U.S. Corporate Bond Deluge Meets Doubled Treasury Buybacks

* 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. Buybacks Begin as 10-Year Auction Looms: U.S. Treasury Yields in Calm Before Storm

- Key points: Large-scale corporate and government bond issuance, together with the first application of the U.S. Treasury Department's expanded buyback program, is set for after markets reopen on the 8th, local time, following the Labor Day holiday, prompting assessments that Treasury yields are in the calm before a storm. Bank of America forecast U.S. investment-grade corporate bond issuance of $190 billion (about 256 trillion won) in September. A Bloomberg dealer survey put the figure at $215 billion, suggesting it could exceed last year's record for the month of $207.5 billion. The Treasury will auction $39 billion of 10-year notes on the 9th while raising long-dated buybacks to $4 billion per operation from $2 billion, and will issue $22 billion of 30-year bonds on the 10th. Thomas Kikis, head of U.S. markets at Standard Chartered, warned that disruption is expected from after Labor Day through Christmas.

2. Is the Weak-Won Boost Over? Exporters Face Earnings Alarm

- Key points: A sharp drop in the won-dollar exchange rate has raised alarms over the earnings outlook for exporters. Yuanta Securities Korea (003470) estimated that if the rate of 1,350 won as of the 7th holds as the September average, the third-quarter average would fall to 1,415 won, down 87 won from the previous quarter and the largest quarterly decline in a decade. Hyundai Motor (005380) and Kia (000270) reaped operating profit gains of 3.7 trillion won and 4.3 trillion won respectively from the currency's rise between the first quarter of 2023 and the second quarter of this year, but the reversal in direction has increased the likelihood of a giveback. Nomura Securities estimated that a 10% appreciation in the won would cut domestic memory makers' operating profit by about 12%, while Citigroup lowered its target prices for Samsung Electronics (005930) and SK hynix (000660) to 430,000 won and 3 million won respectively.

3. [Exclusive] Big Four Life Insurers Cut Government Bond Holdings by 14 Trillion Won This Year

- Key points: Combined holdings of government and public bonds at four major life insurers — Samsung Life Insurance (032830), Hanwha Life Insurance (088350), Kyobo Life Insurance and Shinhan Life — stood at 151.3175 trillion won at the end of June, down 13.8633 trillion won from the end of last year, while their equity holdings more than doubled to 189.9461 trillion won. With the Financial Services Commission easing rules on insurers' stock and equity investment in April in the expectation that as much as 24.2 trillion won could flow to companies, some point out that capacity for bond investment may also shrink. The yield on 10-year treasury bonds rose about 1 percentage point to 4.36% on the 4th from 3.385% at the end of last year. Lena Kwok, an analyst at Bloomberg Intelligence, said that if long-dated yields rise further, insurers will tighten management of long-duration holdings out of concern over valuation losses.

4. [Investment Window] The Next Battleground for Batteries

- Key points: Batteries are an industry in which raw material sourcing, production scale and facility utilization rates weigh heavily on costs alongside technology, and in 2025 Chinese battery pack prices were 30% below those in the United States and 35% below those in Europe. EY-Parthenon projected that global end markets for rechargeable batteries will grow about 15% annually through 2030 and that demand for energy storage systems will expand roughly 4.4-fold to 745 gigawatt-hours in 2030 from 170 GWh in 2023. The United States has also added supply chain restrictions tied to prohibited foreign entities to the Inflation Reduction Act, and the European Union will require digital battery passports for electric vehicle, industrial and household storage batteries from February 2027. As a result, non-Chinese sourcing networks and traceable data systems are emerging as scarce assets.

5. Anthropic, Heading for Listing, Locks In a Decade of Computing Capacity in Infrastructure Race With OpenAI

- Key points: Anthropic, the developer of the artificial intelligence model Claude, has signed computing capacity contracts worth $517 billion (about 700 trillion won) in less than a year. According to The Information, the capacity secured over the past 11 months amounts to 14.8 gigawatts in power terms, a scale that would require operating more than 10 of South Korea's latest APR1400-class nuclear reactors, compared with just 1 to 2 GW secured before October last year. The largest contract covers 11 GW supplied by Amazon and Google, exceeding $300 billion over 10 years, alongside $30 billion for leasing 1 GW of Microsoft Azure servers and a deal with SpaceX worth up to $45 billion. Meanwhile chief rival OpenAI plans 30 GW and spending of up to $750 billion by 2030, intensifying the infrastructure race between the two companies as both approach public listings.

6. Chip Surge Puts KOSPI 7,000 Within Reach; Goldman Sees 12,000

- Key points: The KOSPI climbed to just below the 7,000 mark, lifted by optimism over OpenAI's next-generation artificial intelligence model Astra. On the 7th, the index closed at 6,995.39, up 308.18 points or 4.61% from the previous session, with Samsung Electronics rising 5.68% to 270,000 won and SK hynix jumping 8.26% to 1.783 million won. Foreign and institutional investors bought a net 2.5525 trillion won and 2.6398 trillion won respectively, while individuals sold a net 6.8274 trillion won, the second-largest such figure on record. Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs, said the market is underestimating how long the current earnings cycle will last and that the firm maintains its KOSPI target of 12,000 based on a forward price-to-earnings ratio of 7.5 times.