September 24: ‘US Interest Rates at 5% × Yen Depreciation × AI Stocks × US-China Summit’

? First, why is the ‘5% US interest rate’ important?In the US market on September 23, the 10-year US Treasury yield temporarily rose to 5.038%. The 2-year note was at 4.860%, and the 30-year bond was at 5.346%. The background to this is that the US PMI for September significantly exceeded expectations, heightening concerns about the strength of the US economy and the prolongation of inflation. This is the key point.US economy is strong?Inflation is difficult to lower?The Fed finds it difficult to lower interest rates?Rise in US Treasury yields?Awareness of stocks being overvaluedThis is the flow.AI and high-tech stocks, which are bought based on expectations of future profit growth, are particularly susceptible to this impact.?? Even so, AI stocks are strongThis is the interesting part of the current market.When interest rates rise, it is usually a headwind for growth stocks, but there is extremely strong investment demand for AI-related stocks.In fact, in the US market on September 21, the Nasdaq hit a record high against the backdrop of expectations for AI. In other words, currently, ‘negative factors due to rising interest rates’and’positive factors due to AI growth expectations’are colliding.Therefore, when looking at AI stocks, instead of simply thinking ‘they will fall because interest rates have risen,’ you need to look at the corporate performance aspect of how much profit AI companies can generate in the future.?? And what is important for Japan is the ‘yen depreciation’On September 23, the dollar-yen rose to the 158 yen level. While the US 10-year Treasury yield exceeds 5%, the dollar is also strengthening. Why does a rise in US interest rates tend to lead to a weaker yen?Roughly speaking, the structure is:US interest rates are high?The appeal of holding dollars increases?Dollar buying/yen selling?Yen depreciationWhen the yen depreciates, from the perspective of Japanese investors, multiple effects occur:* Exchange rate risk increases when buying US stocks* The yen-denominated value of US assets may increase* It tends to be a tailwind for export companies* On the other hand, there is upward pressure on import pricesIn other words, US interest rates ? ? Dollar appreciation ? Yen depreciationis also affecting Japanese stocks.?? And today’s biggest event, the ‘US-China Summit’On September 24, President Trump and President Xi Jinping are scheduled to meet in Washington.The focus is on tariffs, rare earths, semiconductors, AI, Taiwan, agricultural products, etc.Investors are particularly focused on AI and semiconductors.The US has restricted China’s access to advanced semiconductor and AI technology. Meanwhile, in China, companies like Huawei are accelerating the development of AI semiconductors. In other words, the US and China simultaneously have ‘areas where they can cooperate on AI’ and ‘areas where they compete over AI’.?? How will the US-China summit affect AI stocks?The scenario here splits depending on the outcome.Scenario A: US-China relations improveDiscussions on tariffs, semiconductors, rare earths, etc., progress?Caution regarding trade friction recedes?Sense of security regarding corporate capital investment and semiconductor demand?Positive material for AI and semiconductor stocksThis is the flow.On the other hand,Scenario B: Conflict reignites?Semiconductor export restrictions are strengthened?Anxiety in the supply chain of AI-related companies?Selling material for semiconductor and AI stocksIn fact, discussions are continuing between the US and China regarding AI security and critical minerals, but tension remains in core areas such as export restrictions on advanced AI chips. ?? Connecting the four points together looks like thisIf we map out the current market, the structure is:US economy is strong?Inflation caution?US long-term interest rates in the 5% range?Dollar appreciation?Yen depreciation to the 158 yen levelOn the other hand,AI demand expansion?Concentration of investment in AI and semiconductor stocks?Nasdaq riseFurthermore,US-China summit?Discussing tariffs, semiconductors, AI, and rare earths?Impact on the future investment environment for AI and semiconductor companies?? Points for investors to watch todayIf you are looking at today’s market, rather than just looking at individual stocks, it is much easier to understand if you look at these five as a set:? US 10-year Treasury yield? Dollar-yen? Nasdaq? Semiconductor stocks? Results of the US-China summitParticularly important is the US 10-year Treasury at 5%. Whether this is a temporary rise or a trend of prolonged high interest rates will change the valuation of AI and high-tech stocks. Reuters also pointed out in early September, regarding the phase where the US 10-year Treasury yield is approaching 5%, the impact on borrowing costs and corporate valuation. To summarize in one word today:’AI growth expectations are strong. However, the interest rate environment supporting those AI stocks is becoming severe. On top of that, the US-China semiconductor and AI war is layered.’ This is the current investment market.And since this theme can be connected from ‘US interest rates ? yen depreciation ? prices ? household finances ? asset formation,’ it is also quite easy to use as a topic for insurance sales.