Group 1 - Japan has become the country with the highest inflation among the G7, leading to increased living costs for voters while easing the government's fiscal burden [1][3] - The U.S. PCE data showed a decline, with core personal consumption decreasing by 0.3% month-on-month, indicating a broad weakening in consumer spending [1] - Wage growth in the U.S. increased by 0.4% month-on-month in May, suggesting that while consumption is weak, there is still income support [1] Group 2 - The Federal Reserve's decision-makers are divided on the future interest rate trajectory, with some advocating for rate cuts while others believe they are unnecessary [2] - Fed Chair Powell indicated that the Fed is not in a hurry to cut rates, emphasizing the need to understand the impact of tariff policies on the economy [2] - Japan's government is experiencing a fiscal surplus for the first time in 17 years, attributed to increased tax revenue from rising inflation [3][4] Group 3 - Japan's long-term bond market is facing distortions due to insufficient demand, prompting the government to reduce the issuance of ultra-long bonds [4] - The IMF predicts that by 2030, Japan's ratio of interest payments on national debt to GDP will double, not accounting for increased military spending [4][5] - Domestic inflation has risen significantly, posing challenges for local financial institutions as demand for long-term bonds declines [5]

Group 1 - Recent trends in US Treasury yields show a decline in short-term rates and a slight increase in long-term rates, indicating a dual market dynamic of outlook and supply-demand mismatch [1] - As of June 20, the 10-year Treasury yield was 4.38%, down 2 basis points from two weeks prior, while the 2-year yield also fell by 2 basis points and the 30-year yield rose by 1 basis point [1] - The US fiscal surplus turned negative in May, resulting in a deficit of $316 billion, with a 12-month cumulative deficit of $2 trillion, highlighting ongoing fiscal pressures [1] Group 2 - The Federal Reserve maintained interest rates at 4.25%-4.50% on June 19, with increasing internal divisions potentially leading to communication risks regarding future policy [1] - The Treasury General Account (TGA) balance increased by $7.7 billion over two weeks, while the Fed's reverse repo tool expanded by $33.3 billion, tightening short-term dollar liquidity [1] - Market conditions are facing risks from rapid oil price increases and tightening liquidity [1]

Core Viewpoint - The Finance Minister of Pakistan announced that the fiscal surplus for the fiscal year 2025 is projected to be 2.4% of the Gross Domestic Product (GDP) [1] Group 1 - The fiscal surplus for the fiscal year 2025 is expected to be 2.4% of GDP [1]

Core Viewpoint - The UK government is facing increasing challenges in achieving fiscal stability and addressing the financial gaps left by the previous Conservative administration, as evidenced by rising public borrowing and expenditure [1][2]. Group 1: Public Borrowing and Fiscal Deficit - In April, UK public borrowing reached £20.2 billion, exceeding last year's level by £1 billion and surpassing market expectations of £18 billion [1]. - For the fiscal year ending March 2023, public borrowing totaled £148.3 billion, which was £11 billion more than initially projected by the Office for Budget Responsibility [2]. - As of April, the UK government debt-to-GDP ratio stood at 95.5%, an increase of 0.7 percentage points from the previous year [2]. Group 2: Government Expenditure - In April, government spending amounted to £93.9 billion, an increase of £4.2 billion compared to the same month last year, primarily driven by rising public service sector wages [1][3]. - The UK government is under pressure to manage rising costs in public services, including salaries for teachers and healthcare workers, which are contributing to increased expenditure [1][3]. Group 3: Revenue Generation and Taxation - The government has raised the employer's National Insurance tax rate and increased VAT on private school fees, with overall tax burden projected to rise to 36.4% of GDP in 2024-25 and further to 38.3% by 2027-28, marking a historical high [4]. - The government is exploring options to cut tax exemptions on capital market investment income, although this is expected to have limited impact on improving fiscal conditions [4]. Group 4: Economic Outlook and Market Impact - The UK government faces a difficult choice between reducing public services or increasing taxes to meet fiscal discipline requirements, with market expectations leaning towards tax increases and spending cuts [4]. - The anticipated challenges in achieving fiscal targets have already affected capital markets, with rising yields on 20-year and 30-year UK government bonds observed [5].

Core Viewpoint - The New Zealand Finance Minister has projected that the country will not achieve a budget surplus over the next five fiscal years [1] Summary by Relevant Categories Fiscal Outlook - The government anticipates a continued budget deficit, indicating a challenging fiscal environment ahead [1] Economic Implications - The lack of expected surpluses may impact government spending and investment strategies, potentially affecting economic growth [1]