Core Viewpoints - The article discusses the current concerns of investors regarding macro interest rates, credit, and convertible bonds, and provides insights on these topics [2][12]. Group 1: Bond Market Dynamics - Bond interest rates are positively correlated with domestic demand and negatively correlated with external demand, indicating that despite unexpected tariff changes, the core contradiction in the bond market remains focused on domestic demand [3][14]. - The liquidity environment is improving gradually, with funding rates decreasing from around 1.8% to a range of 1.4%-1.6%, suggesting that negative carry is becoming a thing of the past [4][19]. - The long-end interest rates, particularly the 10-year government bond, require a decline in deposit rates to facilitate further downward movement [20][21]. Group 2: Macro-Prudential Support - The People's Bank of China is focusing on macro-prudential measures to support the healthy development of the bond market, which includes monitoring risks and enhancing regulatory coordination [5][24]. - The current credit environment shows weak growth in broad credit, with local government bonds expanding, indicating that investors may face more interest rate risks [25]. Group 3: Credit Bond Market - The credit bond market is expected to see a shift towards stronger credit performance and weaker interest rates, driven by a decrease in deposit rates and increased allocation towards credit bonds by wealth management products [7][28]. - The performance of credit strategies is likely to favor short to medium-term bonds, particularly those with a maturity of 2-3 years, with a ranking of value from city investment bonds to industry bonds [8][30]. Group 4: Investment Opportunities - The recent surge in sci-tech bonds presents unique investment opportunities, especially with new issuers and private sector participation, although investors should remain cautious of potential credit risks [10][32]. - The recommendation for a near-term convertible bond strategy is based on the increasing market focus on bonds with shorter maturities, particularly those with a strong repayment capability [11][34].

Core Viewpoint - The article discusses the significant rise in long-term Japanese government bond yields, attributing it to factors such as improving employment, rising wages, and inflationary pressures, alongside supply-demand imbalances in the bond market [2][8][15]. Group 1: Long-term Japanese Government Bond Yields - The auction of 1 trillion yen 20-year bonds on May 20, 2025, saw a bid-to-cover ratio drop to 2.5, the lowest since 2012, and a tail difference of 1.14, the highest since 1987, leading to a sharp increase in 30-year bond yields to 2.74% [1][6]. - The yield spread between 30-year and 10-year Japanese bonds increased significantly to 126 basis points, placing it in the 99.3 percentile since 2000, indicating a steepening of the yield curve [1][6]. Group 2: Economic Factors Influencing Yields - The Japanese labor market has shown consistent improvement since 2021, with a declining unemployment rate and rising labor participation, contributing to wage increases and inflation that have exceeded the Bank of Japan's target of 2% for two consecutive years [2][8][12]. - The Bank of Japan is expected to initiate a rate hike cycle in March 2024 to address rising inflation and normalize monetary policy, which has been extremely accommodative for 25 years [12][15]. Group 3: Supply-Demand Imbalances - The supply-demand imbalance in the long-term bond market is a primary driver of the recent yield increases, with the Bank of Japan reducing its bond purchases, leading to liquidity risks in the market [15][22]. - Major Japanese life insurance companies are facing significant unrealized losses on their bond holdings, prompting them to reconsider their long-term bond positions, further exacerbating liquidity issues [22][24]. Group 4: Future Outlook - Upcoming bond auctions from May 28 to June 5, 2025, for 40-year, 10-year, and 30-year bonds are expected to impact the overall bond market, with potential for continued upward pressure on yield spreads [3][24]. - The actions of the Bank of Japan and the Ministry of Finance in mid-June will be crucial in determining the trajectory of Japanese bond yields, as they seek to balance currency appreciation, economic recovery, and market normalization [3][24]. Group 5: Impact on Global Markets - The ongoing rise in Japanese bond yields may influence global bond markets, as the interconnectedness of developed economies means that changes in Japanese yields could lead to similar movements in other countries' long-term bond rates [5][41]. - A reversal in the carry trade, where investors borrow in yen to invest in higher-yielding dollar assets, could lead to capital outflows from U.S. equities, increasing volatility in those markets [5][41].

Core Viewpoint - April's profit growth is primarily driven by short-term improvements in costs and expenses, but attention is needed on potential profit decline pressures in the third quarter due to tariff disturbances [3][76]. Group 1: Profit and Revenue Analysis - In April, industrial profits increased by 0.4 percentage points year-on-year to 2.9%, mainly due to improved cost and expense pressures [3][9]. - The contribution of costs and expenses to overall profit improved, with costs contributing +2.7 percentage points and expenses +0.5 percentage points, while other losses contributed negatively [3][9]. - Actual operating revenue showed resilience, with a year-on-year decline of 1.6 percentage points to 5.5%, contributing 4.9% to overall profit growth [3][9]. Group 2: Cost Structure and Industry Performance - The overall cost rate for industrial enterprises was 86%, with a year-on-year marginal decline of 12.6 basis points [3][17]. - Downstream consumer manufacturing industries saw a cost rate increase of 59.7 basis points to 84.3%, which was significantly lower than seasonal trends [3][17]. - In contrast, the petrochemical and metallurgy chains experienced weaker cost performance, with respective cost rates rising to 86.5% and declining to 87% [3][17]. Group 3: Revenue Support from Infrastructure and Exports - Benefiting from infrastructure investment and export boosts, the coal and metallurgy chains, along with downstream consumer industries, provided significant revenue support [4][27]. - The actual revenue growth rate fell by 1.6 percentage points to 5.5%, with the petrochemical industry experiencing a notable decline of 3 percentage points to 2.1% [4][27]. - The consumer manufacturing chain maintained a relatively high revenue growth rate of 7.8%, supported by short-term export boosts [4][27]. Group 4: Future Outlook and Uncertainties - Future profit recovery remains uncertain due to potential lagging effects of tariffs and low capacity utilization in mid and downstream sectors [4][33]. - Historical data indicates that profit margins have a greater impact on profits than revenue, with current low capacity utilization keeping consumer manufacturing cost rates high [4][33]. - Previous experiences suggest that post-tariff implementation may lead to declines in asset turnover and rising fixed costs, resulting in profit growth rates declining more than revenue [4][33]. Group 5: Regular Tracking of Industrial Performance - Industrial enterprise profits showed a year-on-year increase of 0.4 percentage points, primarily due to improved profit margins [5][36]. - Revenue growth for industrial enterprises remained stable, with significant increases in the food and beverage sectors [5][50]. - Inventory growth slightly declined, indicating that terminal demand still requires further recovery [5][61].

Group 1 - The core driver of the recent volatility in the US Treasury market is the US tax reduction bill and the weak demand for Japanese bonds, leading to significant increases in Treasury yields in May [2][3][7] - The 10-year Treasury yield rose by 37 basis points since April 30, with the term premium contributing 28 basis points to this increase, indicating heightened concerns over fiscal sustainability and inflation [10][69] - The term premium for US Treasuries reached a new high of 0.9% by May 22, reflecting disturbances in fiscal, inflation, monetary, and trading factors [10][69] Group 2 - The "Beautiful America Act" aims to extend tax cuts from the Tax Cuts and Jobs Act (TCJA), with an expected increase in the deficit rate by approximately 1.8 percentage points by 2026, despite limited marginal economic contributions [3][29][40] - The Act's passage faces uncertainty in the Senate, where the Republican majority is slim, and potential amendments could require further voting in the House [3][29] - The Act includes significant tax cuts, with 80% of the measures extending existing cuts and 20% introducing new cuts, but the overall economic impact is expected to be limited, similar to the effects of tax extensions in 2010 and 2012 [33][40][41] Group 3 - The relationship between the US fiscal deficit and Treasury yields remains stable, with a 1 percentage point increase in the deficit correlating to a rise of approximately 78 basis points in the 10-year Treasury yield [4][47] - Short-term pressures on the Treasury market have eased, with positive net inflows into bond funds in May, indicating a temporary reduction in systemic pressure [49][50] - Long-term, Treasury yields are expected to remain elevated due to potential unanticipated deficit expansions and ongoing trade policy uncertainties [60][70]

美国众议院通过减税法案。 5月22日，美国众议院以215票赞成、214票反对的微弱优势通过了《美丽大 法案》，法案旨在永久延续2017年《减税与就业法案》中的多项减税措施，并引入新的税收优惠。该法 案已提交参议院，共和党计划将在7月4日之前完成表决。 5月美国Markit制造业、服务业PMI反弹，日本4月核心CPI升温。 美国5月Markit制造业、服务业PMI均 提升至 52.3，前值分别为50.2、50.8，或反映中美关税缓和影响；4月日本CPI同比3.6%，核心通胀（剔除 食品、能源口径）同比3.0%，后者维持上升趋势。 文 | 赵伟、陈达飞、赵宇 联系人 | 赵宇 摘要 大类资产&海外事件&数据：众议院通过减税法案，市场再现"股债汇"三杀 美国再现"股债汇"三杀，金价再度"异军突起"。 当周，纳指下跌2.5%，日经225下跌1.6%；10Y美债收益 率上行8bp至4.51%；美元指数下跌1.8%至99.12，离岸人民币升至7.1722；WTI原油下跌1.5%至61.5美元/ 桶，COMEX黄金上涨5.0%至3351.0美元/盎司。 风险提示 地缘政治冲突升级；美国经济放缓超预期；美联储超预期转"鹰" ...

Core Viewpoint - The market is expected to remain in a high central oscillation phase during Q2, with short-term adjustments anticipated due to increased uncertainty in the U.S. economy and limited expansion space for new consumption [1][2][3]. Group 1: Market Conditions - Q2 is characterized as a high central oscillation market, with short-term adjustments expected [2]. - The upper limit of the oscillation range is supported by a combination of wide monetary policy and external demand improvements, but concerns about economic downturns remain [2][3]. - The lower limit is influenced by the timely implementation of monetary policies and the role of stabilization funds in managing market sentiment [2][3]. Group 2: Sector Analysis - Technology and consumer sectors are currently not positioned to lead market breakthroughs, with technology still in a mid-term adjustment phase [2][4]. - New consumption trends are facing limitations in expanding outward due to reduced internal demand stimulus [2][4]. - The pharmaceutical sector (CXO and innovative drugs) and precious metals are expected to continue their positive trends in the short term [4]. Group 3: Fund Management and Market Dynamics - The recent trend of public funds aligning with performance benchmarks has concluded, with potential for a new round of market dynamics in June [5]. - Fund managers are encouraged to reassess their benchmark choices, as the alignment with performance benchmarks may not be suitable for all [3][4]. - The potential inflow of funds into sectors such as non-banking, banking, construction, public utilities, and coal is noted, although actual inflows remain low relative to market capitalization [3]. Group 4: Profitability and Economic Outlook - A general expectation is that A-shares will struggle to see a significant uptick in profitability until 2025 [2]. - The mid-term outlook for A-shares relies heavily on breakthroughs in the technology sector, particularly in AI, embodied intelligence, and defense industries [4]. - The combination of new merger regulations and venture capital financing is anticipated to contribute positively to high-growth segments of the new economy [4]. Group 5: Market Sentiment Indicators - The market sentiment indicators show varying levels of profitability across sectors, with banking at 97% and consumer sectors like beauty care and pharmaceuticals showing moderate expansion [8]. - Sectors such as public utilities and basic chemicals are experiencing contraction, indicating a need for focused investment strategies [8]. - The overall A-share market sentiment is showing signs of contraction, with only 42% of stocks indicating profitability expansion [8].

Core Viewpoint - The article discusses the fiscal revenue and expenditure situation in China for the first four months of 2025, highlighting a decline in general public budget revenue and an increase in expenditure, indicating a potential for fiscal acceleration supported by government debt financing [2][7]. Group 1: Fiscal Performance Overview - In the first four months of 2025, general public budget revenue was 80,616 billion yuan, a year-on-year decrease of 0.4%, while expenditure was 93,581 billion yuan, a year-on-year increase of 4.6% [2][7]. - The broad fiscal revenue grew by 2.7% year-on-year in April 2025, with expenditure increasing by 12.9%, showing improvements compared to March [3][8]. - The budget completion rates for broad fiscal revenue and expenditure were 33% and 28.4%, respectively, both higher than the average of the past five years [3][8]. Group 2: Government Debt and Financing - The broad fiscal deficit reached -2.7 trillion yuan in April 2025, exceeding the average deficit of -1.4 trillion yuan from 2020 to 2024, indicating strong support from government debt financing [10]. - As of May 16, 2025, the net financing of government bonds reached 2.4 trillion yuan, with an issuance progress of 49.4%, significantly higher than the 20.9% in the same period of 2024 [10]. Group 3: Special Bonds and Land Revenue - The issuance progress of new special bonds remains slow, with a current issuance scale of 1.37 trillion yuan and a progress rate of 31%, lower than the previous two years [13]. - Land transfer revenue showed a year-on-year increase of 4% in April 2025, with a significant improvement in growth rate compared to March [12][19]. Group 4: Policy Implications - The article emphasizes the initiation of "incremental policies," with financial policies leading the way, and highlights the importance of monitoring the pace and direction of future fiscal expenditures [4][15]. - The current 90-day tariff "grace period" is seen as a window for accelerating the implementation of established policies and strengthening the reserve of incremental policies [15].

Group 1 - The core issue of service consumption recovery is that it is slower compared to goods consumption, with a significant gap in service consumption tendency compared to historical trends, indicating that income may not be the primary constraint on service recovery [2][8][107] - In 2024, the gap in per capita service consumption compared to historical trends is 2,093 yuan (13.9%), while the gap for goods consumption is only 458 yuan (2.9%) [2][8][107] - The increase in working hours, averaging 6 hours and 23 minutes per day in 2023, has reduced leisure time, which is crucial for service consumption [2][19][107] Group 2 - The increase in working hours has led to a concentration of consumption during holidays, but the legal holiday days are relatively few, with only 18 days mandated for 2025, significantly lower than Japan and South Korea [3][30][108] - The service sector is a non-trade sector, and insufficient effective supply will constrain the recovery of service consumption more than that of goods consumption [4][49][109] - Employment in the service sector has decreased compared to historical trends, indicating an excess supply gap, particularly in life services such as education and entertainment [4][60][109] Group 3 - The lack of entrepreneur confidence is a significant constraint on service supply, with high industry costs and increased debt pressure contributing to this issue [6][110][111] - Investment in the service sector, especially in life services, has not kept pace with profitability, indicating a cautious investment behavior among entrepreneurs [6][90][110] - The shift in investment logic from proactive to reactive, driven by profitability, has led to a slowdown in investment growth, particularly in the health and education sectors [7][90][110]

Core Viewpoint - The article emphasizes the importance of aligning public fund performance with investor interests and enhancing the stability of fund investment behavior, as outlined in the CSRC's action plan for high-quality development of public funds [1][2]. Group 1: Fund Performance and Benchmarking - Approximately 70% of active equity funds use major broad-based indices such as CSI 300, CSI 800, and CSI 500 as performance benchmarks, with a similar proportion in terms of fund size [2][5]. - About 14% of active products are benchmarked against Hong Kong indices, indicating a growing interest in Hong Kong stocks among mainland active public funds [2][9]. Group 2: Industry Allocation and Performance Deviation - Financial, dividend, and computer sectors are identified as the main underweight industries, with significant absolute underweight amounts even after excluding industry index products [3][4]. - The banking and non-banking financial sectors are underweight by approximately 190 billion yuan each compared to their benchmarks, while the electronics sector is overweight by nearly 140 billion yuan [3][11]. Group 3: Detailed Industry Analysis - The analysis shows that banks and non-banking financials are underweight by over 8 percentage points, while the electronics sector is overweight by 5.8 percentage points [4][12]. - Absolute amounts indicate that the banking and non-banking sectors are underweight by around 180 to 200 billion yuan, while the electronics sector is overweight by about 130 billion yuan [4][11].

Core Viewpoint - The article highlights the stable operation of industrial production, marginal improvement in infrastructure construction, and the divergent trends in shipping prices, indicating a mixed economic recovery landscape. Group 1: Industrial Production - Industrial production remains stable, with the blast furnace operating rate showing resilience, down by 0.5 percentage points year-on-year to 2.6% [2][5] - In the chemical sector, except for a significant drop in soda ash production, other areas like PTA and polyester filament have improved, with year-on-year increases of 3.4 percentage points to 4.7% and 1.9 percentage points to 4.8%, respectively [2][17] - The operating rate of automotive semi-steel tires has also improved significantly, up by 15.5 percentage points year-on-year to -2.4% [2][17] Group 2: Construction Industry - The construction industry shows mixed performance, with national grinding operating rates and cement shipment rates significantly lower than the same period last year, up by 1.5 percentage points to -3.5% and down by 0.6 percentage points to -6.9%, respectively [2][28] - Asphalt operating rates have seen a notable increase, up by 4.8 percentage points year-on-year to 6.8% [2][40] Group 3: Downstream Demand - The transaction volume of commercial housing continues to decline, with the average daily transaction area of new homes down by 45.7% year-on-year to -12% [2][52] - Port cargo throughput and container throughput related to exports have also decreased, down by 15.3% to -6.2% and 7.1% to -0.3%, respectively [2][63] - Shipping prices show divergence, with the West America route continuing to rise while Southeast Asia route prices have significantly dropped [2][93] Group 4: Price Trends - Agricultural product prices are mixed, with vegetable and egg prices falling by 2.2% and 0.6% respectively, while pork prices remain stable and fruit prices have increased by 0.7% [3][105] - The industrial product price index has risen by 2% week-on-week, with the energy and chemical price index up by 2.1% and the metal price index up by 1.8% [3][117]