US 10-Year Yield Exceeds 4.9%, Testing 5% Upper Bound

Former President Donald Trump mentioned a plan to provide subsidies worth 1,500 trillion won to the American people, putting upward pressure on bond yields and inflation in the market. Yu Sa-nam assessed this as a "smart move" from Trump's political perspective, not from the standpoint of American citizens or investors.

This situation adds instability to the international oil market.

Energy stocks fell due to concerns about declining refining margins from potential refinery attacks. This raised doubts about whether rising interest rates are destroying raw material demand and made investment decisions in energy stocks more difficult. Yu Sa-nam suggested that this phenomenon might be related to reduced refining margins.

Considering the current market situation, a strategy of staggered selling has been suggested as not bad. Yu Sa-nam, based on the investment philosophy that realizing profits is always right, emphasized the necessity of staggered selling at this time, despite differing opinions on holding or selling stocks depending on the situation. This is presented as an effective risk management strategy when market uncertainty increases.

Rising bond yields lead to an appreciating dollar, reducing the attractiveness of commodities. Silver and copper, in particular, are more vulnerable to rising bond yields as demand can plummet during an industrial production contraction. This operates on the same principle that a rise in 10-year yields causes an overall decline in energy stocks, creating a chain reaction across the commodity market. A strong dollar is one of the main factors negatively impacting commodity prices.

Yu Sa-nam stated that buying SPY often yields greater returns when bond yields are expected to rebound. However, from a hedging perspective, the effectiveness of bond products was reconfirmed. The analysis suggests that bond investment still plays a crucial role in defending assets amid market volatility.

The market consensus for the Producer Price Index (PPI) expected a headline increase of 0.4% month-over-month and 3.4% year-over-year. Core PPI was projected at 0.2% month-over-month and 2.4% year-over-year. A 4% rise in gasoline prices was predicted to drive the headline index. If core PPI records a higher-than-expected 0.4%, expectations for interest rate hikes are likely to resurface, indicating persistent inflationary pressure.

The distribution is variable, not fixed, and recorded $0.3071 as of the end of August. As this product continuously rolls over Treasuries with maturities from 0 to 3 months, if short-term interest rates fall, the distribution also decreases relatively quickly. This product is suitable for short-term fund operations of 3-12 months but is deemed unsuitable as a substitute for long-term bonds.

Cruise company Carnival (CCL) is scheduled to announce its third-quarter earnings on September 17th. Key points of interest for this earnings release are whether the annual guidance and fuel cost per ton forecast will be maintained. While there are concerns about increased fuel costs due to recent oil price surges, the 2026 booking rate reaching 93% indicates robust demand, drawing attention to future outlook. The company's maintenance of guidance is expected to be a crucial variable for stock performance.

The crypto bill, the Clarity Act, is approaching a procedural vote in the Senate on September 15th. It passed the Senate Banking Committee 15-9, but securing the 60 votes needed for passage requires compromise on ethical provisions and the scope of stablecoin compensation demanded by Democrats. Galaxy Research downgraded the probability of passage from 50% to 30%, and Citi expects it to be processed in 2027 as a base estimate, indicating a predominantly skeptical view of the bill's passage.

For the sole purpose of defending against stock declines, over 90% gold is recommended. For simultaneously targeting inflation defense and industrial economic recovery, 80% gold and 20% platinum is suggested as a balance point. If the platinum ratio exceeds 30%, there is a risk of it turning into a commodity market bet, and it should be noted that gold's defensive power may weaken when real interest rates are soaring.

The distance to 5.0% is not large, so there is sufficient possibility of touching 5.0% intraday in the short term. However, institutional forecasts generally do not expect it to close above 5.0% and stay there, indicating prevailing skepticism about a long-term settlement above 5.0%. The main factors for upward rate pressure are identified as oil prices and Treasury supply burden.

According to a Wall Street Journal report, Iran has resumed ballistic missile production at an underground facility using stockpiled components. This has raised concerns among US and Middle Eastern officials that military tensions in the region could escalate again. If military tensions in the Middle East intensify, anxieties about crude oil supply chains and maritime transport routes could grow, leading to increased oil price volatility and a strengthening preference for safe-haven assets. Iran's actions add significant uncertainty to the international oil market.

Jensen Huang, CEO of Nvidia, recently stated that investments in artificial intelligence are not cyclical. He directly dismissed concerns raised in some market segments about mutual funding between big tech companies and inflated sales figures on ledgers, specifically a 'self-referential investment bubble.' CEO Huang countered that AI investments lead to actual productivity innovation, emphasizing that securing market confidence in the sustainability of hardware demand is crucial. These remarks demonstrate his belief in the long-term growth potential of AI technology.

However, if inflation stabilizes and signs of an economic slowdown appear, downward pressure on rates may ease. Yemen's Houthi rebels stated that Red Sea navigation is safe for all member vessels except Saudi Arabian ships.

The Treasury accepted purchase applications for 23 issues, aiming to provide long-term liquidity. This buyback demonstrates the Treasury's commitment to ensuring market liquidity and managing interest rate volatility.

In Oracle's earnings announcement, the market is watching whether revenue surpasses $19.73 billion and EPS exceeds $1.74. Particularly, whether cloud service (IAS) revenue exceeds $7.19 billion and guidance is maintained are considered key points. The current operating profit consensus has been downgraded by 2%, and quarterly free cash flow (FCF) is expected to be -$3.7 billion, indicating that cloud business performance will determine overall results.

This aims to curb sharp yen depreciation pressures. However, yen depreciation pressure is likely to persist unless the US-Japan bond yield gap narrows. There's a risk of the market intervention effect weakening if foreign reserves are depleted, drawing attention to further responses from the Japanese government.

Research and development costs also surged by 67% year-over-year, with capital expenditures and principal repayments totaling $31.08 billion. These massive investments demonstrate Meta's strong commitment to enhancing AI technological competitiveness and are seen as a strategy to secure long-term growth drivers.

The bid-to-cover ratio reached 2.61x, surpassing the recent average of 2.38x, indicating robust demand. Notably, the proportion of overseas central banks and institutions (indirect bidders) expanded to 79.5%, while primary dealers' acquisition volume sharply decreased to 2.2%. This suggests that institutional investors' interest in long-term Treasury bonds remains high despite elevated interest rates.

It needs 60 votes in the Senate plenary session for final passage.

This price is lower than the market's expectation of $2,300 to $2,500, interpreted as Apple's aggressive strategy to penetrate the foldable phone market. Meanwhile, the iPhone 18 Pro and Pro Max models are expected to increase by $100, a strategy to offset rising component costs such as memory.

OffA predicted $73 in Q2 2027 and $74 in Q4 2027. If disruptions to transit through the Strait of Hormuz persist, oil price increases could be prolonged. If Saudi Arabian or UAE production infrastructure is damaged, a tail risk of oil prices breaking $150 could occur. The market is deliberating on strategies to respond to these scenarios.