Three Major Indices Close Down, Treasury Yields Soar

The Philadelphia Semiconductor Index, which had plummeted nearly 6% the previous day, rebounded in early trading but narrowed its gains over time to close up 0.4%.

This is interpreted as the market entering a breather phase, and compared to major past downturns such as the COVID-19 pandemic, the Trump administration's tariff war, and the 2022 interest rate hikes, the current correction is not significant.

The U.S. stock market has consistently risen over the past decade, and analysis suggests that a long-term sideways trend may follow such an extended rally. Historically, after 1950, the U.S. market has followed a pattern of a decade of gains followed by a decade in a trading range, and a similar pattern is now suggested as a possibility.

Currently, the 3-month Treasury yield stands at 4.06%, and the 1-year Treasury yield is at 4.37%. This suggests that the bond market is pricing in the possibility of further interest rate hikes.

This is analyzed as a reflection of market expectations that Japan will also raise interest rates soon, following the anticipated U.S. FOMC rate hike.

This change, observed when comparing interest rate conditions in 2007 and now, is interpreted as a result of a combination of increased demand for capital due to changes in the U.S. industrial structure, decoupling from China's supply chain, and efforts to foster new industries.

Analysis suggests that if economic growth is sustained, the market can accommodate high interest rates, driven by the growth of specific high-profit industries such as data centers. It was also added that during periods of high growth, high-debt strategies can be utilized as part of corporate management.

The current positive outlook for the U.S. economy hinges on continuous growth. However, concerns are raised that if the growth rate falters, the current high interest rate levels could place a significant burden on businesses and households. The possibility that positive expectations for economic growth may be mistaken cannot be ruled out.

Following the shutdown of Saudi Arabia's east-west oil pipeline due to a drone attack, oil prices surged as Libyan oil facility guards closed valves. This resulted in a shutdown of approximately 1.4 million barrels of crude oil production per day, and the possibility of cascading shutdowns due to increased pipeline pressure is also raised.

International oil prices surged due to geopolitical risks and concerns about supply disruptions. West Texas Intermediate (WTI) surpassed $105, Brent crude reached $108, and Dubai crude was around $120. Concurrently, gasoline prices also rose to $3.5 per gallon, putting upward pressure on diesel prices.

Stablecoins are evaluated to have strengths in payment ease due to the convenience of blockchain technology and suitability for digital environments. However, it is pointed out that stablecoins cannot seize all global payment rights or replace currency sovereignty. Ultimately, institutional entities like Visa and various governments are expected to absorb and control these systems.

The scenario of lowering interest rates by purchasing $2-3 trillion worth of U.S. short-term Treasury bonds through stablecoins may be theoretically sound. However, analysis suggests that in practice, various realistic constraints and arduous processes will be involved, making it difficult to create large-scale changes in a short period.

This is interpreted as an indicator showing a decline in investment sentiment and market vitality.

Nvidia CEO Jensen Huang emphasized that new laws or regulations are not necessary for AI. He shared his experience conversing with former President Trump about AI development efforts and identified cybersecurity as the next-generation growth engine after GPUs.

The trade balance in August registered a surplus of $3.47 billion, showing clear performance improvement. However, despite these positive indicators, the Korean stock market's share prices have been sluggish, creating a disconnect between performance and stock prices.

The U.S. Empire State Manufacturing Index for New York significantly dropped from a previous 20.6 to 7.6. Meanwhile, in China, housing prices have continued to decline for five years, and retail sales growth stagnated at 0.4%, intensifying deflation concerns.

This leads to a contraction in private consumption, acting as a factor that hinders overall economic vitality. Amid intensifying U.S.-China tech competition, the Chinese government is focusing investments on advanced technology, while the private sector is seen meticulously managing household debt for survival.

This suggests a focus on value stocks when formulating investment strategies for the coming year.