Bitunix Analyst: Policy Tools Are Being Financialized — Global Markets Are Trading Not Just Rates, but Institutional Credibility

August 4th. A common signal was released in the global market, indicating that governments around the world are intervening in market operations with unprecedented intensity. Investors' focus is no longer solely on economic data itself, but on whether policy tools still have sufficient credibility and execution capability. The U.S. Treasury Department has raised the third-quarter borrowing size to $739 billion, indicating that the pressure of U.S. bond supply will continue to increase. On the other hand, Federal Reserve official Williams still maintains the stance that inflation will eventually return to 2%. However, in an environment where the market's anticipation of the Fed's forward guidance is diminishing and long-term bond yields remain elevated, monetary policy truly needs to restore the market's trust in the policy path, not just inflation expectations.

Also worth noting is that Japan seemingly intervened in the forex market again last week, with an estimated $34 billion intervention. The U.S. Treasury Department openly supported expanding the discussion on the FIMA tool, indicating that stabilizing the yen is no longer just Japan's unilateral effort to maintain the exchange rate, but also involves avoiding the impact of Japan's massive U.S. bond sales on the global bond market. This shows that the U.S. is trying to use financial tools to stabilize its allies while reducing its own bond market's liquidity risk. The focus of policy coordination has gradually shifted from simple monetary policy to the stability of the global financial system.

On the other hand, the Trump administration is facing dual challenges both domestically and internationally. 25 states have jointly sued the latest tariff measures, reflecting that the tariff policy has evolved from an international trade issue to a legal battle over U.S. domestic institutions and administrative authority. Trump's public demand for oil companies to lower retail fuel prices also indicates that the importance of energy prices to political approval ratings is continuously increasing. However, the real determinant of oil prices still lies in whether the Strait of Hormuz returns to normal operation. Although Trump has signaled for negotiations, Iran refuses to fully reopen the strait. The differences in their statements imply that the risk premium on energy supply disruptions is still difficult to eliminate completely in the short term.

It is worth noting that the U.S. is concurrently advancing an AI governance framework, reflecting that AI competition is gradually shifting from computing power, chips, and capital expenditure to the establishment of institutional and regulatory standards. When major economies simultaneously strengthen policy interventions in areas such as currency, energy, technology, and trade, the future competition in the global capital market will not only be about corporate profitability but also about whether countries' policies are consistent, predictable, and able to maintain market trust in institutional credibility. In such an environment, asset price volatility will stem more from corrections in policy expectations rather than changes in fundamentals themselves.