This Week in Review: Fed Rate Hike Expectations Plummet, AI Craze and Middle East Crisis Dominate Markets

August 15th. This week, the global market focused on inflation easing, Fed policy, Middle East tensions, and the AI investment wave. The U.S. saw a significant drop in July CPI and PPI, leading to a reduced expectation of interest rate hikes for the rest of the year. However, long-term U.S. Treasury bonds remained under pressure due to fiscal concerns. U.S. tech stocks rebounded, the South Korean stock market surged more than 20% in two weeks, and the AI industry chain once again became a key investment theme.

In the U.S., July CPI rose by 3.4% year-on-year, core CPI rose by 2.5% year-on-year, and PPI fell to a year-on-year increase of 4.7%, causing a significant decline in market expectations for a September Fed rate hike. However, the yield on U.S. 30-year Treasury bonds rose to 5.22%, reaching a new high since 2001. Investors are concerned that the expanding U.S. deficit will raise long-term financing costs.

Tensions in the Middle East continued to escalate. Trump stated that the U.S. would declare the Strait of Hormuz as "U.S. territory" after "defeating Iran" and mentioned further economic sanctions against Iran. Iran responded that only Iran could decide on opening or closing the strait. The U.S. military continued to strengthen its presence in the region, with the USS Washington carri...ndef.

The AI capital market continued to expand. NVIDIA, together with BlackRock, Blackstone, Goldman Sachs, and other institutions, plans to mobilize over $500 billion in capital to support AI data center construction. Jensen Huang stated that AI computing is becoming a new type of infrastructure like energy and transportation, but the market is also starting to pay attention to the risks of AI financing models.

The South Korean KOSPI index rebounded strongly this week, rising nearly 22% from its late-July low and re-entering a technical bull market. Samsung Electronics and SK Hynix led the gains driven by increased demand for AI servers and HBM.

AI company valuations continued to soar. It is reported that Anthropic plans to IPO, with market expectations for a valuation of up to $2 trillion. OpenAI is accelerating its commercialization efforts, with reported annual revenue exceeding $40 billion.

Regarding tech giants, Apple was reportedly collaborating with Alibaba to train a China-specific large model, adjusting its AI localization strategy. Meanwhile, there is still controversy over whether Apple's 20th-anniversary "All-Glass iPhone" project is progressing.

In the market, the S&P 500 and Nasdaq continued to rise this week as investors once again bet on the "rate cut expectations + AI profit realization" logic. However, Bank of America warned that the current market bullish sentiment has reached an extreme level seen since 2021, highlighting the need to be cautious of geopolitical risks and valuation pressures.