Core Viewpoint - Morgan Stanley analysts suggest that the outcome of the upcoming elections in Japan could significantly impact the 30-year Japanese government bond yield, with potential scenarios leading to yields ranging from 2.90% to 3.2% depending on the ruling party's performance [1] Group 1: Election Impact on Bond Yields - If the ruling party wins a majority, moderate fiscal stimulus measures may lower the 30-year Japanese government bond yield to approximately 2.90% [1] - Conversely, if the ruling party fails to secure a majority, the prospect of large-scale fiscal stimulus could push the 30-year bond yield up to 3.2% [1] Group 2: Market Conditions and Investor Sentiment - Following market deterioration in May, the ultra-long Japanese government bonds temporarily stabilized, but weak supply and demand dynamics resurfaced after the July auction of 30-year bonds [1] - Investors remain concerned about the risks to Japan's fiscal discipline amid a backdrop of structural supply and demand weakness [1]

Group 1 - The core viewpoint of the articles revolves around the impact of U.S. trade policies, particularly the proposed tariffs by President Trump on Japan and other trade partners, which have led to fluctuations in currency exchange rates, particularly the USD/JPY [1][2] - Following Trump's announcement of a 25% tariff on Japan and other countries, the USD/JPY exchange rate rose to its highest point in over two weeks, indicating market reactions to trade tensions [1] - The ongoing trade negotiations between the U.S. and Japan are at an impasse, primarily due to Japan's reluctance to compromise on rice market protection, which is affecting the value of the yen [2] Group 2 - The Euro is holding steady against the dollar as the market speculates on the possibility of the EU receiving exemptions from U.S. tariffs, which could influence currency valuations [2] - Market expectations indicate that the Federal Reserve may lower interest rates twice before the end of the year, while the European Central Bank is only expected to lower rates once, affecting the relative strength of the euro against the dollar [3]

Group 1 - The core viewpoint of the article highlights South Korea's fiscal stimulus measures, which include cash disbursements and financial assistance [1] Group 2 - The fiscal stimulus aims to support the economy amid ongoing challenges [1] - Cash payments are expected to provide immediate relief to households [1] - Financial assistance is targeted at sectors most affected by economic downturns [1]

Group 1 - The investment outlook for the second half of 2025 will be influenced by three main themes: the stock market led by large U.S. tech companies expanding to a broader market, a shift in the bond market favoring corporate credit over developed market sovereign bonds, and the increasing importance of active asset allocation strategies in a slowing growth and high inflation environment [1] - U.S. tariffs and retaliatory measures from trade partners are expected to create supply shocks and negatively impact global demand, while fiscal measures like deregulation and tax cuts may pose additional upside risks to economic growth and inflation [1] - The current investment environment is returning to one where returns are generated from a wider range of regions and sectors, necessitating a diversified investment strategy and flexible deployment from investors [1][2] Group 2 - China is advancing in artificial intelligence technology, with expectations for accelerated technological innovation in the coming years, despite challenges in computing power [2] - The transformation of the Chinese consumer market is creating opportunities in sectors such as collectible brands, fresh beverages, and leisure snacks, driven by evolving consumption patterns [2] - The focus on diversifying investments into higher-quality and more resilient emerging market regions is seen as beneficial in navigating risks associated with trade, inflation, and policy movements [2] Group 3 - Given high valuations, there is a cautious stance on stocks, particularly U.S. equities, while European and emerging market stocks are viewed more favorably due to competitive earnings prospects and potential benefits from stimulus measures [3] - A lower allocation to bonds is anticipated due to upward pressure on U.S. interest rates, although a higher allocation to higher-yielding bonds is favored as their fundamentals remain supportive [3] - In a volatile market environment, maintaining a higher allocation to cash is considered prudent as it offers attractive returns and liquidity [3]

Group 1 - Investor confidence in the German economic outlook has improved significantly, primarily due to an upcoming surge in public spending that offsets concerns over U.S. tariffs [1] - The ZEW expectation index rose to 47.5 in June, up from 25.2 in the previous month, exceeding the median forecast [1] - The current situation indicator also showed improvement, reinforcing the assessment that the fiscal policy measures announced by the new German government could boost the economy [1] Group 2 - Achim Wambach, president of ZEW, stated that recent European Central Bank interest rate cuts may end Germany's nearly three-year economic stagnation [1]

Core Viewpoint - The newly elected South Korean President Lee Jae-myung prioritizes economic revitalization, focusing on high-tech industries like AI and semiconductors to enhance competitiveness and create jobs [1][4]. Economic Policy and Market Response - Lee Jae-myung's administration aims to address multiple economic challenges, including regional development disparities and job creation [1][4]. - Following Lee's inauguration, the KOSPI index rose over 4%, rebounding more than 20% from April lows, nearing a bull market [1][8]. - The South Korean won appreciated by 1.50% against the US dollar, reaching a recent high of 1351.80 [1]. Political Stability and Governance - The end of political vacuum is expected to improve the political risk index in South Korea, with a current score of 18.85, down from over 20 [4][8]. - Lee's government is anticipated to have a stable political environment until at least the 2028 National Assembly elections, enhancing policy implementation capabilities [1][4]. Trade Relations and Tariff Negotiations - The new government is prioritizing tariff negotiations with the US, with a focus on reaching a comprehensive agreement by July 8 [5][6]. - The outcome of these negotiations is critical, as South Korea's exports to the US in sectors like automobiles and steel face significant tariffs [5][6]. Economic Growth Forecasts - Despite a 0.2% contraction in Q1 2025, market expectations for South Korea's economic growth are improving, with forecasts for real GDP growth adjusted upwards by major financial institutions [8][9]. - Goldman Sachs raised its GDP growth forecast for South Korea from 0.7% to 1.1%, while Morgan Stanley adjusted its projections for 2025 and 2026 to 1.1% and 1.5%, respectively [9][10]. Investment Sentiment - Lee's commitment to boosting the stock market, with aspirations for the KOSPI index to reach 5000 points, has attracted renewed interest from global asset management firms [10].

Market Overview - The South Korean KOSPI index increased by 1.02%, reaching 2799.20 points, with a gain of 28.36 points [2][3] - The Japanese Nikkei 225 index decreased by 0.16%, closing at 37688.48 points, down by 58.75 points [4][5] South Korea - Newly elected President Lee Jae-myung issued his first executive order to establish an emergency economic inspection team [2][3] - Lee emphasized "practical diplomacy" and aims to maximize national interests, indicating plans for fiscal measures to stimulate economic growth [3] - Analysts from Goldman Sachs believe that the election results will reassess the stock market, predicting a boost in the Korean stock market and currency due to Lee's presidency [3] Japan - Japanese automotive stocks, including Subaru, Mazda, Nissan, and Honda, experienced declines of over 2% [4][5] - Japan's real wages adjusted for inflation fell by 1.8% year-on-year in April, marking the fourth consecutive month of significant decline due to inflationary pressures [5] - UBS Asset Management suggested Japan halt the issuance of long-term government bonds to mitigate selling pressure, as the 40-year Japanese government bond yield surged to 3.675%, the highest since its introduction in 2007 [6]

Core Viewpoint - The European Central Bank (ECB) is expected to lower interest rates by 25 basis points, which may be the last cut in the current cycle [1] Group 1: Economic Indicators - The anticipated rate cut is influenced by declining energy prices and upcoming fiscal stimulus measures [1] - The global economic recession risk has decreased, prompting a more cautious approach to further policy actions [1] Group 2: Market Expectations - Market expectations are fully aligned with the anticipated 25 basis point cut on Thursday, with another cut expected before the end of the year [1]

Group 1 - The Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser believes that China has the capability and determination to stimulate economic vitality and achieve its growth targets despite challenges from the US trade dispute [1][3] - Hauser observed that Chinese business leaders are generally confident about China's ability to gain an advantage in the trade war, with many believing that fiscal stimulus measures have positively impacted the economy since January [3][4] - The sentiment among Australian companies regarding collaboration with China is optimistic, supported by expectations of improved market conditions in early 2025 and confidence in the Chinese government's ability to maintain economic vitality [4] Group 2 - Hauser noted that the Chinese anticipate that the actual costs of US tariffs will be borne by the US itself, and there is a strong resolve in China not to mitigate this impact [4] - The general belief among the Chinese is that a significant depreciation of the yuan would lessen the impact of US tariffs on American consumers, but there is little support for this idea as China does not wish to alleviate the tariff burden on the US [4]