Core Insights - The article discusses the January 2026 U.S. Consumer Price Index (CPI) data, indicating a year-on-year increase of 2.4%, which is lower than the expected 2.5% and previous value of 2.7% [1][5] - Core CPI increased by 2.5% year-on-year, meeting expectations, while month-on-month it rose by 0.3%, also in line with forecasts [1][5] - The overall inflation remains resilient yet shows signs of moderation, alleviating initial market concerns regarding tariff impacts and seasonal effects [1][5] Inflation Data Analysis - January's CPI data reflects a year-on-year increase of 2.4% and a month-on-month increase of 0.2%, both lower than expectations [1][5] - Core CPI year-on-year growth is at 2.5%, consistent with expectations, while the month-on-month growth is 0.3%, surpassing the previous month's 0.2% [1][5] - The market had anticipated higher inflation due to tariffs and seasonal effects, but the CPI results were relatively mild [1][5] Core Goods and Services - Core goods prices remained flat, with a year-on-year increase of 1.1% and no month-on-month change [10][11] - The price of used cars fell significantly by 1.8% month-on-month, contributing negatively to the core CPI [10][11] - Excluding used cars, core goods prices rebounded to a month-on-month increase of 0.4%, indicating a shift in inflation pressure towards other categories like appliances and clothing [12][11] Service Sector Inflation - Core service prices increased by 0.4% month-on-month, slightly higher than the previous month's 0.3% [12][13] - Year-on-year, core service prices rose by 2.9%, down from 3% previously, with notable increases in transportation and education services [12][13] - Rent prices showed a month-on-month increase of 0.2%, down from 0.4%, suggesting a potential correction from previous high rates [12][13] Seasonal Adjustments and Weight Changes - The Bureau of Labor Statistics (BLS) announced seasonal factor revisions and weight adjustments, which may lead to a slight statistical decline in CPI readings by the end of 2026 [14][15] - The adjustments increased the weight of categories with weaker price growth, such as used cars, while decreasing the weight of faster-growing categories like transportation services [14][15] Market Reactions - Following the CPI data release, the market slightly increased the probability of a Federal Reserve rate cut in June to 51.8% from 48.9% [16] - U.S. Treasury yields fell, with the 2-year yield decreasing by 7 basis points to 3.4% and the 10-year yield down by 5 basis points to 4.04% [16] - The stock market showed mixed results, with small-cap stocks performing well, indicating a rotation of funds towards sectors with higher growth potential [17]

Core Viewpoint - The January social financing data indicates a stable start to the year, with a total increase of 7.22 trillion yuan, surpassing market expectations and showing a year-on-year increase of 1654 billion yuan. However, the growth rate of social financing stock has slightly decreased to 8.2% [1][5][11]. Summary by Sections Social Financing - In January, social financing increased by 7.22 trillion yuan, exceeding the market average expectation of 6.5 trillion yuan, with a year-on-year increase of 1654 billion yuan. The growth rate of social financing stock is 8.2%, down by 0.1 percentage points from the previous month [1][5][6]. Entity Loans - Entity loans increased by 4.9 trillion yuan, which is a year-on-year decrease of 3194 billion yuan. This is attributed to several factors, including a high base from the previous year and a balanced credit supply-demand environment [2][7][9]. Government and Corporate Bonds - Government bonds increased by 9764 billion yuan, a year-on-year increase of 2831 billion yuan, indicating a proactive fiscal approach. Corporate bonds saw an increase of 5033 billion yuan, with a year-on-year increase of 579 billion yuan [3][9][10]. Bank Acceptance Bills - Undiscounted bank acceptance bills increased by 6293 billion yuan, a year-on-year increase of 1639 billion yuan, primarily due to a reduction in the scale of bills discounted to banks [3][9]. Monetary Supply - M1 grew by 4.9% year-on-year, up by 1.1 percentage points from the previous month, driven by cross-border capital flows and improved risk appetite among micro-entities. M2 increased by 9%, up by 0.5 percentage points from the previous month, supported by factors such as interbank investment expansion [4][10]. Overall Assessment - Overall, the January credit and social financing data shows a stable start. Despite the lack of significant recovery in medium to long-term loans indicating weak entity investment activities, improvements in non-entity activities have enhanced liquidity in the real sector, contributing to the rebound in M1 and M2 growth rates [4][11].

Core Viewpoint - Each technological revolution initially enhances production efficiency, subsequently leading to changes in economic structure, industry patterns, and asset allocation models. The driving force behind technology's evolution from inception to widespread adoption is not merely a breakthrough in a single technology, but rather the penetration, diffusion, and deep integration of new technologies within the economic system [1][13]. Group 1: Technological Revolution Phases - Since the Industrial Revolution, global economies experience a "great wave" driven by significant technological clusters approximately every 50-60 years, establishing a new "technology-economy paradigm" that optimizes production, organization, and management models [2][17]. - Each technological revolution can be divided into two main phases: the Installation Period and the Deployment Period. The Installation Period is characterized by infrastructure reconstruction, trial-and-error business models, and financial capital accumulation, further divided into the outbreak and frenzy stages. The Deployment Period features comprehensive technology dissemination and the establishment of economic paradigms, further divided into the synergy and maturity stages [2][17]. Group 2: Capital Forms and Their Roles - The "great wave" theory distinguishes between two forms of capital: financial capital and production capital. Financial capital is adept at trend identification, flexibility, speculation, and short-term profit orientation, while production capital focuses on industry realization, stability, path dependence, and long-term investment orientation. During the Installation Period of technological revolutions, financial capital typically takes the lead, while production capital assumes a dominant role during the Deployment Period [3][20]. Group 3: Economic Impacts of Technological Revolutions - In the Installation Period of a technological revolution, the overall economy may face pressure, and the differentiation between new and old industries may widen. New technologies are still in the nurturing phase and may not broadly stimulate related industries, employment, or productivity [5][29]. - During the Deployment Period, overall economic pressure is expected to ease, and the differentiation between new and old industries may narrow. New technologies become widely applied, leading to new products, business forms, and industries, which can create new employment forms [5][30]. Group 4: Global Dynamics and Catch-Up Opportunities - The "great wave" theory indicates that the Installation Period of each technological revolution provides critical catch-up windows for latecomer countries. Historical examples include Germany and the U.S. surpassing the U.K. before World War II, and the post-war rise of Japan and other economies [7][40]. - Latecomer countries can leverage their "latecomer advantage" by utilizing labor cost and technology transfer advantages to achieve leapfrog development, mastering key core technologies that drive the development of leading industries [7][40]. Group 5: Future Implications and Trends - The emergence of AI as the core technology of the sixth technological revolution is expected to enhance productivity across all sectors, breaking traditional growth bottlenecks. The scenario of AI's application is anticipated to evolve significantly, particularly in countries with favorable conditions for technology integration [10][12]. - The theory also suggests that macroeconomic policies should promote overall rebalancing, including actively expanding total demand and ensuring employment stability during the technological revolution's Installation Period [12][13].

Core Viewpoint - The article discusses the recent employment data released by the U.S. Department of Labor, highlighting a significant increase in non-farm payrolls and private sector employment, while also noting methodological changes that may have influenced these figures. Group 1: Employment Data - In January, non-farm payrolls increased by 130,000, exceeding expectations of 70,000 and the previous value of 48,000, significantly above the Dallas Fed's estimated balance level of 30,000 jobs per month [1][8] - Private sector employment rose by 172,000, surpassing the expected 75,000 and previous 64,000, indicating a rebound in employment trends [1][8] - The employment diffusion index increased from 54.2% to 55%, suggesting a broader coverage of employment growth across industries [1][8] Group 2: Methodological Changes - The introduction of a "birth-death model" adjustment by the Bureau of Labor Statistics may have led to an overestimation of the new job figures, particularly in the healthcare sector, which saw a significant increase of 137,000 jobs, the highest since September 2020 [2][11] - This model adjustment reflects a more cyclical characteristic in estimating job contributions from new businesses, potentially amplifying job estimates during periods of economic acceleration [2][11] Group 3: Sector-Specific Insights - Excluding healthcare, private sector job growth still showed a significant rebound, driven by investments in AI capacity, particularly in the construction sector, which added 33,000 jobs, with 25,000 from non-residential specialty trade contractors [3][13] - The construction job growth is attributed to the demand for data centers and AI infrastructure rather than traditional residential building [3][13] Group 4: Unemployment Rate and Labor Market Quality - The unemployment rate (U3) decreased from 4.38% to 4.28%, with an increase of 528,000 in the employed population and a decrease of 141,000 in the unemployed population, indicating a recovery from the impacts of government shutdowns [4][18] - The broader unemployment rate (U6) fell by 0.4 percentage points to 8.0%, reflecting a shift from part-time to full-time employment, suggesting an improvement in job quality [4][18] Group 5: Wage Growth and Labor Market Dynamics - Wage growth remained sticky, with average hourly earnings increasing by 3.7% year-over-year and 0.4% month-over-month, indicating tight labor supply in sectors like healthcare and construction [5][21] - The average weekly hours worked slightly increased to 34.3 hours, suggesting stable labor demand despite some fluctuations in wage growth across different sectors [5][21] Group 6: Market Reactions and Economic Outlook - The employment data has influenced market expectations regarding interest rate cuts, with a decrease in the probability of a June rate cut by the Federal Reserve [7][24] - Following the data release, U.S. Treasury yields rose, and the dollar index increased to 96.91, reflecting market adjustments to the employment figures [7][24]

Core Viewpoint - The central theme of the article revolves around the People's Bank of China's (PBOC) monetary policy adjustments and their implications for the economy, focusing on stabilizing short-term interest rates, promoting low financing costs, and leveraging exchange rates as automatic stabilizers for macroeconomic balance [5][6][10]. Group 1: Short-term Interest Rates - The PBOC aims to guide short-term money market rates to operate smoothly around the central bank's policy rates, specifically targeting DR001 and DR007, with a stable operation range defined as 20 basis points below and 50 basis points above the 7-day reverse repo rate [1][6]. - The report indicates that the key interest rates like DR001 and DR007 are expected to operate within a corridor of 70 basis points, which is considered acceptable by the central bank [1][6]. Group 2: Financing Costs - The PBOC emphasizes the need to maintain low comprehensive financing costs for society, suggesting that current financing costs are already at a relatively acceptable low level, making further rate cuts less likely without stronger triggers [2][8]. - The focus remains on stabilizing and expanding bank interest margins while ensuring sufficient liquidity for the banking system, indicating a low probability of significant increases in short-term rates like interbank certificates of deposit [2][8]. Group 3: Exchange Rate Stabilization - The PBOC calls for the exchange rate to function as an automatic stabilizer for the macroeconomy and international balance of payments, highlighting its role in adjusting trade conditions and absorbing external policy impacts [3][10]. - Emphasizing the need for exchange rate flexibility, the PBOC aims to maintain a balance between internal and external economic conditions, which requires a certain degree of exchange rate elasticity [3][10]. Group 4: Response to Deposit Migration - The PBOC addresses the issue of "deposit migration," noting that as direct financing develops and financing channels diversify, the allocation of household savings between bank deposits and other financial assets will become more varied [4][11]. - The central bank emphasizes that while this diversification may affect the structure of bank liabilities, it does not necessarily lead to significant changes in the overall liquidity of the financial system [4][11].

Core Viewpoint - Inflation is accelerating, with January CPI showing a month-on-month increase of 0.2%, marking the second consecutive month of positive growth. Core CPI, excluding food and energy, rose by 0.3%, the highest in six months, surpassing similar periods in 2015 and 2018. January PPI increased by 0.4%, reaching the highest point since May 2022 [5][6][7]. Group 1: Inflation Data Analysis - January CPI increased by 0.2% month-on-month, consistent with the previous value. Core CPI rose by 0.3%, higher than the previous value of 0.2% and equal to January 2023's 0.4%, marking the highest since August 2025 [6]. - January PPI increased by 0.4%, matching the previous month and reaching the highest level since May 2022. The base period adjustment and weight changes had a minor impact on the data, with an estimated effect of 0.06-0.08 percentage points on month-on-month growth rates [7][8]. Group 2: Price Increases in CPI - Notable month-on-month price increases in CPI include seasonal rises in tourism and service prices, with tourism prices up by 1.8% and service prices up by 0.2%. Specific increases include airfare (5.7%) and travel agency fees (2.0%) [2][8]. - The "CPI within PPI" category for household appliances continued to rise by 0.7%, with year-on-year growth increasing from 5.9% to 6.6%. Communication tools also saw a month-on-month increase of 0.9%, with year-on-year growth at 1.3% [2][8]. - Pork prices experienced their first month-on-month increase in six months, rising by 1.2% in January [2]. Group 3: Price Decreases in CPI - Certain categories, such as alcoholic beverages and rental housing, continued to show month-on-month declines. These categories are significant for the capital market, reflecting shifts in consumer behavior and economic cycles [2][9][10]. Group 4: PPI Price Increases - In January, prices for globally priced non-ferrous metals rose significantly, with non-ferrous metal mining and smelting increasing by 5.7% and 5.2%, respectively. Other sectors, including cement manufacturing and lithium-ion battery production, also saw increases [3][14][15]. - The automotive manufacturing sector reported zero growth, marking the first month without a decline in seven months. Prices in the AI industry chain, particularly for computer communication electronics, rose by 0.5% [3][16]. Group 5: Simulated Deflation Index - The simulated deflation index showed a year-on-year decline from -0.28% to -0.44% due to the timing of the Spring Festival, despite a month-on-month CPI increase. The index is expected to improve in February, potentially returning to around -0.28% [3][16].

Global Macroeconomic Overview - In 2025, global economic growth is expected to stabilize at approximately 3.2%, with the IMF projecting little difference from 2024. The resilience is attributed to tariff impacts being offset by imports and AI investments [1][10] - Economic differentiation is evident, with the US experiencing a decline in growth, while Europe and Japan show slight rebounds, and emerging markets maintain resilient growth [1][10] - Inflation and monetary policies are diverging, with a general trend towards easing; the Eurozone is expected to cut rates in the first half of the year, while the US is anticipated to lower rates in the second half [1][10] - Tariff disruptions have led to significant changes in trade environments, with a normalization expected in the latter half of the year [1][10] - The AI industry is expected to see increased capital expenditure, contributing to global trade growth and strong demand for non-ferrous metals [1][10] Global Asset Pricing Understanding - A stable growth environment and loose fiscal and monetary policies in major economies create opportunities for risk assets, with commodities and stocks showing high returns [2][14] - The decline in the dollar's asset yield due to US rate cuts and increased credit risk premiums from tariffs are key factors driving the dollar's weakness, influencing asset pricing [2][14] - Emerging markets exhibit relative growth resilience, benefiting from capital reallocation away from dollar assets [2][14] - The narrative surrounding AI's industrial fundamentals and global supply chain restructuring, combined with favorable liquidity conditions, creates a strong pricing narrative [2][14] US Economic Outlook for 2026 - The US economy is expected to experience a "strong then stable" trajectory, with GDP growth projected at around 2.4%, slightly above market expectations of 2.1% [5][29] - The first half of 2026 may see growth spike to approximately 3% due to the impact of tax cuts and government spending recovery, followed by a decline to around 2% in the latter half [5][29] - Consumer spending is anticipated to grow by 2.1%, supported by tax cuts and tariff rebates, although K-shaped recovery characteristics are noted [5][29] - Corporate fixed investment is projected to grow by about 5%, driven by systematic reductions in capital costs from tax reforms and ongoing AI infrastructure investments [5][29] US Monetary Policy Changes - The nomination of Warsh as the next Federal Reserve Chair signals a potential systemic shift in US macroeconomic policy, focusing on regulatory reforms to enhance private sector credit expansion [6][35] - This new framework aims to achieve a balance between Fed balance sheet reduction and credit easing, potentially leading to a decline in the Fed's balance sheet relative to GDP without triggering a liquidity crisis [6][35] Non-US Economic Conditions - Japan's fiscal policy is shifting towards a growth-oriented approach, with GDP growth expected at 0.6% in 2026 [7][41] - The Eurozone is projected to maintain weak recovery, with GDP growth anticipated at 1.3%, supported by fiscal expansion and resilient consumption [7][41] - Emerging markets are expected to see moderate growth, with significant regional differentiation; India is projected to maintain a growth rate of 6.4% driven by domestic demand [7][41] Geopolitical Environment - The global geopolitical landscape in 2026 faces challenges from the US's "transactional diplomacy," with significant developments in Latin America, Europe, and the Middle East [8][46] - The US is redefining its resource control in Latin America, while the Russia-Ukraine conflict is moving towards a ceasefire, impacting asset pricing related to geopolitical risks [8][46]

Investment Outlook - The relative elasticity of investment is expected to be highest in 2026, with a projected rebound from a low base of -3.8% in 2025 to around 3% growth in 2026, potentially yielding an elasticity of 6-7 percentage points [3][4] - The Chinese government is focusing on effective investment to stabilize economic growth, emphasizing the importance of infrastructure, urban renewal, public services, and emerging industries [28][29] - Guangdong province plans to increase its annual investment in key projects to 1.05 trillion yuan in 2026, up from 1 trillion yuan in 2025 and 2024 [2][3] Global Market Trends - Global stock markets are shifting towards "non-growth" assets, with a risk-off sentiment dominating pricing, leading to a focus on traditional economic sectors [5][6] - The U.S. stock market has shown significant differentiation, with defensive sectors like consumer staples and industrials leading, while technology stocks face pressure [5][6] - Commodity markets are experiencing high volatility, with gold and silver prices fluctuating significantly, while oil prices have also shown wide swings due to geopolitical factors [7][8] Economic Indicators - The U.S. labor market is showing signs of cooling, with job openings dropping significantly, indicating a potential slowdown in economic momentum [14][15] - Consumer confidence in the U.S. is mixed, with current conditions improving slightly but future expectations declining due to concerns over inflation and job security [15][16] - The European Central Bank (ECB) is maintaining its policy stance, indicating a period of observation without immediate changes to interest rates [12][13] Domestic Economic Policies - The Chinese government is implementing measures to promote effective investment, including the use of central budget investments, special bonds, and policy financial tools [28][29] - Local governments are also adjusting their economic growth targets, with Guangdong aiming for a growth range of 4.5%-5% for 2026 [21][22] - Various provinces are introducing policies to stabilize the housing market, including purchasing second-hand homes for rental purposes and providing subsidies for homebuyers [23][24]

Core Viewpoint - The narrative of "deposit migration" has gained traction again, particularly with a significant amount of high-interest fixed deposits maturing in 2026, which may lead to asset reallocation towards financial markets in a low-interest environment [1][4] Group 1: Deposit Maturity and Trends - Since 2022, the annual scale of maturing fixed deposits has reached new highs, with an annual increase of 4-7 trillion yuan; the total maturing fixed deposits in 2026 are estimated to be around 57-60 trillion yuan, with a year-on-year increase of 5-8 trillion yuan [6][7] - The proportion of personal fixed deposits in state-owned banks accounts for 67% of total fixed deposits in these banks, and 50% of personal fixed deposits across all banks, which can be used to extrapolate data for the entire banking system [6] Group 2: Resident Behavior and Preferences - Despite low interest rates, many residents are likely to continue choosing fixed deposits, insurance, or early loan repayments after their deposits mature, as income expectations remain constrained and preserving value is a core concern for most savers [10][11] - The proportion of residents' fixed deposits is expected to be 73.4% in 2025, an increase of 0.8 percentage points from 2024; the trend of early loan repayments is also significant, with personal housing loan reductions projected at 630 billion yuan, 490 billion yuan, and 670 billion yuan from 2023 to 2025 [10] Group 3: Investment Behavior Post-Maturity - The proportion of funds from maturing fixed deposits that will be reinvested into equity assets is expected to be relatively limited, as the current maturing deposits are primarily from low-risk preference funds that have already been filtered [13][14] - Historical data from Japan during the 1995-1996 period supports this view, where despite a peak in maturing deposits and low interest rates, residents increased their holdings in cash and low-risk assets rather than high-risk assets [14][16] Group 4: Observations on Financial Asset Allocation - The current trend of deposit migration began in Q3 2023 and is expected to continue until Q4 2025, with the proportion of deposits in residents' financial assets decreasing from 88% to 53-54% [19] - The remaining space for deposit migration is estimated to be around 1-2 percentage points, with the potential low point for the proportion of deposits in financial assets projected to be between 52% and 53% [19][20] Group 5: Broader Financial Market Considerations - For the equity market, deposits are just one potential source of liquidity; attention should also be given to disposable income after consumption and investments in non-financial assets, as well as allocations in insurance and bond-like assets [23] - The earning potential of bonds and insurance assets is expected to decline significantly by 2025, while the equity market may see improved earning potential, prompting high-net-worth individuals to adjust their asset allocations accordingly [23]

Core Viewpoint - The performance of major asset classes in January 2026 shows a trend where the Korean Composite Index outperformed other assets, with significant volatility in precious metals leading to a broad adjustment across asset classes [1][14]. Group 1: Asset Performance - In January 2026, the ranking of major asset classes was as follows: Korean Composite Index > Crude Oil > Gold > Sci-Tech 50 > Nanhua Composite > Hang Seng Index > Nikkei 225 > Long VIX > Shanghai Composite Index ≈ Hengke > S&P 500 > Nasdaq > China Bond > US Dollar [1][14]. - The commodity market experienced structural upward trends driven by both long-term narratives and short-term realities, with gold and silver showing volatility but not losing their gains [2][21]. - The global stock markets are entering a critical earnings disclosure period, with all major markets showing gains, and a shift in leading stocks within the US market [2][24]. Group 2: Macroeconomic Insights - The macroeconomic landscape is characterized by a synchronous rise in hard and soft data indices in the US and Japan, while Europe shows a V-shaped reversal in its data [4]. - China's soft data indicators are inconsistent, with hard data in a vacuum period, but nominal GDP growth is estimated at 4.94% for January, indicating a solidifying trend of improvement [4][21]. - The domestic stock and bond markets have shifted from a "seesaw" dynamic to "synchronous volatility," with the stock market experiencing a spring rally and the bond market undergoing a correction [2][4]. Group 3: Investment Strategies - The next driving factors for equity assets may stem from price increases and solidified inflation expectations, with a focus on domestic demand recovery post-holiday [5]. - The "M1-BCI-PPI timing system" indicates a slight expansion in scores, suggesting a supportive environment for risk assets despite a convergence in narratives [6]. - The bond market is showing signs of improvement in relative value, with the yield spread between 10-year government bonds and dividend yields indicating a return to a more favorable position for bonds [7]. Group 4: Sector Performance - The technology sector is currently underweighted compared to the overall market, with a significant drop in the score of high-growth assets due to internal and external liquidity conditions [9]. - The dividend asset timing model suggests that macro conditions do not favor dividends significantly, maintaining a low allocation relative to the overall market [10]. - The energy sector has shown strong performance, driven by geopolitical safety premiums and narratives around AI industrial energy consumption [24].