0924 Thursday / Why US interest rates surged

The September (month 9) 24 Indicator Tracker reviews changes in the U.S. and Japanese markets while the Korean market is closed for the Chuseok holiday. Supply and demand in Korean equities are weak, with foreign investors recording net selling for 6 consecutive weeks and individual investors also reducing their holdings. The analysis argues that although Samsung Electronics and SK Hynix have strong earnings, rising interest rates, the end of share buybacks, diminished expectations for shareholder return policies, and a shortage of buying funds are holding back their share prices. The KOSPI closed above the 7,000 level, but with the 20 day and 60 day moving averages converging, its direction could be determined during the remaining 3 trading days of September (month 9) after the holiday. The U.S. Treasury yield for a maturity of 10 years jumped from approximately 4.95% to 5.14%. The explanation identifies higher borrowing costs on new issuance as the immediate trigger, including an auction yield exceeding 5% on Treasury notes with a maturity of 5 years. The subsequent auction of Treasury notes with a maturity of 7 years could also affect long-term yields. Geopolitical expectations have also weakened, as U.S.–Iran contacts ended without results and U.S.–China talks achieved little beyond temporarily putting tariff disputes on hold. The rollover between WTI futures contract months can make the decline appear larger than it actually is, while gasoline and diesel prices experienced by U.S. consumers remain high, leaving inflationary pressure unresolved. Japanese government bond yields for a maturity of 30 years also surged, and the Nikkei's chart has weakened, making it necessary to consider the overall trend in Asian equities together. Samsung Electronics is relatively strong on dividend expectations, but SK Hynix faces substantial selling pressure. The host says they increased their cash allocation to approximately 70% to avoid uncertainty before the Korean market reopens and will decide how to respond after monitoring interest rates, exchange rates, and developments in overseas markets through the weekend.