Daily Briefing | 2026-09-25: US Treasury Bonds Under Long-Term Pressure, AI Financing Intertwined with US-China Game

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Today's main theme

Over the past 24 hours, the common theme in global markets has been the simultaneous strengthening of "high capital costs" and "strategic investments". The high yield on long-term U.S. Treasury bonds means that global assets will continue to face higher discount rates; However, AI capital spending has not subsided as a result. SoftBank has supported OpenAI's investment with over $10 billion in bond financing, showing that leading capital is still willing to bet on computing power and models with higher leverage. Meanwhile, the high-level meeting between China and the United States brought issues such as the trade truce, supply chains, and Taiwan back to the center of global policy pricing, while China continued to emphasize expanding openness and stabilizing cross-border trade. In the Middle East, shipping in Hormuz has not yet fully returned to normal, and energy logistics risks continue to constitute a tail variable for inflation. Interest rates, AI investment, Sino-US relations, and energy security have thus become the four interconnected threads today.

Five key news items

1. US long-term Treasury yields remain high, and global assets continue to face pressure from high discount rates.

The yield on long-term U.S. Treasury bonds has remained at a multi-year high recently, with the 30-year yield hovering above 5% and the 10-year yield also remaining in a high range. The market is reassessing a more important issue than a single central bank meeting: if U.S. inflation remains sticky due to service demand, energy costs, and strong investment, even if the Federal Reserve stops raising interest rates in the future, it may not be able to quickly lower the policy rate back to the low levels of the past decade. Long-term yields reflect not only expectations for the next meeting, but also term premiums, fiscal financing needs, and long-term inflation compensation. Therefore, their rise will directly increase the financing costs for housing, corporate bonds, and long-term projects. For global markets, U.S. Treasury bonds remain a core risk-free pricing anchor. High yields will depress the forward cash flow value of overvalued technology stocks and increase capital outflow pressure from emerging markets. Going forward, attention needs to be paid to US inflation and employment data, demand for Treasury bond auctions, fiscal deficit expectations, and whether the yield curve will steepen further.Reuters

2. SoftBank advances over $11 billion in bond financing, marking the beginning of the realization phase of its massive OpenAI investment.

SoftBank Group is advancing approximately $11 billion in senior unsecured bond financing, including $10 billion in dollar bonds and €1 billion in euro bonds. The funds will be primarily used to pay for the third tranche of approximately $10 billion in its additional investment in OpenAI, which is expected to be completed in early October. If completed as planned, this will be one of the largest non-financial corporate bond transactions in the Asia-Pacific region and Japan. The US dollar bonds have maturities of 3.5 years, 5.5 years, and 7.5 years, and Fitch has given the proposed bonds a BB+ rating. SoftBank had previously secured a $10 billion bridge loan for its investment in OpenAI, and this bond issuance essentially replaces short-term financing with long-term financing from the capital market. The significance of this event lies in the fact that the AI race is shifting from a model performance competition to a balance sheet competition: training, inference, data centers, and chips require tens of billions of dollars in continuous capital investment. The high interest rate environment has not deterred leading investors from increasing their investments, but increased debt will amplify the risk of valuation declines. Going forward, we will focus on the final bond pricing, investor subscription multiples, OpenAI's capital expenditures, and changes in SoftBank's net debt.Reuters

3. High-level meetings between China and the US continued to address the trade truce, with supply chain stability becoming a core market variable.

US-China relations returned to the highest-level coordination phase this week, with issues such as the trade truce, tariffs, key supply chains, artificial intelligence, and Taiwan all constituting the focus of market attention. Over the past year, the two sides have gradually returned from triple-digit retaliatory tariffs to a phased truce and established trade and investment communication arrangements, but export controls on rare earths, semiconductors, and high technology still constitute important leverage for each other. For businesses, what really matters is not just how much a particular tariff is reduced, but whether policy predictability can be extended: a stable truce period directly affects multinational corporations' inventories, capacity allocation, and capital expenditures. China's vast export system is also continuously dispersing to markets outside the United States, gradually extending the impact of bilateral trade policies to third-country re-exports and global supply chain rules. It remains to be seen whether both sides will formally extend the existing arrangements, whether quantitative commitments will be made to agricultural and energy procurement, whether restrictions on key minerals and chips will be adjusted, and whether the new trade and investment communication mechanism will produce actionable results.Reuters

4. China continues to emphasize expanding openness and stabilizing cross-border trade, with policy focus shifting to institutional support.

China's economic policies continue to place great emphasis on expanding market access, stabilizing foreign trade, and improving business expectations. With the recovery of domestic demand still uneven and the real estate sector's contribution to growth weakening, exports and manufacturing investment continue to bear significant responsibility for growth. Therefore, policies are shifting from simply stimulating aggregate demand to reducing institutional transaction costs, expanding the opening up of the service and consumption sectors, and improving new trade channels such as cross-border e-commerce. For businesses, such measures may not immediately change aggregate demand in the short term like interest rate cuts or fiscal stimulus, but they may improve the medium- to long-term business environment through access, customs clearance, cross-border settlement and import policies. Especially given the continued uncertainty surrounding US-China trade rules, further opening up to other markets and import channels would also help reduce dependence on a single market. Going forward, attention should be paid to changes in the negative list for specific industries, detailed rules of cross-border e-commerce retail import policies, the actual amount of foreign capital used, and whether the growth rate of private enterprise investment can improve.Chinese government website

5. Hormuz shipping has not yet fully recovered, and energy logistics has become a tail risk to global inflation.

The Strait of Hormuz remains one of the most important geopolitical risk points in the global macroeconomic market. The conflict had previously kept trackable merchant ship traffic significantly below pre-war levels, while Middle Eastern exporters maintained some crude oil flows by shutting down transponder navigation, ship-to-ship transshipment, and alternative pipelines. This means that the energy market has shifted from the initial "whether to cut off supply" to "at what cost to maintain supply": even if actual exports do not decline proportionally, insurance premiums, VLCC freight, detour and transshipment costs will form new logistics premiums. Hormuz handles a significant proportion of the world's oil and liquefied natural gas transportation, so any military escalation could quickly spread to Brent oil prices, European gas prices, and inflation expectations, and in turn, affect the interest rate paths of European and American central banks. Going forward, we should focus on observing daily ship throughput, the resumption of Saudi Arabia's east-west pipeline, tanker insurance quotes, diplomatic progress between the United States and Iran, and whether Asian importing countries continue to increase alternative sources.Reuters

Market Correlation and Today's Observation

The most noteworthy question for the market today is whether high interest rates and high capital expenditures can continue to coexist. The high level of long-term yields in the United States means that the risk-free discount rate for stock valuations remains high; If the US dollar strengthens in tandem, it will further tighten global financial conditions, putting pressure on emerging market currencies and highly leveraged companies. However, SoftBank's continued investment in OpenAI through massive bond financing indicates that the AI infrastructure cycle is still in a phase of capital-intensive expansion, and the short-term valuation of the technology depends more on whether the speed of profit realization can outpace the rate of rising financing costs. On the Chinese side, the stability of the US-China trade truce and domestic policies of expanding opening-up together affect the expectations of the RMB, export enterprises and manufacturing investment. If policy uncertainty decreases, Asian risk assets may be supported.

On the commodity side, it is still necessary to guard against the resurgence of energy risks. The actual oil flow in Hormuz can be partially restored through transshipment and alternative routes, but higher transportation and insurance costs are equivalent to adding a “logistics tax” to the global energy supply chain. If oil prices rise again and U.S. long-term Treasury yields remain high, the market will face dual pressures from inflation and discount rates. Conversely, if risks in the Middle East decline, oil prices fall, and Sino-US trade relations remain stable, risk appetite may continue to spread to AI, semiconductors, and cyclical assets. Today, we should continue to observe the performance of long-term US Treasury bonds, the US dollar index, Brent crude oil, the RMB, and leading AI companies relative to the broader market.

Cover image:Peter Beke / Unsplash