An analysis said concerns about tightening in June, which the market had worried about, have eased significantly because oil prices fell after a U.S.-Iran end-of-war agreement. At the same time, it said the large-scale capital raising by big tech corporations amid competition over artificial intelligence (AI) infrastructure is not yet at a worrisome level.
Park Sang-hyun, an iM Securities researcher, said, "The June FOMC meeting, which had heightened market tension, has somewhat lost steam on expectations of a memorandum of understanding (MOU) for an end of war between the United States and Iran," adding, "With oil prices falling and easing inflationary pressure, the Federal Reserve's justification for additional tightening will also weaken."
The market takes a rate hold for granted at this FOMC meeting, but is watching how much a hawkish tone will be reflected in the dot plot and revised economic outlook. Park projected an upward adjustment to the dot plot is inevitable, as the recent consumer price inflation rate exceeds 4%.
However, it was expected that the Fed's hawkish message will have limited impact on the market. If an end-of-war agreement between the United States and Iran materializes, the likelihood of a further drop in international oil prices rises, which could in turn slow inflationary pressure.
Park said, "After consumer price inflation peaks in May–June, there is a high possibility that a moderate disinflation phase will unfold in the second half," adding, "Falling oil prices are a factor that weakens the Fed's rationale for raising rates."
However, he picked Fed Chair Kevin Warsh's press conference as a key variable. Park said, "It is necessary to check not only the future direction of monetary policy but also the possibility that policy conflicts within the Fed will surface."
Meanwhile, the recent aggressive fundraising moves by major hyperscalers are drawing market attention. Alphabet has sought to raise $80 billion through bond issuance and other means, and Amazon is also securing funds for AI infrastructure investment through bond issuance and large-scale borrowing.
Park said, "Recent large-scale capital raising is for expanding AI data centers and power infrastructure," but added, "There are concerns in the market that excessive investment competition could lead to deteriorating profitability and a chicken game."
Indeed, the credit default swap (CDS) premiums of Amazon and Alphabet have recently rebounded. However, they are not significantly exceeding past peaks, leading to the assessment that this is not a phase of a full-fledged expansion of credit risk.
Park said, "Following the SpaceX listing, Anthropic and OpenAI are also moving to raise large-scale funds, intensifying AI competition," but added, "Given the growth pace of the AI industry and expanding data center demand, it is hard to see current investment as excessive."
In particular, he noted that the credit market remains stable. Park explained, "Unlike during the dot-com bubble or the global financial crisis, current credit spreads are maintaining a stable trend," adding, "There are still no signs that the risk of corporations going bankrupt is spreading across the broader credit market."
He added, "As price stability from lower oil and easing rate burdens come together, the so-called 'three highs (high oil prices, high inflation, high interest rates)' phenomenon is likely to ease," saying, "This will act as a factor reducing hyperscalers' capital-raising burdens."