[Interest Rates, AI, Geopolitics] Decoding the Market 'Triangle': 3 Surprising Truths Revealed by the Latest Market
Introduction: The ‘Unexpected Silence’ and Frenzy After the Storm
The recent market has shown movements that, at first glance, seem full of contradictions. While ‘headwinds’ such as hawkish inflation-curbing remarks by Federal Reserve officials and concerns over interest rates remaining high have been blowing, the market has turned toward a powerful buyback, centered on high-tech stocks.
The main engine of this rebound was a ‘short squeeze’ resulting from the dissipation of excessive fear regarding high interest rates and high oil prices leading up to the previous weekend. What currently dominates the market is a ‘triangle market’ where the three elements of ‘interest rates, AI, and geopolitics’ are intricately intertwined. Why did investors swallow the hawkish warnings and steer toward risk-on? Based on the latest data, we will unravel the three truths at the core of this.
Truth 1: The ‘Success’ of US-China Dialogue Triggered the Risk-On
The biggest factor driving this powerful risk-on development is the expectation of a dramatic easing of geopolitical risk. Ministerial-level talks between US Treasury Secretary Bessent and Chinese Vice Premier He Lifeng were held in New York, and Bessent declared this to be a ‘very successful engagement.’
This is not merely diplomatic etiquette. The market interpreted this as a concrete step forward toward ‘easing US-China trade friction’ and ‘stabilizing supply chains.’ For the AI sector, especially NVIDIA, the receding uncertainty regarding access to the Chinese market and parts procurement became a powerful positive surprise that dispelled concerns about the global macro economy. This geopolitical thaw painted the stock market bullish at the start of the week.
Truth 2: The Sharp Drop in Oil Prices and Avoiding the ‘Worst of Inflation’
The second truth is the retreat of inflation concerns brought about by the decline in energy prices. Following the US Department of Defense’s announcement that the number of ships passing through the Strait of Hormuz has recovered and the route is heading toward normalization, supply anxiety has eased. WTI crude oil futures fell sharply to the $93 range (down over 2.7% from the previous day).
With the ‘scenario of a sudden resurgence of inflation due to high oil prices,’ which the market feared, moving further away, the rise in the US 10-year Treasury yield was braked. Furthermore, in the foreign exchange market, while the dollar-yen maintained a high level in the low 157 yen range, a capital rotation of selling the ‘yen,’ considered a safe asset, and shifting funds to ‘US stocks and crypto assets’ became clear. As a result, major indices have shown a phenomenal recovery as follows (as of September 21, 2026).
● NY Dow: $52,048.83 (+0.71% / +$366.19)
● S&P 500: 7,764.70 points (+1.49% / +114.20 points)
● Nasdaq: 27,122.09 points (+2.26% / +599.55 points)
● Bitcoin: Around $85,221 (+4.99%)
Truth 3: The Frenzy for AI Infrastructure That Swallows Even the ‘Pain’ of High Interest Rates
The third truth is the overwhelming ‘valuation resilience’ possessed by the AI sector. Even as Chicago Fed President Goolsbee maintained his hawkish stance, stating that ‘curbing inflation may involve pain such as worsening employment,’ the return of funds to AI-related stocks did not stop.
Specifically, there was a rush of dip-buying in AI hardware-related stocks such as Arm, Western Digital, and NVIDIA. The fact that the rise in long-term interest rates was suppressed due to lower oil prices means a decrease in the ‘discount rate’ used to discount future cash flows to present value. This justified the valuations of AI companies expected to have high growth, which were thought to be too high, and dispelled concerns about increased capital costs. The singularity of the current market is that even with the weight of high interest rates, the underlying strength of AI demand is a stronger investment motive.
Institutional Investor Perspective: Selecting for ‘Quality’ by Reading Two or Three Moves Ahead
Institutional investors do not view the current situation as ‘unconditional optimism.’ While acknowledging the retreat of geopolitical risk, they are looking ahead to the ‘selection’ that follows. Based on second-order thinking, the three-stage forecast for the future is as follows.
[Step 1: Immediate Term] A comprehensive rise in high-tech stocks due to short-covering by short-sellers who welcomed the geopolitical easing and lower oil prices.
[Step 2: 1-2 Months Later] While policy interest rates remain high, the shaking out of companies that cannot prove the ‘substantial monetization’ of AI investments in their third-quarter earnings.
[Step 3: The Main Event] As the upside for the index as a whole becomes heavy, a concentration of funds into ‘ultra-large debt-free platformers (quality stocks)’ that can complete infrastructure development with their own capital.
It is a bad move to rashly conclude that ‘geopolitical easing = end of adjustment’ and indiscriminately jump into small-cap stocks with poor cash flow. Since the interest rate level itself remains high, narrowing down to ‘high-quality’ companies that can win growth on their own is essential.
LUNA’s Perspective: One Stock to Watch Now and Investment Philosophy
In the current market environment, the stock to watch most is NVIDIA (NVDA). In addition to its overwhelming market share, it holds abundant cash flow that is less susceptible to the high-interest-rate environment, and it is in a position to most directly enjoy the benefits of the easing of US-China relations.
There are words to keep in mind when investing.
‘A fisherman does not cast his net on a day with high waves. When the market jumps with joy, it is time to quietly inspect your own gear.’
As a concrete strategy, I recommend diversified buying at the timing when a small dip is made after this sharp rise, that is, when the S&P 500 approaches the 7,700-point level. On the other hand, if the S&P 500 falls below the 7,600-point level, which is a major support line, please thoroughly follow a disciplined exit rule, such as mechanically liquidating 20% of your growth stock position.
Conclusion: To Ride the Waves of Change
Interest rates, AI, geopolitics. The ‘triangle market’ consisting of these three vertices is constantly changing its shape. While lower oil prices and progress in US-China dialogue are powerful tailwinds, the wave of ‘selection’ due to the prolonged high interest rates is just around the corner.
The ones who maximize profits are not mere optimists, but investors who continue to insist on ‘quality’ while always assuming the worst-case scenario. In the midst of the current euphoria, have you finished checking your portfolio in preparation for the next ‘selection’? Now is the time when a calmness that excludes emotional trading and discerns the true earning power of companies is required.