Overview - The overall CPI for December in the US met expectations, while the core CPI was slightly weaker than anticipated, primarily due to weak performance in the goods sector. The December CPI year-on-year was 2.7% and month-on-month was 0.3%, aligning with market expectations. However, the core CPI year-on-year was 2.6%, slightly below the expected 2.7%, and month-on-month was 0.2%, compared to the expected 0.3% [1][5][43]. Structure - Vehicle inflation significantly weakened, with new and used car prices showing month-on-month changes of 0% and -1.1%, respectively, which had a considerable negative impact. In contrast, clothing, toys, and other tariff-sensitive goods saw a month-on-month increase, indicating that tariff transmission may still have room to operate. Statistical biases, such as double-month samples and holiday effects, may have influenced inflation but to a lesser extent than market expectations [2][18][44]. - Core service inflation in December showed an uptick, particularly in rent and super core services. The rent CPI increased by 0.4% month-on-month in December, up from 0.2% in September, although future rent inflation is expected to cool down. Non-rent services, including medical and transportation services, also saw an increase, with airfares rising to 5.2%, reflecting robust consumer demand in the US [2][24][44]. Outlook - In the first half of 2026, US inflation may remain sticky, but a transition to a "disinflation" phase is anticipated in the second half. The implementation of tax cuts in early 2026 is expected to gradually boost household income, consumption, and inflation, thereby enhancing the last mile of tariff transmission. However, as the impact of tax cuts diminishes in the latter half of 2026 and the first-year tariff transmission concludes, inflation is projected to begin a sustained decline [3][29][34][45]. - The Federal Reserve's response function indicates that inflation is not the primary concern at this time, and the pace of interest rate cuts may be delayed. The Fed is expected to adopt a data-dependent approach, considering rate cuts only if economic data shows significant weakness. The impact of the tax cuts from the "Inflation Reduction Act" on the economy and inflation will likely influence the timing of any rate cuts [3][34][45].

Economic Outlook - The core viewpoint emphasizes that 2026 marks the beginning of the "15th Five-Year Plan," which is crucial for understanding future policies and economic environments. The focus will be on "comprehensive efforts" and "strategic initiative" in various sectors [3][4] - "Comprehensive efforts" suggests an acceleration in policy implementation across development and reform areas, while "strategic initiative" indicates an increase in proactive policy measures, particularly in domestic economic management and international trade [3][4] Policy Framework - The central economic work conference has highlighted an increased frequency of terms like "reform" and "opening up," indicating a shift in focus for 2026. The concept of "cross-cycle" has returned, but this does not imply a reduction in growth stabilization efforts [5][6] - Fiscal policy will remain proactive, ensuring necessary spending and debt levels, while monetary policy will emphasize flexibility and efficiency in using tools like interest rate cuts [6][5] Market Dynamics - The analysis of 2025 reveals three significant shifts: the weakening of post-pandemic scars, reduced impact from tariff conflicts, and the establishment of a coherent new policy framework since late 2024 [7][8][9] - The economic recovery in 2026 is characterized as "atypical," with limited volume elasticity and a focus on price normalization, leading to a nominal GDP recovery from approximately 4% in 2025 to around 5% in 2026 [9] Capital Market Insights - The relationship between the ten-year government bond yield and A-share dividend yield illustrates the emotional cycles in the capital market, which have been disrupted since 2022 due to long-term concerns about the Chinese economy [10][11] - Key events influencing market behavior include a policy shift in late 2024 and the introduction of DeepSeek, which has redirected investment thinking from macro to micro perspectives [12][11] Investment Behavior - The new tariff war initiated by the Trump administration has led to a reevaluation of investment strategies, with non-U.S. funds increasingly seeking opportunities in China as the perception of risk shifts [13] - The "anti-involution" policy has gained attention, indicating a structural approach to restoring corporate profitability and nominal GDP growth, which has initiated a domestic "funds rebalancing" process [13] Future Projections - The nominal GDP recovery is expected to continue driving the "funds rebalancing" process into 2026, with a potential rise in bond market interest rates and support for traditional sectors' profitability and valuation [14] - The RMB is anticipated to enter a period of appreciation, with a projected annual increase of 2-3%, which could attract foreign investment and positively impact the stock market [15]

Group 1 - The core viewpoint of the article discusses the economic "temperature difference" at the end of 2025, highlighting a divergence between macro indicators like PMI and micro indicators such as production and consumption [2][10][115] - At the end of 2025, production indicators such as high furnace operation and PTA operation showed a decline, while manufacturing PMI increased by 0.9 percentage points to 50.1% in December [2][10][115] - Consumer high-frequency indicators further declined at the end of 2025, but the overall consumer goods industry PMI rose to a prosperous zone, increasing by 1 percentage point to 50.4% in December [20][10][115] Group 2 - Investment indicators such as asphalt operation rates and cement shipment rates did not show significant improvement, yet the construction industry PMI surged by 3.2 percentage points to 52.8% at the end of 2025 [3][32][10] - The article identifies that the economic growth momentum is shifting, with new momentum areas lacking high-frequency indicators contributing more to the economy [4][44][10] - The service consumption sector, which lacks tracking indicators, has shown significant improvement, contrasting with the consumer goods sector facing "demand overdraft risks" [4][56][10] Group 3 - The article anticipates that service consumption and new infrastructure investments will support the economy at the beginning of 2026, despite pressures on commodity consumption due to the decline of the "old-for-new" policy [6][78][10] - The easing of the debt issuance effect is expected to lead to a rebound in broad infrastructure and service investment at the beginning of 2026 [7][82][10] - The delayed Spring Festival in 2026 is projected to extend the "export rush" window, potentially boosting January export figures [8][105][10] Group 4 - The overall economic situation at the end of 2025 remains within a reasonable range, with a projected GDP growth of around 4.4% for the fourth quarter [8][110][10] - The article concludes that the divergence in macro and micro indicators is primarily due to different recovery paces in economic structures, with policies leaning towards service consumption and new infrastructure investments expected to bolster the economy [8][110][10]

Group 1: Industrial Production - The operating rate of blast furnaces improved slightly, with a week-on-week increase of 0.4% and a year-on-year rise of 1.3 percentage points to 2.2% [1][4] - Apparent steel consumption decreased by 0.6% week-on-week and fell by 1.5 percentage points year-on-year to 0.6% [1][6] - Steel social inventory continued to decline, down 2.5% week-on-week [1] Group 2: Chemical and Automotive Industries - In the chemical sector, the operating rate of soda ash increased significantly by 4.4% week-on-week and rose by 0.2 percentage points year-on-year to -2.2% [10][11] - The operating rate of PTA rose by 3.2% week-on-week and increased by 4.1 percentage points year-on-year to -4.2% [10][14] - The operating rate of polyester filament increased by 0.4% week-on-week and rose by 3 percentage points year-on-year to 4.8%, while the operating rate of automotive semi-steel tires showed weakness, down 2.4% week-on-week and falling by 2.8 percentage points year-on-year to -13% [10][18] Group 3: Construction Industry - The cement production and demand showed marginal improvement, with the national grinding operating rate increasing by 2.1% week-on-week and rising by 5.2 percentage points year-on-year to 9.9% [22][23] - Cement shipment rate decreased by 1.5% week-on-week but increased by 1.9 percentage points year-on-year to 0.5% [22][26] - The cement inventory ratio continued to decline, down 0.5% week-on-week and up 0.9 percentage points year-on-year to 1.3% [22][30] Group 4: Demand Tracking - The average daily transaction area of commercial housing in 30 major cities decreased by 47.4% week-on-week and fell by 13.6 percentage points year-on-year to 38.4% [44][45] - The transaction volume in first-tier and second-tier cities was significantly weaker than the previous year, with first-tier cities down 30.8% week-on-week and 12.7 percentage points year-on-year to 44.5%, and second-tier cities down 61.9% week-on-week and 15.8 percentage points year-on-year to 29.8% [44][48][51] - The freight volume related to domestic demand showed a decline, with railway freight volume down 5.9 percentage points year-on-year to -10.3% and highway freight traffic down 8.4 percentage points year-on-year to -9.7% [56][58] Group 5: Price Tracking - Agricultural product prices showed differentiation, with vegetable and fruit prices decreasing by 0.9% and 0.2% respectively, while egg prices increased by 1.4% [98] - The industrial product price index rose by 1.7% week-on-week, with the energy and chemical price index increasing by 0.7% and the metal price index rising by 3.9% [110][114]

Core Insights - The U.S. real estate market is in a downward cycle from 2024 to 2025, with potential for recovery in 2026 depending on stabilization in property sales and continued interest rate cuts by the Federal Reserve [1] Group 1: U.S. Real Estate Market Dynamics - The core issue in the U.S. real estate market is insufficient demand, with supply shortages being secondary [10][77] - Mortgage rates have decreased by 80 basis points since 2025, yet real estate sales and investment remain sluggish [1][6] - The average monthly cost of homeownership is $3,060, accounting for 43.2% of household income, significantly higher than the $2,227 monthly rental cost [2][19][69] Group 2: Federal Reserve's Interest Rate Policy - The Federal Reserve is expected to cut interest rates 1-2 times in 2026, but the downward potential for long-term Treasury yields is limited [3][28] - Mortgage rates are closely tied to the 10-year Treasury yield, which is projected to remain around 4.0% by the end of 2026, limiting the impact of Fed rate cuts on mortgage rates [3][41][69] Group 3: Trump's Real Estate Policy Initiatives - Trump's administration has proposed five key real estate policies aimed at stimulating the market, including transferable mortgages and a ban on large institutional purchases of single-family homes [4][52][55] - The effectiveness of these policies is questioned, as only 1% of U.S. homes are owned by large institutional investors, and the proposed $200 billion MBS purchase may only marginally affect mortgage spreads [55][56][69] - The long-term solution to the housing crisis lies in increasing housing supply, which is hindered by high construction costs and labor shortages [56][69] Group 4: Market Outlook - The U.S. real estate market is expected to show only weak recovery in 2026, with slight improvements in property sales anticipated as mortgage rates gradually decline [65][71]

Overview - The U.S. non-farm payrolls added 50,000 jobs in December, slightly below expectations of 65,000, while the unemployment rate fell to 4.4% [1][7] - The labor force participation rate decreased by 0.1 percentage points to 62.4% [1][7] - Market reactions were muted following the data release, with slight fluctuations in the 10-year Treasury yield and the dollar index [1][6] Structure: Understanding the Divergence Between Non-Farm Payrolls and Unemployment Rate - December's employment in the goods-producing sector was weak, reflecting impacts from tariffs and other factors [2][18] - The construction sector saw a decrease of 11,000 jobs, while manufacturing employment declined further, influenced by real estate market conditions and immigration factors [2][18] - Private service sector jobs increased by 58,000, up from 32,000 in the previous month [2][18] - The decline in the unemployment rate to 4.4% was primarily due to tightening labor supply and temporary layoffs being reversed, indicating a divergence in non-farm employment and unemployment rate trends [2][25] Outlook: U.S. Economy Continues "Low-Growth Balance" and Fed Rate Cut Expectations May Be "Delayed" - The characteristics of the U.S. economy in 2026 may include a "low-growth balance" in employment and "jobless prosperity" [3][28] - The economy is expected to maintain a "low-growth balance" due to synchronized supply and demand contractions, but factors like resilient consumer spending and AI capital expenditures may sustain "jobless prosperity" [3][28] - The anticipated tax cuts from the "Beautiful America Act" in the first half of 2026 could boost consumer spending and inflation, potentially delaying the Federal Reserve's rate cut schedule [3][30]

Group 1 - The core viewpoint of the article highlights a collective rebound in overseas risk appetite, with geopolitical tensions leading to significant increases in gold and oil prices [2][5]. - Major developed market indices saw gains, with the Nikkei 225, DAX, and Dow Jones Industrial Average rising by 3.2%, 2.9%, and 2.3% respectively, while the Hang Seng Index fell by 0.4% [5]. - Emerging market indices also experienced growth, with the Korean Composite Index, Istanbul Stock Exchange National 30 Index, and Ho Chi Minh Index increasing by 6.4%, 5.9%, and 4.7% respectively [5]. Group 2 - The S&P 500 and Nasdaq indices rose by 1.6% and 1.9% respectively, while the WTI crude oil price increased by 3.1% to $59.1 per barrel, and COMEX gold prices rose by 3.6% to $4,473.0 per ounce [2][32]. - The U.S. Treasury General Account (TGA) balance decreased to $783.6 billion, and the net issuance of U.S. debt fell, with the 15-day rolling net issuance amount dropping to -$27.03 billion [47]. - The U.S. fiscal deficit for the calendar year 2025 reached $1.82 trillion, lower than the $1.91 trillion recorded in the same period of 2024 [50]. Group 3 - The U.S. unemployment rate fell to 4.4% in December, despite non-farm payrolls adding only 50,000 jobs, which was below market expectations [64]. - The ISM Manufacturing PMI for December was reported at 47.9, marking a third consecutive month of decline, primarily driven by inventory destocking [66]. - The article notes that the labor market is experiencing a "low-growth balance," with potential for continued economic resilience driven by consumer spending and fiscal stimulus [64].

Core Viewpoint - The article discusses the relationship between the Chinese yuan and Hong Kong stocks, highlighting their historical positive correlation and the recent divergence due to various market factors [2]. Group 1: Yuan and Hong Kong Stocks - Historical analysis shows a significant positive correlation between the yuan and Hong Kong stocks, influenced by stock earnings, asset revaluation effects, and foreign capital inflows [2]. - Recent rapid appreciation of the yuan has not led to an increase in Hong Kong stocks, attributed to weak performance in key sectors and a focus on profit-taking in the market [2]. - Future expectations suggest that as Hong Kong stock earnings improve and foreign capital allocation resumes, the negative correlation with the US dollar may return, with yuan appreciation potentially aiding in stock price increases [2]. Group 2: Investment Trends - Equipment investment has shown strong growth, reflecting either a phase of the Juglar cycle or a new stage of economic transformation, raising questions about sustainability in 2026 [8]. - The structure of equipment investment indicates that non-manufacturing sectors account for 35%, with significant contributions from services and construction [8]. Group 3: New Infrastructure Development - The article emphasizes the importance of "new infrastructure" as a core component of broader infrastructure initiatives, advocating for proactive development in technology and digital transformation [9]. - The "14th Five-Year Plan" and "15th Five-Year Plan" highlight the need for advanced infrastructure, including 5G networks and data centers, to enhance efficiency and support economic growth [9].

Core Viewpoint - The surge in copper and gold prices, influenced by input factors, has led to a continued rise in inflation for December [2][8] - December's PPI increased primarily due to the rise in copper prices, while other commodity prices and mid-to-lower stream PPI showed weak performance [2][8] - The CPI for December rose year-on-year, supported by high gold prices, although core CPI excluding gold remained low [2][8] Inflation Data Summary - On January 9, the National Bureau of Statistics released December 2025 inflation data: CPI year-on-year at 0.8%, previous value 0.7%, expected 0.8%, month-on-month at 0.2%; PPI year-on-year at -1.9%, previous value -2.2%, expected -2%, month-on-month at 0.2 [1][7][71] PPI Analysis - December PPI increased by 0.2% month-on-month, driven by a 7.9% rise in copper prices, which was the strongest contributing factor [2][8] - Coal prices contributed positively to PPI, while international oil prices declined, negatively impacting domestic oil prices [2][8] - The utilization rate in mid-to-lower stream sectors did not improve significantly, leading to a failure in price transmission from upstream to downstream [2][8] CPI Analysis - December CPI rose year-on-year by 0.1 percentage points to 0.8%, with core CPI rising to 2% mainly due to high gold prices [2][8] - Excluding gold, the remaining core CPI continued to decline, with a slight increase of 0.1 percentage points to -0.7% [2][8] - The CPI for food items increased by 0.9 percentage points to 1.1%, with fresh vegetables and fruits seeing significant price increases due to supply constraints [3][23][72] Service CPI Insights - The service CPI fell by 0.1 percentage points to 0.6%, with weak rental demand dragging down housing rent CPI [3][29][72] - Core service CPI also decreased by 0.1 percentage points to 1%, while dining out CPI saw a slight decline [3][29][72] Future Outlook - The ability of anti-involution policies to sustain price increases in mid-to-lower stream sectors is crucial for future inflation trends [4][40] - Over the past three years, commodity prices have only explained about 30% of PPI fluctuations, with more influence from price "over-declines" in mid-to-lower stream sectors [4][40] - High gold prices and improvements in service consumption may support core CPI, but the high base effect from the Spring Festival may limit January's CPI increase [4][40]

Group 1 - The core viewpoint of the article emphasizes the implementation of new policies for equipment updates and consumer goods trade-in subsidies in 2026, aimed at boosting consumption and investment in key sectors [2][3][5] - The 2026 policy expands the support scope for equipment updates to include the installation of elevators in old residential areas, elderly care institutions, and other fields, while optimizing the application process for small and medium-sized enterprises [2][3] - The subsidy for new energy passenger vehicles is set at 12% of the vehicle price, with a maximum of 20,000 yuan, while fuel vehicles will receive a 10% subsidy, capped at 15,000 yuan [3][4] Group 2 - The 2026 budget for early investment includes approximately 2,950 billion yuan, with 2,200 billion yuan allocated for "two heavy" projects focusing on urban underground pipelines and high-standard farmland [5][6] - The new personal housing sales tax policy reduces the VAT rate for homes sold within two years from 5% to 3%, while homes sold after two years are exempt from VAT, simplifying the transaction process [7][9] - The national fiscal work conference emphasizes the continuation of a more proactive fiscal policy, focusing on expanding domestic demand, supporting innovation, and promoting green transformation [10][11] Group 3 - The State Council meeting outlines measures to promote cross-border trade facilitation, emphasizing the importance of efficient logistics and the development of new business models such as green trade and cross-border e-commerce [12][13] - The construction of a national water network is highlighted as a strategic initiative to optimize water resource allocation and enhance flood prevention capabilities, contributing to domestic demand expansion [14]