Group 1 - Malaysia has implemented significant adjustments to the Sales and Service Tax (SST) starting July 1, imposing a 5% to 10% sales tax on non-essential and luxury goods, while expanding the service tax scope [1][2] - The new tax policy aims to broaden the tax base and increase fiscal revenue while selectively avoiding essential goods to mitigate the burden on the general public [1][4] - Luxury items such as imported salmon, high-end fruits, and truffles are taxed at 5%, while high-value collectibles like antiques and luxury cars are taxed at 10%, reflecting the government's consideration of consumer spending capacity [1][2] Group 2 - The expansion of the service tax includes sectors like leasing, construction, financial services, education, and beauty services, addressing long-standing gaps in the tax base [2][3] - The tax reform is part of the "Prosperous Economy" reform framework, emphasizing sustainable fiscal policies and social inclusivity while avoiding taxes on basic necessities [2][4] - Measures have been introduced to alleviate the impact on small and medium-sized enterprises (SMEs), including exemptions for those with rental income below 500,000 MYR (approximately 117,900 USD) [3][4] Group 3 - The additional tax revenue will be allocated to enhance public services, expand cash assistance, and improve infrastructure and healthcare resources, aiming to reduce the budget deficit from approximately 4.3% in 2024 to 3.8% in 2025 [4] - The tax reform is designed to maintain basic government operations while gradually building a more robust tax system, balancing moderate adjustments with progressive reforms [4] - The government asserts that the tax burden will not increase on essential goods for the general public, but higher-income individuals will contribute more to address future economic pressures [4]

Group 1: Market Performance - Domestic precious metal futures experienced an overall increase, with the main Shanghai gold price at 776.04 CNY per gram, up by 0.70%, and the main Shanghai silver price at 8747.00 CNY per kilogram, up by 0.09% [1] - In contrast, international precious metals saw a decline, with COMEX gold priced at 3341.60 USD per ounce, down by 0.25%, and COMEX silver at 36.21 USD per ounce, down by 0.10% [1] Group 2: Price Data - On July 2, 2025, the opening, highest, and lowest prices for the main Shanghai gold were 780.80 CNY, 781.00 CNY, and 775.02 CNY per gram respectively [2] - For the main Shanghai silver, the prices were 8802.00 CNY, 8825.00 CNY, and 8741.00 CNY per kilogram [2] - COMEX gold opened at 3350.00 USD, reached a high of 3354.80 USD, and a low of 3337.70 USD per ounce [2] - COMEX silver had opening, highest, and lowest prices of 36.24 USD, 36.38 USD, and 36.05 USD per ounce respectively [2] Group 3: Legislative Impact - The "Big and Beautiful Act" (OBBB) proposed by President Trump has garnered mixed reactions, with some banks supporting it as a necessary economic stimulus [3] - The Senate passed the bill with a narrow margin, and it is now awaiting approval in the House of Representatives, where some Republican members have expressed opposition to certain provisions [3] - The bill includes comprehensive tax reforms and targeted incentives, which are expected to increase the federal deficit, raising concerns among credit institutions [3] Group 4: Market Analysis - On July 1, COMEX gold prices rose by 1.28% to 3349.90 USD per ounce, while the main Shanghai gold futures increased by 0.84% to 777.10 CNY per gram [4] - The U.S. Treasury Secretary indicated that the Federal Reserve might act sooner than fall, with a strong likelihood of a rate cut by September [4] - Current CME "FedWatch" data shows a 78.8% probability of maintaining interest rates in July, with a 21.2% chance of a 25 basis point cut [4]

Core Points - The U.S. Senate voted 51-50 to approve the Trump tax proposal, with Vice President Vance breaking the tie, sending it back to the House for a re-vote [1] - The "Big Beautiful" tax legislation passed by the House has been revised by the Senate [1] - There is still a possibility that the House may reject the Senate's amendments to the bill [1]

Group 1 - The U.S. Secretary of Commerce, Ross, indicated that a tax legislation proposal is expected to pass in the next 1-2 weeks [1] - There is confidence that consensus can be reached on the state and local tax deduction (SALT) legislation between Congress and the White House [2] - If the tax reform proposed by President Trump is implemented, there will be no need to change tariffs [3]

Core Viewpoint - Fitch Ratings has issued a more conservative forecast for Pakistan's fiscal deficit, citing potential difficulties in implementing expected tax reforms compared to the government's projections [1] Group 1 - Fitch Ratings' forecast for Pakistan's fiscal deficit is less optimistic than the government's expectations [1] - The potential challenges in implementing tax reforms are highlighted as a key factor influencing the fiscal outlook [1]

Core Viewpoint - The Japanese government is considering the cancellation of the tax exemption for foreign tourists and the introduction of a "departure tax" for them, in response to rising domestic prices and the abuse of the tax exemption system by tourists [1] Group 1: Government Strategy - The Japanese government is promoting a tourism strategy aimed at increasing foreign tourist numbers to 60 million by 2030 [1] - The backdrop of the yen's depreciation has led to a sustained increase in foreign tourist visits to Japan [1] Group 2: Economic Context - Domestic prices in Japan are continuously rising, prompting the government to explore tax reforms targeting foreign tourists [1] - The government aims to enhance national revenue without increasing the tax burden on Japanese citizens [1]

Core Viewpoint - The tax reform proposal pushed by the Trump administration, referred to as the "beautiful bill," is facing intense debate in Congress and is seen as a significant shift in the U.S. tax system, with potential global investment implications [1][4]. Group 1: Tax Reform Proposal - The proposal includes a controversial provision, Section 899, which grants the U.S. government unprecedented taxing authority over investments from countries deemed to have "unfair tax practices" [3][4]. - This provision could lead to punitive tax increases on any investment returns from foreign investors, including institutional and individual investors, as well as central banks [3][4]. Group 2: Impact on International Investors - The "long-arm jurisdiction" of the proposed tax regime could significantly affect international financial markets, as it targets investment returns from countries with specific tax classifications [4][10]. - For instance, if Japan holds $1.13 trillion in U.S. Treasury bonds with an average interest rate of 3%, the implementation of Section 899 could result in a tax liability of $151.5 million, effectively halving the returns on these investments [6][10]. Group 3: Fiscal Context - The U.S. government is facing a record fiscal deficit of $1.83 trillion for the 2024 fiscal year, prompting the need for increased revenue through measures like tariffs and the proposed tax reform [8][10]. - The Joint Committee on Taxation estimates that Section 899 could generate $116 billion in tax revenue over the next decade, highlighting the financial motivations behind the proposal [8][10]. Group 4: Broader Implications - The proposed tax changes reflect deeper fiscal anxieties within the U.S., as foreign investors are perceived to benefit from the dollar's dominance without contributing proportionately to U.S. fiscal responsibilities [10][12]. - The potential for a significant restructuring of the international financial system is evident, as investors globally will need to reassess the risk premiums associated with U.S. investments due to the uncertainty surrounding tax liabilities [12].

Group 1: Monetary Policy - President Trump criticized the Federal Reserve's interest rate decisions, arguing that current rates are too high given the declining inflation data [3] - The market perceives Trump's frequent interventions in interest rate policy as a potential threat to the independence of the central bank, with a 0.25 percentage point implicit risk premium observed in the pricing of the federal funds rate by traders [3] Group 2: Fiscal Policy - Trump promoted his tax reform 2.0, which includes expanding the income tax exemption for tips, adjusting the Social Security tax threshold, and optimizing overtime tax treatment, claiming it would reduce taxes for auto industry workers by an average of $1,450 annually [3] - The Congressional Budget Office estimated that the full implementation of this proposal would reduce federal revenue by approximately $215 billion over the next decade, with 38% of the tax cuts benefiting the manufacturing sector [3] Group 3: Trade Policy - Trump defended his tariff policy, stating that a 25% tariff on imported cars and parts has led to a net increase of 42,000 jobs in the U.S. auto manufacturing sector, with Michigan accounting for 29% of this growth [4] - However, Bloomberg's economic research indicated that the average price of imported cars and parts rose by 17.3% during the same period, with consumers bearing about 62% of the tariff costs [4] Group 4: Market Reaction - During Trump's speech, the volatility of the dollar index rose to 112.5 basis points, the highest in nearly three months, while the 10-year U.S. Treasury yield briefly surpassed 4.38% before retreating, indicating investor caution regarding policy uncertainty [5] - The University of Michigan's consumer confidence index showed an increase in the five-year inflation expectations to 3.1%, the highest level since June 2023 [5]