U.S. 10-Year Yield Tops 5%, Highest in 18 Years on Oil Surge

* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and delivers six news items tailored to each reader type.

1. U.S. 10-Year Breaks Through the 5% Line as Markets Bet on a Rate Hike

- Key points: The yield on the 10-year U.S. Treasury note rose 7 basis points (1bp = 0.01 percentage point) to 5.039% during trading on the 15th, its highest level since July 2007. Inflation concerns spread after news that Saudi Arabia had closed an alternative crude shipping route sent Brent and U.S. West Texas Intermediate futures up about 5% to above $100 a barrel. Price indexes far above the Fed's 2% target, the massive debt of the U.S. federal government and concerns over large-scale corporate bond issuance tied to artificial intelligence also pushed yields higher. Based on the CME FedWatch tool, the probability of a 0.25 percentage point increase at the September Federal Open Market Committee meeting jumped to 94.5% from 87.3% the previous day.

2. U.S. Inflation Flips the Rate Outlook: 85% of Economists Say the Fed Hikes This Week

- Key points: In a Reuters survey of 101 economists, 86, or 85%, expected the Fed to raise rates by 25 basis points in September. If that happens, the U.S. benchmark rate would rise to 3.75% to 4.00% from the current 3.50% to 3.75%, marking the Fed's first increase since July 2023. The revision was driven by the August consumer price index, which rose 3.4% from a year earlier. Its month-on-month gain of 0.4% was larger than July's 0.1%. Of the 70 economists who offered a view on the path ahead, 37, or about 53%, expected at least one additional hike by the end of March next year, lending weight to expectations of prolonged tightening.

3. [Investment Window] Investment Strategy at a Rate Inflection Point

- Key points: The Bank of Korea's back-to-back rate increases in late August and hawkish remarks by Fed Chair Kevin Warsh at the Jackson Hole meeting came in quick succession. Article 1 of the Bank of Korea Act sets out a single mandate that puts price stability through monetary and credit policy first, while the Fed operates under a dual mandate that, under Section 2A of the Federal Reserve Act, sets maximum employment, stable prices and moderate long-term interest rates side by side. On that basis, the column argued that central banks will not easily change the direction of monetary policy until price stability is confirmed. For asset allocation, it advised locking in interest income through high-yielding short-term bonds, then buying long-term bonds in stages once the peak in rates is confirmed, and rebuilding equity holdings around stocks with stable dividends and pricing power.

4. Korean Retail Investors Flee to U.S. Ultra-Short Bonds, Pouring in 300 Billion Won in a Month

- Key points: Over the past month, from Aug. 15 to Sept. 14, domestic investors made net purchases of $218.49 million, or about 294.5 billion won, of the iShares 0-3 Month Treasury Bond ETF (SGOV). That was the second-largest amount among all overseas equities after Alphabet, ahead of the Vanguard S&P 500 ETF (VOO) and the Schwab U.S. Dividend Equity ETF (SCHD). The TIGER U.S. Ultra-Short Treasury Bond ETF, a domestically listed product from Mirae Asset Global Investments, drew 20.9 billion won from individual investors. Because bond yields and prices move in opposite directions and price declines are larger for longer maturities, ultra-short bonds with low volatility and high liquidity have gained appeal during a period of rising rates.

5. Pulling Up the Ladder on Latecomers: The Race to Set AI Standards

- Key points: Debate is spreading over the motives behind calls from leading artificial intelligence executives to slow the pace of advanced AI development. Anthropic CEO Dario Amodei's call to ease off drew support from OpenAI CEO Sam Altman, xAI CEO Elon Musk and Google DeepMind Chairman Demis Hassabis, while Microsoft released an AI code of conduct. But David Sacks, chairman of the White House science and technology advisory council, said asking the government for the regulation a company wants can look like regulatory capture. Anthropic, meanwhile, is accelerating plans for a Nasdaq listing in late October and is in talks to raise $10 billion with Nvidia secured as a core investor, while OpenAI raised its projection for spending on AI computing infrastructure through 2030 to $750 billion from $600 billion.

6. With China's Rare Earth Controls Looming, Korea Searches for Resources in Chungnam and Sejong

- Key points: The Korea Institute of Geoscience and Mineral Resources has designated about 225 square kilometers stretching from Jeoni in Sejong to the Gongju area of South Chungcheong Province as a promising new rare earth zone and has begun airborne radiometric and magnetic surveys. China's extraterritorial controls, introduced last year, have been deferred until Nov. 10, and a second round of export controls extending to downstream areas such as finished magnets, refining technology and production equipment is expected once the grace period ends. The government is promoting a recycling ecosystem for used permanent magnets and process scrap, with plans to raise the recycling rate for 10 strategic core minerals to 20% by 2030. But while South Korea's dependence on China for rare earth raw material imports stood at around 50% as of 2025, China accounted for more than 90% of materials and components imports that year, leaving diversification of downstream processing as a challenge.