dominance of the AI market is not expected to collapse in a short period. Nvidia's core competitiveness lies less in the chips themselves and more in its strong influence over the 'CUDA platform' that governs overall AI operations. However, as big tech companies move into developing their own chips, competition is intensifying, and Nvidia's market share may gradually shrink.