Core Viewpoint - The article discusses the inflation data for June, highlighting the changes in CPI and PPI, and their implications for the economy, particularly in terms of GDP growth and price pressures across various sectors [3][14][25]. Group 1: June Price Data Summary - In June, the CPI increased by 0.1% year-on-year, while the core CPI rose by 0.7%, indicating a slight improvement in inflation after four months of negative values [3][18]. - The PPI decreased by 3.6% year-on-year, which is a larger decline than the previous month's 3.3%, reflecting ongoing pressures in the manufacturing sector [3][25]. - The nominal GDP growth rate for the second quarter is estimated to be around 4.4%, slightly down from 4.6% in the first quarter [3][16]. Group 2: CPI Analysis - The CPI's year-on-year increase was driven by a narrowing decline in food and energy prices, with food prices improving from -0.4% to -0.3% and energy prices from -6.1% to -5.1% [18][19]. - The rental market saw a seasonal increase in demand, with rents rising by 0.1%, which is lower than the average increase of 0.25% during the same period from 2015 to 2019 [4][19]. - Medical service prices have risen for three consecutive months, indicating potential ongoing inflationary pressures in healthcare [4][27]. Group 3: PPI Analysis - The PPI's month-on-month decline of 0.4% was influenced by seasonal price decreases in domestic raw materials and increased green energy supply, which reduced energy prices [5][26]. - Specific sectors such as coal and electricity production experienced significant price drops, contributing to the overall PPI decline [5][26]. - The article notes that industries with high export ratios are facing price pressures due to a slowdown in global trade, impacting PPI negatively [5][27]. Group 4: Inventory Perspective on PPI - The actual inventory levels in various industries are crucial for understanding PPI trends, with high inventory levels typically exerting downward pressure on prices [6][9]. - As of May, the actual inventory growth rate in the mining and manufacturing sectors has decreased, which historically correlates with a potential upturn in PPI [6][9]. - The current inventory pressure is slightly higher than last year but significantly lower than in the first half of 2015, indicating a more favorable pricing environment for some sectors [7][12].

Core Viewpoint - The TBAC committee has submitted materials to the Treasury Department regarding stablecoins, addressing their impact on Treasury demand, dollar hegemony, the expansion of dollar-backed payment stablecoins, and potential effects on deposit-holding institutions [2][10]. Group 1: Development of the Stablecoin Market - Stablecoins are digital assets designed to maintain price stability by anchoring their value to reserve assets like fiat currencies [3][12]. - The stablecoin market has evolved rapidly, driven by institutional interest, regulatory frameworks, and broader on-chain applications, experiencing significant events over the past four years, including the collapse of Terra (UST) in May 2022 and the regional bank crisis in March 2023 [3][20]. - The market is projected to reach a valuation of approximately $2 trillion by 2028, influenced by evolving market dynamics and incentive mechanisms [28]. Group 2: Legislative Framework for Stablecoins - The GENIUS Act, passed by the U.S. Senate in 2025, aims to establish the first federal regulatory framework for payment stablecoins, significantly impacting the future of dollar-pegged stablecoins [4][31]. - Key provisions of the GENIUS Act include defining stablecoins, reserve requirements, disclosure and auditing mandates, and consumer protection measures [35]. Group 3: Impact on Bank Deposits - The design of stablecoins will determine their potential impact on bank deposit flows, with non-interest-bearing stablecoins likely leading to a shift towards tokenized money market funds for yield capture [5][37]. - If stablecoins offer interest, they may attract funds from traditional deposits, enhancing their global appeal, especially among existing on-chain holders [5][37]. Group 4: Impact on U.S. Treasury Market - Stablecoin issuers currently hold over $120 billion in short-term U.S. Treasury bills, with projected incremental demand for U.S. Treasuries reaching approximately $900 billion by 2028 due to stablecoin growth [6][43]. - The transition of funds from bank deposits to stablecoins may lead to increased demand for U.S. Treasuries, potentially exacerbated by trust crises or de-pegging events [6][43]. Group 5: Impact on Money Supply - The growth of stablecoins may catalyze a shift of funds from traditional bank deposits to stablecoins, influencing the movement of money from M1/M2 to stablecoins without significantly altering the total money supply [7][49]. Group 6: Market Structure Implications - Historical de-pegging events have highlighted the need for more robust market access mechanisms for stablecoin issuers, akin to banking regulations [8][52]. - The GENIUS Act's stringent reserve requirements aim to prevent "breaking the buck" scenarios, drawing lessons from past money market fund reforms [8][53].

Core Viewpoint - The document emphasizes that the research material is intended solely for professional investors associated with Huachuang Securities, highlighting the importance of proper interpretation of the information provided [3]. Group 1 - The research team at Huachuang Securities is positioned to serve professional investors, providing timely exchanges of viewpoints in the context of new media [3]. - The material is not intended for general investors, as they may lack the necessary interpretative services to understand key assumptions, ratings, and target prices, potentially leading to investment losses [3]. - The content is derived from previously published research reports by Huachuang Securities, and any discrepancies should refer to the complete report from the publication date [4].

Core Viewpoint - The article highlights the performance of global asset classes in June, with global stocks leading at 4.40%, followed by commodities at 3.52%, and global bonds at 1.89%, while the US dollar showed a decline of 2.47% [2]. Group 1: Global Asset Performance - In June, global stocks outperformed other asset classes, with a return of 4.40% [2]. - Commodities followed with a return of 3.52%, while global bonds returned 1.89% [2]. - The US dollar experienced a decline of 2.47%, indicating a shift in investor sentiment [2]. Group 2: Oil Price Volatility - The geopolitical situation in the Middle East led to significant fluctuations in oil prices, particularly through the Strait of Hormuz, which is crucial for global oil trade [4][12]. - In June, oil prices surged due to heightened geopolitical tensions but quickly retreated as concerns over supply disruptions eased [4][12]. Group 3: US Market Dynamics - The divergence between the performance of the seven major US tech stocks and the 2-year Treasury yield indicates a shift in market sentiment from recession fears to expectations of interest rate cuts [4][14]. - The decline in the 2-year Treasury yield, previously interpreted as a recession signal, did not deter the rise of tech stocks in June [4][14]. Group 4: Emerging Market Strategies - A successful arbitrage strategy involving dollar financing and investment in six emerging market currencies yielded a return of 8% since 2025, outperforming similar strategies using yen or euro financing [4][17]. - The reduced correlation between the dollar and the S&P 500 index enhances the attractiveness of the dollar for arbitrage trading [4][17]. Group 5: Fund Manager Allocations - Global fund managers have increased their allocations to emerging markets, stocks, energy, banks, and communications, while reducing exposure to euros, utilities, cash, and bonds [4][21]. - The survey indicates a significant overweight in eurozone and emerging market assets compared to US dollar assets [4][21]. Group 6: Money Market Fund Growth - The total assets under management in US money market funds reached a record high of $7 trillion in 2025, driven by their attractive yields and investor preference for safety amid market uncertainties [4][26]. - Despite the Federal Reserve entering a rate-cutting cycle, money market funds maintained yields around 4%, appealing to risk-averse investors [4][26]. Group 7: Dollar Index and Foreign Investment - The dollar index serves as a leading indicator for net foreign investment in US equities, with a notable correlation observed over a 12-month period [4][29]. - An increase in the dollar index typically leads to higher foreign capital inflows into US assets [4][29]. Group 8: Correlation Between Dollar and Oil - The correlation between oil prices and the dollar index has shifted from negative to positive over the past two decades, reflecting changes in global economic dynamics and energy demand [4][32]. Group 9: Historical Gold-Oil Ratio - The historical analysis of the gold-oil ratio from 1920 to 2025 shows a significant decline in its central tendency post-1970s, attributed to the decoupling of the dollar from gold and the strengthening of oil's financial attributes [4][37]. Group 10: Currency Sensitivity to Oil Prices - The Indian rupee's performance is highly sensitive to oil price fluctuations, with rising oil prices leading to increased import costs and inflationary pressures [4][40]. - The Reserve Bank of India may intervene in the forex market to stabilize the rupee amid these external pressures [4][40]. Group 11: New Taiwan Dollar Hedging Costs - The New Taiwan Dollar experienced an 11% appreciation in Q2 2025, leading to significant foreign exchange losses for Taiwanese life insurers [4][42]. - The hedging costs for the New Taiwan Dollar reached nearly 15%, reflecting heightened market volatility and increased demand for currency protection [4][42].

Core Viewpoint - Recent market focus on supply-side reform highlights the need to address "involution" in key industries such as photovoltaics, lithium batteries, new energy vehicles, and e-commerce platforms, with various sectors facing fundamental pressures [2][10] Industry Analysis 1. Policy Direction - "Involution" competition includes low-price competition, homogenization, and excessive marketing from enterprises, as well as unfair local government policies and market barriers [4] - Key industries targeted for "anti-involution" measures include photovoltaics, lithium batteries, new energy vehicles, and e-commerce platforms [4][10] - Measures to combat "involution" involve coordinated efforts on both supply and demand sides, government behavior regulation, and industry self-discipline [4] 2. Current Industry Status - **Photovoltaics**: Prices are weak, with a June index showing a year-on-year decline of 11.8%. However, production remains strong, with a 18.3% increase in solar cell output from January to May [5][13] - **Automobiles**: Increased low-price competition is evident, with sales discount rates rising to 25.2% in June. This trend may lead to intensified price wars among manufacturers [5][18] - **Steel**: Production decreased by 1.7% year-on-year from January to May, while prices remain weak, with a 13.4% decline in steel prices from January to June [5][23] - **Cement**: Production fell by 4% year-on-year, and prices have weakened, with a June index showing a 2.4% decline [5][26] - **Pork**: Production is strong but prices are weak, with net profits per pig dropping significantly, indicating the industry is nearing losses [5][29] 3. Anti-Involution Measures - **Photovoltaics**: Industry self-discipline is emphasized, with major manufacturers collectively reducing production by 30% and signing self-regulatory agreements [8][14] - **Automobiles**: Self-regulation is key, with companies like BYD halting aggressive pricing strategies and standardizing supplier payment terms [8][18] - **Steel**: A combination of self-discipline and administrative guidance is being implemented, with industry associations urging companies to manage production and cash flow effectively [8][24] - **Cement**: Measures include industry self-discipline and media supervision to ensure compliance with production standards and to recognize compliant companies [8][27] - **Pork**: Administrative guidance is being utilized, with reports of government requests for major producers to control breeding and market supply [8][30]

Group 1: Economic Trends - Service consumption shows an upward trend with domestic flight executions increasing to 14,300 flights in the first five days of July, up 4% year-on-year compared to 12,800 flights in June, which was up 0.8% year-on-year [1][10] - Land premium rates have rebounded from low levels, reaching 7.8% in the week of June 29, with a three-week average of 4.3%, compared to 4.93% in May [1][11] - Prices in coal and real estate infrastructure sectors have risen due to "anti-involution" trends, with prices for Shanxi-produced thermal coal increasing by 0.5%, rebar prices in Shanghai up by 2.9%, and iron ore price index rising by 2% [1][32] Group 2: Downward Economic Indicators - The Huachuang Macro WEI index remains at a high level at 6% as of June 29, down 1.63 points from 7.63% on June 22, indicating a general decline in indicators such as commodity housing transaction area and coal throughput [2][7] - Real estate sales have seen a significant decline, with a 30% year-on-year drop in housing transaction area in 67 cities in the first four days of July, compared to a 17.6% decline in June [2][10] - Foreign trade shows a decline, with container throughput at domestic ports dropping to a 3.1% year-on-year decrease as of June 29, down from 4.3% the previous week [2][18] Group 3: Debt and Interest Rates - The issuance of new special bonds has surpassed half of the annual target, with 2.2 trillion yuan issued by June 30, representing a 50.5% progress compared to 38.5% in the same period last year [3][38] - Interest rates have decreased post-half-year, with DR001 at 1.3140%, DR007 at 1.4222%, and R007 at 1.4881%, showing declines of -5.43bps, -27.46bps, and -43.2bps respectively from June 27 [3][46] Group 4: Production and Consumption - The construction sector shows fluctuations in asphalt and cement dispatch rates, with asphalt plant operating rates at 31.7%, up 6.5% year-on-year, while cement dispatch rates are at 40.8%, slightly down from the previous week [14][17] - Industrial production indicators such as coal throughput at Qinhuangdao port have shown a year-on-year increase of 8.3% in early July, maintaining stability compared to June [14][18] Group 5: Price Movements - Domestic commodity price indices have shown mixed trends, with the BPI down by 0.5% while the RJ/CRB commodity price index increased by 0.6% [31][37] - Prices for major commodities like copper, gold, and oil have risen, with COMEX gold at $3,332.5 per ounce, up 1.9%, and Brent crude oil at $68.3 per barrel, up 0.8% [31][37]

Core Viewpoint - The June non-farm payroll data exceeded expectations, indicating a robust job market, but there are mixed signals regarding employment strength and potential economic implications [1][3][14]. Group 1: Non-Farm Employment Data - In June, the U.S. added 147,000 non-farm jobs, surpassing the forecast of 106,000, marking the fourth consecutive month of exceeding expectations [1][14]. - Job growth was concentrated in four sectors: government (+73,000), education and healthcare services (+51,000), leisure and hospitality (+20,000), and construction (+15,000) [1][16]. - The employment diffusion index fell to 49.6%, indicating a low breadth of job growth compared to historical averages [14]. Group 2: Unemployment Rate - The unemployment rate decreased from 4.2% to 4.1%, below the expected 4.3%, with a decline in the labor force participation rate from 62.4% to 62.3% [2][20]. - Youth and female labor force participation saw significant declines, contributing to the drop in the unemployment rate [20][21]. Group 3: Wage Growth - Wage growth was below expectations, with hourly earnings increasing by 0.2% month-over-month, compared to the expected 0.3% [2][26]. - Weekly hours worked decreased from 34.3 to 34.2, leading to a 0.1% decline in weekly earnings, marking the first negative growth this year [2][26]. Group 4: Market Reactions - Following the non-farm report, market expectations for interest rate cuts diminished significantly, with July cut probabilities dropping from 25.3% to 4.7% and September from 91% to 70.7% [2][28]. - U.S. stock indices rose, with the Dow Jones up 0.77%, Nasdaq up 1.02%, and S&P 500 up 0.83%, while the dollar index increased by 0.35% [2][28].

Core Viewpoint - The document emphasizes that the research material is intended solely for professional investors recognized by Huachuang Securities, and it should not be shared or used by non-professional investors [1][2][3]. Group 1 - The research team at Huachuang Securities is positioned to provide timely exchanges of viewpoints for professional investors in the context of new media [3]. - The material is derived from previously published research reports by Huachuang Securities, and any discrepancies should refer to the complete content of the original report [4]. - The opinions and analyses presented may change without notice based on subsequent reports from Huachuang Securities [4].

Core Viewpoint - The article emphasizes the recent policy directions aimed at reducing "involution" in various industries, particularly focusing on the solar energy sector and the need for quality improvement and orderly competition [2][11]. Group 1: Policy Directions - On July 1, the Central Economic Committee meeting highlighted the importance of advancing a unified national market, addressing low-price disorderly competition, and promoting the exit of outdated production capacity [2][10]. - The Ministry of Industry and Information Technology held a meeting on July 3 with 14 solar industry companies, reiterating the need to implement the decisions from the Central Economic Committee meeting and to enhance product quality [2][11]. Group 2: Trade Relations - The Ministry of Commerce addressed questions regarding U.S.-China trade relations, noting that there is no confirmation of a potential visit by Trump with a business delegation, and emphasized the need for mutual respect and cooperation [3][12]. - The Ministry of Commerce announced anti-dumping duties on brandy imported from the EU for five years and stated that measures would be taken in response to the EU's restrictions on Chinese companies in public procurement [3][13]. Group 3: Real Estate Market - The Ministry of Housing and Urban-Rural Development conducted research in Guangdong and Zhejiang, urging local authorities to effectively utilize real estate regulation policies and ensure the stability of the real estate market [4][13]. - The report noted that the overall real estate market remains stable, with a year-on-year increase in new and second-hand housing transactions, indicating a shift in market dynamics [4][13].

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