📊 Weekly Market Recap: Interest Rates Repriced, AI Enters the "Show Me" Phase

The core logic of the market this week remains centered on the Federal Reserve, long- and short-end U.S. Treasuries, gold, crypto assets, and AI infrastructure.

I. The Fed: The focus isn't hawkish vs. dovish, but expectation management

I believe this speech is more about resetting market expectations. Short-term rates reflect future policy expectations, while 10-, 20-, and 30-year Treasury yields largely mirror the market's view on long-term inflation, fiscal health, and confidence in U.S. dollar assets.

Thus, a rise in short-end rates doesn't necessarily signal a loss of control; what truly matters is whether long-end Treasuries can hold steady. If only short-end rates adjust, it's mostly a repricing of policy expectations. However, if both short- and long-end rates surge simultaneously, greater attention should be paid to long-term fiscal and debt pressures.

Therefore, rather than fixating solely on the September meeting itself, it's more important to monitor changes in inflation, employment, dollar liquidity, and long-term Treasury yields.

II. Gold & Crypto: One tracks real rates, the other tracks liquidity

Gold's near-term trajectory hinges on real rates and the U.S. dollar. Rising rates exert pressure on gold; however, if long-end Treasuries continue to climb, heightened concerns over fiscal sustainability and dollar asset credit may actually reinforce gold's safe-haven and credit-hedging appeal.

Crypto assets are even more sensitive, particularly BTC and ETH. As a key sentiment indicator for the crypto market, BTC's price action indirectly influences exchange-listed equities. Increased market activity and trading volumes generally support exchange-related revenues.

Yet, given crypto's continued sensitivity to shifts in liquidity and risk appetite, I prefer treating it as a high-volatility satellite position rather than a core holding.

III. U.S. Equities: Shifting from "pricing in expectations" to "focusing on fundamentals"

Following the rate repricing, the valuation framework for U.S. equities will also undergo adjustments.

High-valuation assets lacking stable cash flows and relying primarily on expected growth may see wider volatility. Companies that can genuinely convert AI demand into orders, revenue, profits, and cash flow remain compelling long-term plays.

This is my primary focus this week: AI is transitioning from a pure tech theme into a framework driven by productivity and macroeconomic realities.

IV. AI Infrastructure: The main thesis holds, but shift from "buying concepts" to "buying realization"

AI infrastructure remains a key medium-to-long-term theme. However, the market won't simply rally all AI names indiscriminately; instead, it will prioritize genuine demand, capex, orders, utilization rates, and cash flow.

Among various sub-sectors, I'm watching:

🤖 Compute: NVDA—The core entry point for AI compute, with clear GPU demand and ecosystem advantages.

🏢 Data Centers: EQIX—Strong infrastructure attributes, benefiting from growth in AI inference, cloud computing, and data center demand.

⚡️ Power Equipment: ETN—Benefiting from rising power demands at AI data centers, alongside grid and electrification upgrades.

🖥 Servers: SMCI—High elasticity in AI servers, but with greater volatility, making it suitable for aggressive allocations.

🔌 Optical Modules: COHR—As AI cluster scales expand, demand for high-speed optical interconnects continues to rise.

☁️ Cloud Services: MSFT—Azure and its enterprise customer base provide strong AI commercialization capabilities.

⚛️ Energy: CEG—Rising long-term power needs for AI underscore the growing importance of stable electricity supply.

V. What to watch after September?

I believe the most critical task ahead isn't betting on a specific direction early, but observing the combined movement of short- and long-end Treasury yields.

If short-end rates rise while long-end rates stay stable, it signals an adjustment in policy expectations. Quality AI infrastructure pullbacks could present buying opportunities.

If both short- and long-end rates spike rapidly, caution is warranted: reduce positions in high-valuation and high-volatility assets, and adopt a more defensive posture.

📌 Weekly Summary

The core market shift this week isn't merely "rates up, risk assets under pressure," but rather a move away from trading policy expectations back toward fundamentals, cash flow, and productivity.

Gold tracks real rates and credit; crypto tracks liquidity; U.S. equities track valuation and earnings; AI tracks orders, cash flow, and productivity realization.

The future AI rally may no longer be about "buying everything AI," but gradually entering a phase of buying certainty, buying real demand, and buying companies capable of delivering results.

$Eaton(ETN.US) $Coherent Corp.(COHR.US) $Microsoft(MSFT.US)