Wall Street Morning Briefing: Besant Presses Long Bond 'Stop Loss' Button, Gold and Bitcoin Surge; Moderna Ignites Pharma Bull Market, AI Momentum Stocks Liquidated

Every Monday to Friday morning, we focus on macroeconomics, US stocks, AI, precious metals, and crude oil, reviewing the market with data and seizing opportunities with trends, produced by PANews.

Debt Surpasses $40 Trillion, Treasury Department Rarely Steps In to 'Buy US Bonds'

The three major indices ended slightly higher: the Dow Jones rose 0.22%, the S&P 500 rose 0.21%, and the Nasdaq rose 0.16%, ending a three-day losing streak.

Last night, the US Treasury Department unexpectedly announced a move that exceeded market expectations: it doubled the liquidity repurchase scale for long-term government bonds with maturities of 10 to 30 years, increasing the maximum from $2 billion to at least $4 billion per transaction. Just the day before, due to investor concerns about uncontrolled US debt and the frenzied bond issuance by AI companies, the yield on 30-year US Treasuries surged to its highest level in nearly 20 years, leading to three consecutive days of declines in US stocks.

The Treasury's sudden intervention at this non-routine time sent a strong signal to the market: the government does not want to see long-term interest rates continue to soar. Following the announcement, US Treasury yields fell sharply. The yield on 30-year US Treasuries dropped more than 9 basis points in a single day, marking the largest single-day decline since October of last year; the yield on 10-year US Treasuries also fell back to around 4.64%.

However, the US debt alarm has not truly been lifted. The latest data shows that the total federal debt of the United States has surpassed $40 trillion for the first time, taking less than five years to rise from $30 trillion to $40 trillion. So far this fiscal year, the US government has spent $1.17 trillion just on debt interest, a 15% increase year-on-year, with interest now being the third-largest federal expenditure after Medicare and Social Security. Matthew Luzzetti, Chief US Economist at Deutsche Bank, pointed out that the $40 trillion figure itself is not the end of the world; the real danger lies in rising interest rates increasing the cost of borrowing, putting growing fiscal pressure on the US government.

Wall Street's Views on the Treasury's Rare Intervention are Highly Divided:

• John Briggs, Head of US Interest Rate Strategy at Natixis, believes that the Treasury's announcement at a non-routine time indicates that officials "really dislike the current out-of-control bond market situation."

• Economists at Evercore referred to it as a "mini twist operation" by the Treasury, arguing that while it can alleviate pressure in the short term, it fundamentally fails to address the underlying issues of the US's massive deficit and AI infrastructure financing.

• CNBC host Jim Cramer quipped that this is clearly another "Trump put option," where the government intervenes directly in the bond market to maintain stock market prosperity.

• RSM Chief Economist Joe Brusuelas warned that the Treasury's artificial suppression of yields could make the Fed's task of controlling inflation even more difficult.

Fed Meeting Minutes Lean Hawkish: No Exclusion of Further Rate Hikes, AI Bubble Risks Named

While the Treasury was busy "stopping the bleeding" in the bond market, the Fed's released minutes from the July meeting sent a hawkish signal. The minutes revealed that although the Fed ultimately decided to keep rates unchanged at 3.5% to 3.75%, there were significant internal divisions, with three voting members (Logan, Harker, Kashkari) explicitly voting against, advocating for an immediate 25 basis point hike.

More importantly, the minutes indicated that several officials believe that if inflation does not decline smoothly, the Fed may need to raise rates further in the future; some officials even suggested that the current restrictive monetary policy is not strong enough.

Notably, the AI boom has entered the Fed's discussions on inflation and financial stability in a very specific way for the first time. Fed officials believe that AI development has pushed up prices for chips, steel, electricity, and data center materials in the short term, creating widespread inflationary pressures through total demand channels.

The Fed also specifically warned about the fragility of AI financing, mentioning that many AI companies' valuations are based on extremely optimistic profit expectations, and a large amount of capital expenditure relies on borrowing. If the market lowers its profit expectations for AI in the future, it could trigger a widespread collapse in asset prices, affecting the financial institutions that provide loans. Nick Timiraos, a journalist known as the "new Fed whisperer," interpreted that this minutes indicate that the internal support for rate hikes at the Fed is larger than previously thought.

Additionally, Fed Chair Waller proposed at the meeting to reduce the number of policy meetings per year from 8 to 6 to allow more time to accumulate economic data, although this proposal will not be implemented until 2027.

Trump Launches 'Economic War' Against Iran, Dollar Falls Below 99, Gold and Bitcoin Celebrate

On Wednesday, Trump criticized interest rates, stating they "should be significantly lower" to help alleviate the nearly $40 trillion debt burden, while praising current Chair Waller for "doing a great job." While attacking high interest rates, he immediately announced the launch of an "economic fury operation" against Iran, warning that any country providing channels to evade sanctions will face "huge economic consequences," specifically targeting oil smuggling, currency swaps, and shell companies.

International oil prices quietly rose, with WTI crude nearing $86, reaching a nearly three-week high. Data from the US Energy Information Administration shows that US refinery utilization has risen to its highest level since 2019, while strategic petroleum reserves are at their lowest level in 43 years, further exacerbating supply concerns.

Due to the Treasury's intervention to suppress US Treasury yields, the dollar faced a fierce sell-off last night. The dollar index plummeted 0.86% to 98.69, hitting a three-month low. Spot gold surged nearly 4% during the session, breaking through the key level of $4500 per ounce, closing up 4.35%, marking the largest single-day gain in six months, while spot silver also surged nearly 6%.

Ole Hansen, a commodity strategist at Saxo Bank, stated that the Treasury's expanded repurchase signals a loosening financial environment, which is extremely favorable for gold. Currently, Wall Street's major banks show remarkable consensus on the long-term outlook for gold. Deutsche Bank set its year-end target at $4700 to $5100, Goldman Sachs at $4900, and JPMorgan even predicts that gold prices could reach $6000 by the fourth quarter of 2026.

Meanwhile, Bitcoin also experienced a surge. Data from OKX showed that Bitcoin's price surged to $70064 on Wednesday, reaching its highest level since June 2, and recording the largest single-day gain since March. Trump's meeting with executives from crypto companies like Coinbase at the White House, the SEC proposing exemptions for certain digital asset issuances, and rumors of Trump urging his paid membership group to "Just Buy" all crypto assets, combined with the decline in long bond yields and the dollar, ignited risk appetite.

AI Retreats, Pharma Explodes

The Treasury's "market rescue" halted the index's consecutive declines, but what truly ignited the market was the successful Phase III trial of the personalized mRNA cancer vaccine developed by Moderna in collaboration with Merck. The pharmaceutical sector led the S&P's eleven sectors with a gain of over 3.5%, while the biotech ETF surged nearly 6%.

At the same time, semiconductor, storage, and optical communication AI hardware momentum stocks continued to be sold off, with the Philadelphia Semiconductor Index dropping over 2%, and Goldman Sachs' broad AI basket falling about 7.5% over two days. The S&P 500 technology sector fell 0.73%, while the S&P 500 excluding AI weights actually rose 1.03%.

Goldman Sachs trader Guillaume Soria pointed out that a rare misalignment has occurred between the 3-month and 12-month momentum portfolios, with the price difference between software and semiconductors reaching the most severe two-day divergence since the vaccine market in 2020. Systematic long-short funds fell about 1.4% in a single day, with the momentum factor contributing approximately 0.6 percentage points to the loss.

The market is shifting from "buying everything AI" to "only buying AI that can truly prove cash flow and orders."

Specific Project Actions and Stock Price Fluctuations:

• Moderna surged 176.97%, marking the largest single-day gain in history and a new all-time high. The company's personalized cancer vaccine in collaboration with Merck significantly reduced the risk of recurrence and distant metastasis in late-stage melanoma during Phase III trials, making it the first successful mRNA cancer therapy Phase III result. Short sellers faced a daily loss of about $5-5.5 billion. Needham called it a "milestone victory," and William Blair upgraded its rating; Goldman Sachs raised the probability of success for melanoma to 100% and significantly increased the target price, while JPMorgan and Citigroup warned that the commercialization threshold for personalization is high and other cancer types still need validation.

• Related pharmaceutical stocks surged broadly: Merck rose 12.60%, BioNTech rose 21.96%, Novavax rose 10.8%, the S&P Biotech ETF rose 5.9%, the Nasdaq Biotech Index rose 6.4%, while Eli Lilly (+4.46%), Johnson & Johnson, and AbbVie all hit new all-time highs.

• Crypto concepts exploded, with HYPE treasury company Hyperliquid Strategies (PURR) surging over 30%: Trump stated that the CFTC chairman is studying allowing the decentralized trading platform Hyperliquid to enter the US in full compliance, which stimulated its stock price and options trading to surge. PURR's options trading volume approached 8 times the 30-day average, with over 120,000 call options traded and less than 8,000 put options. Strategy surged 12.68%, Coinbase rose 9.55%, Circle rose 9.56%, Robinhood rose 4.63%, and Canaan Technology rose over 10%.

• Storage and optical communication adjustments are not yet over: Seagate fell 7.87%, Western Digital fell 6.87%, SanDisk fell about 3.5%; Coherent fell 6.19%, Lumentum fell over 5%, with optical communication becoming the weakest link in the AI sub-sector.

• MyWave Technology rose 9.85%: The company deepened its AI chip cooperation with Google, granting Google the right to purchase up to $12.2 billion in shares. Analysts believe this move may pose competitive pressure on Nvidia and Broadcom's long-term market share. Related chip stocks collectively fell: Nvidia fell 0.99%, Broadcom fell 4.57%, AMD fell 3.71%, Intel fell 4.02%, TSMC ADR fell 0.32%, and the Philadelphia Semiconductor Index fell about 2%.

• Gold broke through $4500, and gold and silver mining stocks surged: Newmont Mining rose 7.85%, Barrick rose 7.22%, Pan American Silver rose 7.94%, First Majestic Silver rose 12.82%, and Freeport-McMoRan rose 4.18%.

• Estée Lauder surged about 16%: The company's latest financial report showed a narrowing loss, and its annual profit outlook exceeded market expectations. Consumer stocks showed significant divergence: Target surged 4.3% to hit a 52-week high due to raising its full-year sales forecast; while La-Z-Boy plummeted 17% due to an unexpected loss, and TJX fell 4.2% due to quarterly results falling short of expectations.

• Other giants: Apple rose 2.19%, despite reports that AI AirPods with cameras have been delayed until 2027 due to supply chain and software issues; Tesla rose over 4%, Amazon rose about 2.5%; SpaceX fell 2.57%, after reports that it plans to acquire AI programming startup Cognition at a valuation of $40 billion, but negotiations have been temporarily suspended; Google rose 0.15%, and YouTube reportedly offered millions of dollars in exclusive collaboration fees to popular creators to counter Netflix's poaching.

Upcoming Focus:

August 20 (Thursday)

• Seoul AI Summit from August 19 to 21: Tech leaders from Google DeepMind, Google Cloud, Microsoft Research, Nvidia, LG AI Research, Hyundai, etc., will attend. The market is focused on new collaborations in large models, AI cloud, autonomous driving, AI chips, and enterprise applications, which may catalyze the global AI software, cloud computing, chip, and robotics chain.

• World Robot Conference from August 19 to 23 in Beijing: Humanoid and industrial robot solutions from companies like UFactory, UBTECH, Siasun, Galaxy Universal, and TianGong will be showcased. If production progress, order realization, or cost reductions exceed expectations, A-shares' (A-shares) robot chain's decelerators, servos, motors, sensors, controllers, and complete machine manufacturers may receive emotional catalysts.

• 20:30 US Initial Jobless Claims: Employment data will influence the Fed's pricing alongside previously weak non-farm data. If initial claims rise, it will strengthen expectations for economic cooling and a pause in rate hikes in September; if employment remains strong, market confidence in "holding steady" may decline.

• Alibaba (20:00 conference call), Pop Mart, NetEase, Walmart, Ping An of China, China Telecom, AIA, Li Ning, Futu Holdings earnings: Alibaba is the top focus among Chinese concept stocks, with the market paying attention to e-commerce GMV, cloud intelligence revenue, AI investment, and Tongyi Qianwen commercialization; Pop Mart focuses on IP overseas expansion, store expansion, and gross margin; NetEase verifies game revenue and AI tools; Walmart is a core barometer of US consumer resilience.

• 23:10 St. Louis Fed President Bullard's interview with CNBC: He previously indicated support for the July rate hike; if he emphasizes inflation risks and the necessity of policy tightening again, it may push US Treasury yields to rebound, halt the dollar's decline, and put pressure on gold and high-valued AI assets.

August 21 (Friday)

• 07:30 Japan's July Core CPI: If inflation exceeds expectations, expectations for a September rate hike by the Bank of Japan may rise, potentially causing the yen and global interest rate curves to fluctuate; if inflation falls, it will alleviate global carry trade liquidation pressure and reduce upward pressure on global long-term rates.

• 08:00 South Korea's export data for the first 20 days of August: The previous year's value was as high as 52.3%, mainly driven by rising storage prices and AI chip exports. This data is a leading indicator of the continuation of the global semiconductor cycle and AI capital expenditures, directly affecting sentiment for Samsung, SK Hynix, Micron, TSMC, AMD, Nvidia, and A-shares' (A-shares) semiconductor chain.

• Second quarter Hang Seng Index series review results announced: CICC predicts that Zijin Mining International, Zhizhu, MINIMAX-W, and other targets are at the forefront of potential inclusion candidates. If inclusion expectations are fulfilled, it will bring passive fund allocation and short-term liquidity catalysts; if not, related targets may face realization pressure.

• NYMEX New York crude oil September futures roll over: Under the risks in the Strait of Hormuz and expectations of US sanctions against Iran, the rollover may amplify fluctuations in near-month contracts. If spot premiums widen, it will indicate tight physical supply; if price spreads converge, upward momentum in oil prices may weaken.