Summary of Morgan Stanley Global Macro Forum Call Industry Overview - **Focus**: Global macroeconomic trends, particularly in the US economy and interest rates - **Key Participants**: Vishwanath Tirupattur, Michael Gapen, Seth Carpenter, Matthew Hornbach, Martin Tobias, James Lord Key Points Economic Indicators - **2Q GDP Performance**: Domestic demand has softened significantly, slowing to a 1.2% pace from 2.7% in the previous year [5] - **Labor Market Trends**: There is a sharp drop-off in labor demand, with downward revisions to May and June employment figures totaling 258,000 [40][7] - **Recession Signals**: A deceleration in nonfarm payrolls is more closely correlated with recession risk than revisions to prior data [11] Central Bank Policies - **Federal Reserve Outlook**: The expectation is that the Fed will maintain its current policy stance, with no rate cuts projected until March 2026 despite rising inflation [40] - **Global Central Banks**: The Fed and the Bank of Japan are expected to remain on hold, while the European Central Bank and the Bank of England may ease policies this year [40] Interest Rates and Market Dynamics - **Market-Implied Rates**: The market is pricing the Fed's policy trough rate to move well below 3.00% [15][40] - **Term Premiums**: Concerns regarding the quality of US economic data and a dovish bias from the FOMC are expected to keep term premiums elevated [40] - **USD Outlook**: Continued weakness in the USD is anticipated, with expectations that the bear market for the currency is not over [40] Treasury Issuance - **Composition of Treasury Issuance**: Bills have been crucial in financing Treasury's borrowing needs, and this trend is expected to continue, leading to a lower weighted average maturity (WAM) of marketable debt [28][31][40] Investment Strategies - **Recommended Positions**: - Long UST 5-year notes and FVU5 futures - Short 10-year TIPS breakevens - Long January 2026 fed funds futures - Stay short USD [40][41] Additional Insights - **Tariff Impact**: Evidence of tariff pass-through is becoming clearer, with prices of goods exposed to tariffs showing sharper increases [40] - **Inflation Concerns**: Inflation remains a significant concern for the Fed, with expectations of price pressures in heavily tariffed goods [40] Conclusion The call highlighted a cooling US economy with significant implications for labor demand and central bank policies. The anticipated trajectory of interest rates and the ongoing weakness of the USD present both risks and opportunities for investors. The focus on Treasury issuance and the impact of tariffs on inflation further complicate the macroeconomic landscape.

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the global rates strategy, focusing on developments in the US, Eurozone, and Japan markets, particularly in relation to interest rates and tariffs. Core Points and Arguments 1. **Tariff Announcement Impact**: A 30% tariff rate on EU goods was announced by Trump, effective after August 1, which was higher than expected. The EU has suspended retaliatory measures but is preparing countermeasures if negotiations fail. Market reactions were muted as investors focused on potential negotiations rather than the tariff rate itself [2][2][2]. 2. **US Curve Steepening**: The US curve steepened by 6 basis points this week, influenced by concerns regarding the independence of the Federal Reserve amid rumors about Chair Powell's potential dismissal. This led to a partial retracement of the steepening move, but uncertainty remains about political influence on the Fed [3][3][3]. 3. **Eurozone Rate Expectations**: The European Central Bank (ECB) is expected to keep rates on hold in the upcoming meeting, with a 42% probability of a rate cut in September. The ECB's recent commentary has been relaxed regarding downside risks to growth and the appreciation of the Euro [35][35][41]. 4. **Market Movements**: Mixed rate movements were observed across developed markets, with Euro rates rallying by 4-5 basis points, while UK gilts sold off. The overall market sentiment appears cautious ahead of the summer holiday period [1][1][44]. 5. **Swaps Seasonality Analysis**: There is no clear evidence of seasonal patterns in swap levels or curves for EUR, GBP, and USD, although some flattening in 10s/30s USD swaps has been noted since 2021. The analysis suggests that summer carry trades can work unless idiosyncratic factors disrupt the market [12][12][18]. 6. **Political Uncertainty in Japan**: In Japan, rates sold off amid political noise ahead of the upper house election, with liquidity conditions remaining poor. The outcome of the election is uncertain, which could impact fiscal policies [4][4][4]. 7. **Inflation Data**: Recent inflation data showed mixed results, with core CPI in the US surprising to the downside while UK CPI delivered an upside surprise. This indicates varying inflationary pressures across regions [47][47][47]. 8. **Central Bank Policy Rate Expectations**: The call highlighted expectations for central bank policy rates across various regions, with J.P. Morgan's forecasts indicating potential adjustments in response to economic conditions [50][50][50]. Other Important but Overlooked Content - The analysis of yield pick-up available via foreign bonds indicates varying opportunities for investors based on currency hedging strategies, with specific yield differentials noted for different maturities [54][54][54]. - The discussion on the potential for larger fiscal outlays suggests that while the overall impact on issuance may be limited, the risk balance is shifting [6][6][6]. This summary encapsulates the key insights and data points from the conference call, providing a comprehensive overview of the current state of the global rates strategy and its implications for investors.

Core Insights - The Euro/USD continues to weaken, falling below 1.1600 due to strong US CPI data in June, which has provided additional momentum to the dollar [1][2]. Economic Indicators - Economic confidence in Germany and the Eurozone has improved, yet the Euro has declined further, nearing a four-week low, contributing to the Euro/USD's fifth consecutive day of decline [2]. - The Federal Reserve's June meeting minutes reveal internal divisions among policymakers regarding interest rate cuts, with some advocating for immediate action while others prefer caution until the impact of tariff-driven inflation is clearer [4]. Trade Tensions - The White House has announced a pause on new tariff decisions until August 1, but escalating trade tensions are evident, including threats of 30% tariffs on EU goods and 25% tariffs on imports from Japan and South Korea, which have heightened concerns over broader conflicts and increased the dollar's value [3]. Central Bank Policies - The Federal Reserve's cautious stance is supported by accelerating inflation pressures, as indicated by the June CPI data, while the European Central Bank has stated it will only consider further easing if there is clear evidence of a slowdown in external demand [4]. Market Dynamics - Speculators are focusing on key levels for the Euro/USD, needing to break above 1.1830 to target long-term highs, while a drop below 1.1592 could lead to testing lower support levels [5]. - Technical indicators have shifted to a bearish mode, with the Relative Strength Index (RSI) falling below 48, indicating potential further declines, and the Average Directional Index (ADX) around 27 suggesting a strong trend [6]. Short-term Outlook - The prospect of Fed rate cuts alongside the ECB's pause may provide new momentum for the Euro, potentially pushing the Euro/USD higher, although any sustained rebound is hindered by ongoing trade tensions and the unpredictability of US tariff policies [9].

Group 1: Impact of Tariffs on Global Economy - Current tariffs impose an effective GDP tax of approximately 1.5% on U.S. importers, and even with a trade agreement, it is unlikely that tariffs will decrease significantly [1] - Global growth tracking estimates a current annual rate of only 1.3%, which is at the 8th lowest percentile historically [1] - There is a significant divergence between hard and soft data following tariff announcements, with a peak gap not seen in 27 years [1] Group 2: U.S. Dollar Dynamics - UBS is bearish on the dollar from a cyclical perspective but does not view this as the start of a long-term depreciation trend [2] - The current dollar sell-off lacks key elements that characterized past long-term declines, such as improved economic growth in other regions and reduced risk premiums [2] Group 3: Inflation and Tariffs - Initial impacts of tariffs are beginning to show in private sector data, but delays in transmission to official consumer price indices are expected [3] - Significant effects on CPI from tariffs are anticipated to manifest in July's data, which will be released in August [3] Group 4: Global Exporters' Response - Evidence of a "tariff rush" in Q1 indicates that trade volumes have not yet stabilized despite price increases [4] - There is little evidence that foreign exporters are absorbing tariff costs by lowering export prices, and the impact of dollar depreciation on their profits is noted [4] Group 5: U.S. Fiscal Outlook and Global Interest Rates - The majority of changes in budget deficits stem from the extension of the 2017 tax cuts, with no fundamental changes expected post-election [6] - Concerns about supply issues persist, but historically, demand fluctuations have been more significant than supply [6] Group 6: Capital Flows from the U.S. - There is a widely accepted view that foreign investors are reducing exposure to U.S. assets, supported by April's international capital flow data [7] - The ongoing decline of the dollar suggests that foreign exchange hedging may be a driving factor behind this trend [7] Group 7: U.S. vs. European Stock Markets - U.S. stock markets typically perform better during global GDP slowdowns, but the current slowdown is primarily driven by the U.S. economy [8] - Comparisons reveal that U.S. valuations are exceptionally high while European markets appear relatively cheap [8] Group 8: "One Big Beautiful" Act's Economic Impact - The "One Big Beautiful" Act is projected to increase deficits before 2026, with a total reduction of $0.4 trillion over ten years [8] - The act is expected to provide a boost of approximately 45 basis points to economic growth by 2026 [8] Group 9: Central Banks' Response to Tariff Escalation - Central banks have shifted their views due to the absence of retaliatory measures and dollar depreciation, with expectations of 1-3 policy rate cuts [9] - The current situation is viewed as simpler than a "stagflation" scenario, allowing for potential easing policies [9]

日本央行周二也要开会，之前市场觉得他们可能加息，但现在行长植田和男说"不确定性太高"，加上特朗普的关税政策可能影响日本经济，所以现在大家 觉得日本央行这周应该不会动利率。如果他们暗示接下来更谨慎，日元可能会继续贬值，这对黄金价格也有影响。 最近一周黄金价格像坐过山车，上周五冲到3446美元，创两个月新高，结果这周一又掉到3415美元附近。与此同时，全球央行扎堆开会，美联储、日本、 瑞士这些国家的央行都要宣布新政策，搞得投资者心里没底。中东那边以色列和伊朗打起来了，美国特朗普还说可能要介入，这些消息搅得市场更乱了。 美联储这周四要开会，大家猜他们会不会继续按兵不动。现在市场普遍认为美联储会保持利率不变，但更关注主席鲍威尔怎么说。美国5月通胀数据比预 期低，但核心CPI还是比目标高，所以美联储可能还是那套"保持耐心"的话术。不过美国就业市场数据不太好看，经济衰退的担忧又冒出来了，这让美联 储下半年要不要降息变得很难说。 刚果（金）东部上周也出事了，武装袭击导致300多人死亡，那边一直不太平，各种反政府武装横行，这次袭击具体是谁干的还不清楚。虽然这事对黄金 影响不大，但全球安全形势紧张，避险情绪还是会影响市场。 中 ...

·植田和男放鸽日元应声走软 【机构分析】 ·英格兰和威尔士特许会计师协会的分析师苏伦·蒂鲁在一份报告中写道，英国就业市场出现问题的迹象 可能不足以促使英国央行本月再次降息。周二公布的数据显示，英国失业率已升至近四年来的最高水 平，为4.6%，而工资增长也在放缓。"英国的劳动力市场正处于一个痛苦的时期，高得惊人的商业成本 可能意味着今年会有更多的失业。"蒂鲁说。但他补充道，由于通胀仍高于英国央行的目标，英国央行 的政策制定者不会受到影响，不会在本月晚些时候召开的政策会议中降息。 ·尽管失业率上升英国央行仍可能按兵不动 ·英国央行将警惕工资增长态势 ·普信集团：美联储近期不太可能降息 ·野村：日本央行加息可能面临"相当大的障碍" ·普信集团策略师蒂姆·默里表示，在关税相关的不确定性消退或劳动力市场出现明显恶化之前，美联储 将继续按兵不动。默里预计短期内不会出现"美联储认沽期权"，即美联储降息救市。美联储的政策制定 者知道，降低利率并不是解决不确定性的良方。考虑到关税将推高通胀的风险，美联储也不愿降息。默 里预计，美联储将坚持其依赖数据的做法，避免提供前瞻指引，并避免发出任何"政治信息"。 ·野村证券全球市场研究部 ...

Summary of Conference Call Records Industry Overview - The records primarily discuss the bond market and the implications of U.S.-China relations on interest rates and liquidity in the financial system [1][3][7]. Key Points and Arguments 1. **Global Economic Trends**: There is a consensus that global economic decoupling and fragmentation are long-term trends, with short-term tariff adjustments unlikely to reverse the overall direction of U.S.-China relations [1][7]. 2. **Interest Rate Projections**: - A complete removal of reciprocal tariffs could lead to an estimated interest rate rebound of about 12 basis points, but the impact is expected to be limited [1][3]. - The 10-year government bond yield is projected to have an upper limit adjustment to 1.75% if tariffs are fully removed, although current macroeconomic conditions do not support a strong rebound to 1.4% [6][8]. 3. **Market Sentiment**: - June has seen improved liquidity conditions, with bond market sentiment turning positive and the 2001 bond effectively breaking below 1.4% [1][4]. - The negative factors that suppressed the market in May are dissipating, indicating clear trend opportunities [4][5]. 4. **Central Bank Policies**: - The central bank is maintaining a tightening stance, which, along with a recovering real estate sector, supports market sentiment [8][9]. - Recent announcements of reverse repos by the central bank aim to stabilize market expectations and signal liquidity support [10]. 5. **Future Liquidity Expectations**: - There is a shift towards a more accommodative liquidity outlook, with the DR001 rate breaking below 1.4%, indicating enhanced liquidity sentiment [2][12]. - The central bank's actions suggest potential for further liquidity increases if market conditions remain tight [11][12]. 6. **Investment Opportunities**: - The outlook for medium to long-term bond funds is positive, with expected returns of 2.5-3% this year, encouraging investors to seize current market trends [13][14]. Other Important Insights - The impact of U.S.-China tariffs on market reactions has diminished, with the market forming a consensus that long-term trends will prevail despite short-term fluctuations [3][7]. - Structural tariffs and trade measures, such as Section 301 and Section 232, continue to pose risks to the economic relationship between the U.S. and China [7][9]. - The central bank's flexible approach to liquidity management reflects its responsiveness to uncertainties in U.S.-China relations and domestic economic pressures [10].

韩国央行行长李昌镛：非银行机构的稳定币可能会影响韩国央行的政策。 ...

本周市场将受到多重因素的影响，尤其是美联储的会议纪要和通胀报告将成为关键的关注点。周初，市场将由特朗普最新关税威胁以及欧洲央行行长拉加德 的讲话引导，而接下来的数据发布将进一步影响市场情绪和投资决策。本文将详细分析本周的重要经济数据和事件，帮助投资者把握市场脉动。 欧美时段首先关注德国5月季调后失业率，4月份经季节调整的失业率连续第二个月保持在6.3%不变，符合预期但当局指出，春季劳工市场复苏似乎相对较 弱，所以需要更多的数据来确认信号，看就业市场依然被经济前景信心弱化所拖累。晚间关注美国5月里奇蒙德联储制造业指数，预计维持负值。原油市场 关注第39届欧佩克和非欧佩克产油国部长级会议举行，上周有报道称其讨论7月增产的选项，在当前经济前景不明朗的情况下，增产会再次施压油价。 周一：央行动态引导市场 美国和英国因假期休市，但市场情绪将主要受到特朗普再次发出关税威胁的影响，留意避险情绪预计集中。美国总统特朗普上周五威胁要再次升级贸易战， 建议从6月1日起对欧盟商品征收50%的关税，并警告苹果，他可能会对美国消费者购买的所有iPhone征收25%的关税。看晚间欧央行行长拉加德讲话关注是 否就特朗普最新关税警告做出回应 ...

Summary of Key Points from Conference Call Records Industry Overview - The records primarily discuss the bond market and the impact of US-China trade relations on it, along with the implications of interest rate policies by the central bank. Core Insights and Arguments 1. **Monetary Policy Outlook** The central bank is not expected to tighten monetary policy significantly in the short term due to the lack of consistent improvement in the economic fundamentals. The rise in funding rates in May is seen as normal, with current overnight rates remaining relatively loose, supporting a bullish stance on the bond market [1][3][2]. 2. **US-China Tariff Levels** It is anticipated that the US-China tariff levels will stabilize between 40-50% in 2025. The long-term decoupling trend in key sectors such as semiconductors and shipping remains unchanged, driven by the inadequacy of the US supply chain [4][5]. 3. **Impact of Tariffs on Corporate Profitability** The average profit margins for foreign trade enterprises are low, with B2B at approximately 10% and B2C at around 20%. An additional 10% tariff could lead many companies to operate at a loss. Therefore, maintaining the current tariff levels is deemed reasonable [6]. 4. **Ten-Year Treasury Yield Trends** The current yield on ten-year treasury bonds is close to 1.65%. A bearish outlook to 1.7% is considered neutral, and any adjustments are viewed as buying opportunities. The overall direction remains bullish for the bond market, even amidst short-term fluctuations [7][1]. 5. **Structural Tariffs and Industry Impact** Future total tariff levels are expected to remain stable, with a focus on structural tariffs such as the 232 and 301 trade laws, which could increase tariffs by 25% or more for specific industries. The relationship between the US and China is not expected to improve significantly [8]. 6. **Shift of Production Capacity Overseas** Companies are increasingly relocating production capacity overseas, despite lower labor costs abroad. The higher efficiency of domestic production and infrastructure leads to lower overall production costs domestically. This shift negatively impacts domestic employment and fiscal revenue [10]. 7. **Export Trends and Market Sentiment** Recent export data indicates a rise in the growth rate of high-value products, while labor-intensive products lag. This trend reflects a shift towards capital goods and raw materials in exports, which may pressure domestic employment and fiscal income [11]. 8. **Rising Overseas Shipping Costs** The increase in overseas shipping costs is attributed to shipping companies adjusting capacity and recovering demand in the US market. It is expected that shipping prices will remain high for the next four weeks before potentially declining [12]. 9. **Banking Sector and Interest Rate Adjustments** Large banks may lower deposit rates, which could benefit the bond market if the adjustments are significant (20-40 basis points). This would reduce the cost pressure on banks' liabilities, making bond purchases more attractive [17]. Other Important Insights - The current 90-day exemption period has led companies to prioritize existing orders, creating a cautious sentiment towards new orders due to potential tariff changes post-exemption [9]. - The central bank will only consider tightening monetary policy when there is a consistent improvement in financial data over at least a month [14]. - Current interest rates are difficult to lower due to market perceptions of instability, which affects bond market sentiment [15]. - Banks are not expected to engage in large-scale profit-taking in the second quarter, focusing instead on routine seasonal operations [16].