U.S. Treasury Yields Churn at Highs; U.S.-Iran Talks and Memory Chips in Focus

On Tuesday, U.S. Treasury yields churned at high levels, weighing on global stocks. The 10-year Treasury yield rose 1 basis point to 5.25% after hitting its highest since 2007 on Monday; the 30-year yield also rose 1 basis point to 5.56%. The MSCI World Index fell 0.2%, hitting its lowest since Sept. 18; Nasdaq futures turned higher after falling as much as 0.5%. Japan's Nikkei 225 closed down 0.6% at 65,481.27; South Korea's KOSPI closed down 0.27% at 6870.81. Spot gold rose 0.7% to $4,145 an ounce. ^[1]

Geopolitically, Iranian Foreign Minister Araghchi said Iran had conveyed a '7-day plan' to the United States through Qatar, was waiting for a formal response from the U.S. side through mediators, and would depart to return to Tehran. Trump denied on social media an Axios report that he 'proposed sanctions relief and unfreezing assets,' calling it a 'hoax.' Brent crude touched $100.28 a barrel intraday before retreating; it was recently hovering near the lower end of the $97.62-$100.28 a barrel range, down about 0.2% on the day; WTI traded near the lower end of the $92.44-$94.74 a barrel range. ^[2]

The divergence between rates and stocks is drawing attention. The 10-year Treasury yield has risen about 57 basis points cumulatively since Aug. 28, while the S&P 500 has barely moved. Goldman Sachs data show the S&P 500 has gained 13% year to date, consensus expectations for the next 12 months' EPS have jumped 29%, and the forward P/E has compressed to 19 times from 23 times a year ago. ^[3]

South Korea's memory chip market is seeing pricing divergence. Goldman Sachs data show foreign ownership of the KOSPI semiconductor sector has fallen to 49.1%, 2.1 standard deviations below the historical average; consensus 2027 EPS estimates for South Korea's tech sector have been raised by as much as 122% over the past six months. South Korea's semiconductor sector currently trades at just 4.7 times forward earnings, compared with a historical average of 10.6 times. TrendForce expects HBM to absorb 30% of DRAM wafer input in 2027, up from 22% in 2026. ^[4]

On the corporate front, Morgan Stanley analyst Adam Jonas drove 2,713 miles using FSD over the past 12 months, accounting for 33% of the total mileage on his Tesla Model Y. He said he enabled FSD on 100% of trips, and the share of miles actually driven by the system is estimated at 98% to 99%. Morgan Stanley maintains an Equal-weight rating on Tesla with a $400 price target; the stock is currently at $357.45. ^[5]

Samsung Electronics Executive Vice President Kim Taewoo said HBM is expected to account for nearly 30% of total global DRAM industry wafer capacity next year (2027), up from about 20% currently. TrendForce has raised its 2027 HBM price outlook, expecting blended average selling prices to jump 121% year over year. Samsung's average monthly HBM wafer starts are expected to rise from about 180,000 this year to about 250,000 in 2027, an increase of nearly 40%. ^[6]