U.S. 10-Year Treasury Yield Nears 5%

The situation is such that it cannot significantly rise above 5% nor significantly fall below 5%.

The market is focused on how strongly the Fed will maintain its commitment to monetary tightening to curb inflation. As inflationary pressures remain high, expectations for a Fed rate cut are declining.

Japan is increasing its government bond issuance as it expands defense spending. This is leading to a rise in Japanese government bond yields, and a similar increase in U.S. Treasury yields is observed.

Japan's government bond market is closely linked with global financial markets, and changes in Japan's fiscal policy are influencing U.S. Treasury yields.

Arguments were made that AI could pose a serious threat to humanity.

In response, Chinese state media criticized the U.S. for needing to control its AI development speed, though China is also strengthening its AI safety management.

This morning, Treasury Secretary Besant's testimony before the House of Representatives took place. A 20-year Treasury bond auction is also scheduled for 1 PM, drawing significant market attention.

It is an important day not only to hear the Secretary's explanations but also to observe what interest rates investors will purchase Treasury bonds at. This provides an opportunity to gauge demand and the direction of interest rates in the Treasury market.

The market is pricing in a 90% probability that the Federal Open Market Committee (FOMC) will raise interest rates. There is a strong consensus leaning towards a rate hike.

If the Fed freezes rates, short-term and 10-year yields may fall, but 30-year yields could rise. This is because bond investors may demand higher yields if they perceive the Fed lacks commitment to curb inflation.

Short-term rates are directly affected by Fed policy, but long-term rates tend to react more to inflation expectations and demand for inflation hedges.

Consequently, a rate freeze might provide short-term relief to the market but could stimulate long-term inflation concerns, leading to higher long-term rates.

The market's answer is in the mirror.

Index investing, which buys the market average, is a strategy that pursues humility and efficiency. It is suitable for investors who do not have much time to dedicate to investing.

Individual stock investing is a strategy that aims for market outperformance through intensive analysis and learning. It is based on a deep understanding of a specific industry or company.

Index investing is advantageous for investors who lack time or have a significant psychological burden from losses. Conversely, stock investing is attractive for investors who are willing to take risks and seek high returns.

The most realistic approach is to use index investing as a base and incorporate a few stocks of interest to build a portfolio.

This signifies aggressive investment in new technologies like artificial intelligence (AI).

Concerns about short-term margin pressure due to large-scale infrastructure spending are growing, and the actual pace of monetization is expected to be a key variable in stock performance. Improving search efficiency and advertising conversion rates are crucial for profitability.

The private loan default rate rose to 6.3% over the past 12 months. This signals that the burden of interest repayment for small and medium-sized enterprises (SMEs) that had to raise funds from private equity or alternative investment funds due to difficulties in traditional bank lending has reached its limit amid a prolonged high-interest rate environment.

This phenomenon is particularly hitting highly leveraged companies. As liquidity pressure intensifies, some companies may face restructuring crises.

The question of a systemic crisis across the financial system depends on the loss-absorbing capacity of large financial institutions. If large institutions cannot absorb defaults, the possibility of an expansion into systemic risk cannot be ruled out.

In conclusion, prolonged high interest rates are deteriorating the financial health of SMEs and acting as a potential source of instability in financial markets.

Isaac Newton suffered significant losses investing in South Sea Company stock. This anecdote offers an important lesson: intelligent knowledge and the ability to wait patiently are different.

Successful investing in the market requires not only intellectual analytical skills but also emotional control and patience. In particular, one must be wary of the temptation to repurchase assets sold due to greed.

Newton's case shows that even someone with exceptional intellect can fall into the market's psychological traps. Cool judgment and a long-term perspective on market volatility are required.

Therefore, with every investment decision, it is necessary to recall Newton's experience, check one's emotions, and approach with caution.

The New York manufacturing index for September recorded 7.6, falling short of market expectations. Signs of economic slowdown are appearing, with new orders and shipments contracting.

However, the prices paid index is nearing its highest level since 2022, indicating that price pressures remain high. This is a different scenario from a typical slowdown where inflation declines.

The phenomenon of increased costs and delivery times despite reduced demand and shipments acts as a constraint, making it difficult for the Fed to easily cut interest rates.

Thus, the Fed faces a complex policy decision between two conflicting factors: economic slowdown and inflationary pressure.

This is interpreted as a proactive measure to prepare for increased delinquency risks due to prolonged high interest rates and to strengthen asset quality and capital ratios.

Concerns have been raised that the profit model for stablecoins could be limited as the likelihood of the bill passing decreases. This appears to reflect policy uncertainty in the stock price rather than damage to the company's fundamentals.

In the absence of a clear regulatory framework for the cryptocurrency market, investors are exposed to high volatility and unpredictable policy changes.

Therefore, the future progress of related legislation is expected to continuously affect the stock prices of cryptocurrency companies, including Circle.

This shows a prevailing perception that the Fed's tightening stance will be prolonged.

This outlook could exert continuous downward pressure on growth stock valuations. A high-interest rate environment increases corporate borrowing costs and lowers the present value of future cash flows.

However, if inflation and employment indicators slow faster than expected, the Fed's rate hike outlook could weaken. The market is closely watching key economic indicators.

Consequently, investors must closely monitor the Fed's monetary policy direction and changes in economic indicators when formulating investment strategies.

This raises concerns about legislative delays.

With the bill stalled at the procedural vote stage in the Senate, policy uncertainty in related markets is prolonged, and a wait-and-see attitude is deepening. Investors are closely monitoring whether the bill will pass.

For the bill to pass, amendments must be proposed or bipartisan consensus is needed. The current deadlock makes final passage of the bill difficult.

Therefore, the future progress of the Clarity Bill is expected to have a significant impact on relevant industries and markets.

This leads to increased industrial fuel costs, putting pressure on finished goods prices.

The rise in diesel prices is a result of combined pressure from refinery supply constraints and rising oil prices. In particular, increased logistics and transportation costs are burdening overall economic activity.

During periods of economic slowdown with reduced freight volumes, price elasticity may weaken. However, current supply-side constraints are driving price increases.

Therefore, rising diesel prices are exacerbating inflationary pressures and squeezing corporate margins.