U.S. Interest Rate Hike, SK Hynix, Household Debt, Clarity Act Failure

This is a measure to stabilize prices, suggesting that market expectations for interest rate cuts could further diminish, especially given that even Fed members cannot predict three months ahead.

Jerome Powell, the Fed Chair, stated in a recent press conference that inflation remains high and that maintaining high interest rates is necessary.

It is speculated that this could be achieved by establishing a joint venture with Intel or utilizing Intel's idle factory sites.

SK Hynix previously denied rumors of acquiring Intel factories but kept the possibility of cooperation open. Intel has recently faced management difficulties and delays in completing its Arizona factory, suggesting that cooperation with SK Hynix could align with both parties' interests.

In a situation where the U.S. government encourages domestic semiconductor production, SK Hynix's move is interpreted as a strategy to strengthen its position in the U.S. market and secure government support.

In contrast, this cooperation with Intel focuses on DRAM front-end production.

DRAM front-end processes require massive infrastructure, including enormous power and special gases. The judgment is that utilizing Intel's existing factories and infrastructure is far more rational than newly building such infrastructure in the U.S.

Therefore, the cooperation utilizing the Indiana plant and Intel factories is expected to create synergy by performing different roles in the semiconductor production process. Through this, SK Hynix plans to strengthen its memory semiconductor supply chain in the U.S. market.

Therefore, if SK Hynix cooperates with Intel to produce memory semiconductors in the U.S., government approval and reporting procedures under the Industrial Technology Protection Act are essential.

While the U.S. side is pushing for the operation of semiconductor factories within its borders, concerns about the potential leakage of core national technologies abroad also exist. Accordingly, devising a plan to prevent technology leakage while meeting the demands of the U.S. government remains an important task for SK Hynix.

At the end of the second quarter of this year, South Korea's household debt-to-nominal GDP ratio was estimated at approximately 81.3%. This is the lowest figure in 10 years, and at first glance, it might appear that the burden of household debt has decreased.

However, the actual total household debt increased to about 2,405 trillion won in the second quarter. The decline in the household debt ratio is because the nominal GDP growth rate significantly exceeded the debt growth rate, which means that the size of GDP grew faster rather than the overall debt of the economy decreasing.

Therefore, for nominal GDP to grow, both production volume and prices must increase.

In the second quarter of this year, the nominal GDP growth rate recorded 26.4%, reaching its highest level in 47 years. This was largely contributed by the growth of export companies, and the increase in nominal GDP due to strong exports created an optical illusion in the reduction of the household debt ratio.

This bill sought to clearly classify individual coins as either securities or commodities.

If a coin is classified as a security, it would be subject to strict regulation under the jurisdiction of the U.S. Securities and Exchange Commission (SEC); if classified as a commodity, it would fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC), with relatively relaxed regulations. The Clarity Act failed, receiving only 50 out of the 60 votes required for Senate passage.

It was expected that if this bill passed, regulatory uncertainty in the virtual asset market would be resolved, but its rejection has led to a chaotic situation once again.

Democrats argued that it is inappropriate for high-ranking officials to profit from virtual asset businesses while in office, demanding regulations to prohibit coin investments by high-ranking officials, including the president.

Republicans presented a compromise reflecting Democratic concerns, but the bill failed to pass due to Democratic opposition. The allowance of interest payments on stablecoins was also one of the major points of contention between the two parties.

There was an expectation that the U.S. short-term Treasury bond yields would stabilize if the Clarity Act passed. This is because stablecoin issuers hold U.S. short-term Treasury bonds as reserves, and an expanding stablecoin market was expected to increase demand for Treasury bonds, thus helping stabilize yields.

However, with the bill's failure, the momentum for the stablecoin market's expansion was lost, and the anticipation of growth among major buyers of U.S. Treasury bonds also diminished. This factor weakened expectations for the stabilization of U.S. Treasury yields.

Coinbase, a major virtual asset exchange, fell 14% over two days, and stablecoin issuer Circle also dropped about 17%.

This is analyzed as a result of selling pressure due to the loss of expectations for resolving regulatory uncertainty in the virtual asset market. The bill's failure delivered a short-term shock to the virtual asset market, dampening investment sentiment.