US Treasuries hold steady ahead of CPI; oil prices approach $90, intensifying tension; 30-year yield hits near 20-year high

⑴ The US Treasury market is in a heightened state of alert ahead of the release of a key inflation report. The renewed tightening in energy markets is further intensifying the tense atmosphere, with Brent crude holding near $90 per barrel after rising about 5% on Monday. Hopes for reopening the Strait of Hormuz have once again been dashed due to serious disagreements over negotiation terms between the US and Iran.⑵ The yield on the US 30-year Treasury bond is hovering around 5.28%, just a step away from a nearly 20-year high. The ongoing pressure at the long end reflects deep concerns in the market about the stickiness of inflation triggered by energy shocks. Despite a solid second-quarter earnings season, the upward pressure on interest rates continues to suppress risk assets.⑶ Additional variables have emerged in the foreign exchange market, as the yen weakened to the 159 level against the US dollar on Monday and continued this trend into Tuesday. With Japan closed for a holiday, the market appears to be testing the determination and ability of US and Japanese authorities to continue supporting the yen following recent joint intervention. Doubts about whether the Bank of Japan is willing to significantly tighten monetary policy to support exchange rates, along with concerns in the US Treasury market that Japan's potential long-term selling of US dollars may be accompanied by reductions in its US Treasury holdings, together constitute background risks.⑷ On the corporate front, Nvidia is joining forces with six major Wall Street institutions to raise a financing pool of about $500 billion to support its AI infrastructure initiatives. Intel is raising about $20 billion through an additional share offering. The capital expenditure race among tech giants in the computing power sector continues to intensify.⑸ Recent yen-buying intervention activities have cumulatively sold nearly $100 billion, temporarily squeezing speculative short positions at close to two-year highs. Whether speculators will rebuild short positions has become a market focus. Despite Japan's market holiday today, the cautious mood regarding further intervention has not dissipated.