Core Viewpoint - The Federal Reserve has updated its monetary policy framework to address significant changes in the economic environment over the past five years, including rising inflation pressures and a shift away from the ultra-low interest rates seen during the COVID-19 pandemic [1][4]. Group 1: Policy Framework Changes - The new framework marks a departure from the special policy framework adopted in 2020, removing references to low interest rate environments and returning to a flexible inflation targeting approach [2][4]. - The previous framework allowed inflation to exceed the 2% target to compensate for periods of underperformance, a strategy that was quickly undermined by the pandemic-induced inflation surge [2][3]. Group 2: Inflation Expectations - The updated framework emphasizes the importance of anchoring long-term inflation expectations, reaffirming the 2% inflation target and the Fed's commitment to taking decisive action to maintain this stability [3][7]. - The Fed believes that a stable long-term inflation rate of 2% promotes price stability and moderate long-term interest rates, enhancing its ability to support maximum employment during significant economic shocks [3][7]. Group 3: Economic Environment Adaptation - The new framework reflects a reassessment of the current economic environment, acknowledging that the pandemic and subsequent stimulus measures have led to the most severe inflation pressures in decades, fundamentally altering the monetary policy landscape [4][5]. - Analysts suggest that, despite a significant easing of inflation pressures and the Fed's plans to lower interest rates, it is unlikely that rates will return to the ultra-low levels seen before the pandemic due to structural changes in the economy and increased government borrowing [5][6]. Group 4: Review and Transparency - The Federal Open Market Committee (FOMC) intends to review these principles annually in January and conduct a comprehensive public assessment of its monetary policy strategy approximately every five years [5][8]. - The FOMC aims to clearly communicate its monetary policy decisions to reduce economic and financial uncertainty, thereby enhancing the effectiveness of its policies [5][6].

Core Viewpoint - Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole conference highlighted the current state of the U.S. economy and the outlook for short-term monetary policy, indicating a potential adjustment in policy stance due to the economy's resilience and the balance of inflation and employment risks [1][5][6]. Economic Conditions - The U.S. economy remains resilient, with the labor market close to full employment, although there are rising risks of employment downturns. Powell noted a "special balance" in the labor market, where both supply and demand are cooling, leading to a significant decrease in the threshold for new job creation needed to maintain stable unemployment [5][6]. - Inflation has receded from pandemic highs but remains elevated, with tariffs contributing to price increases. Powell anticipates that the impact of tariffs will continue to accumulate in the coming months, although he views the inflationary pressures as likely to be one-time adjustments rather than persistent [5][6]. Monetary Policy Outlook - Powell emphasized that the current policy interest rate is closer to neutral, situated within a restrictive range, and that there is no preset path for monetary policy. The Federal Reserve will base its decisions on economic data and risk assessments, adhering to a "data-driven" approach [6][7]. - Following Powell's remarks, traders increased bets on a potential interest rate cut by the Federal Reserve in September, with expectations of two rate cuts by the end of the year [1]. Market Reactions - Following Powell's speech, major U.S. stock indices saw significant gains, with the Dow Jones Industrial Average rising by approximately 2%, the Nasdaq Composite up nearly 2%, and the S&P 500 increasing by over 1.5%. The Nasdaq China Golden Dragon Index also rose by over 2.5% [2][1]. Monetary Policy Framework - Powell presented the results of the Federal Reserve's second public assessment of its monetary policy framework, which maintains the dual mandate of "maximum employment and stable prices." The framework has evolved since its initial release in 2012 and its first revision in 2020, reflecting changes in the economic environment [9][10]. - The adjustments to the framework are a response to the significant economic shifts post-COVID-19, including the highest inflation rates in 40 years, which diverged from the previously anticipated low inflation and effective lower bound constraints [10]. Long-term Inflation Target - The Federal Reserve continues to uphold a long-term inflation target of 2%, which is deemed low enough to avoid negatively impacting household and business decisions while allowing for counter-cyclical policy adjustments. However, there is no specific numerical target for "maximum employment" due to its measurement complexities and influences from non-monetary factors [10].

Core Viewpoint - Federal Reserve Chairman Jerome Powell indicated potential for interest rate cuts in the upcoming September meeting, citing changes in baseline outlook and risk balance as reasons for policy adjustments [3][4][5] Economic Conditions - The U.S. economy has shown resilience amid significant policy changes, with the labor market remaining close to maximum employment and inflation having decreased from pandemic highs [9] - Recent economic challenges include increased tariffs reshaping global trade, tighter immigration policies slowing labor force growth, and long-term changes in tax and regulatory policies impacting economic growth and productivity [10] Labor Market Insights - The July employment report revealed a significant slowdown in job creation, with an average of only 35,000 new jobs added over the past three months, far below the projected 168,000 for 2024 [10][11] - Despite the slowdown, the unemployment rate remains low at 4.2%, and other labor market indicators show only slight weakening, suggesting a peculiar balance in the labor market that poses rising downside risks for employment [10][11] Inflation Dynamics - Inflation risks are currently tilted upward, while employment risks are leaning downward, creating a challenging scenario for policymakers [4][13] - The core Personal Consumption Expenditures (PCE) index showed a year-over-year increase of 2.9%, with tariffs contributing to rising consumer prices, although these effects are expected to be one-time shocks rather than sustained inflation [11][12] Market Reactions - Following Powell's remarks, market reactions were notably dovish, with the dollar index dropping approximately 0.5% and U.S. Treasury yields falling sharply, particularly the two-year yield which decreased by 9 basis points to 3.70% [4][5] - The probability of a rate cut in September surged to about 90% from 75% prior to Powell's speech, with significant gains observed in major U.S. stock indices, including a rise of over 700 points in the Dow Jones [5]

Summary of Key Points from the Conference Call Industry or Company Involved - The discussion revolves around the Federal Reserve and potential candidates for the next Federal Reserve Chair. Core Points and Arguments 1. **Potential Candidates for Federal Reserve Chair**: The Trump administration is considering Kevin Warsh, Kevin Hassett, and Christopher Waller as potential candidates for the next Federal Reserve Chair, all of whom are Republicans with economic backgrounds and prior experience at the Federal Reserve [1][3][4]. 2. **Divergent Economic Outlooks**: The three candidates have differing views on the U.S. economic outlook. Hassett is the most optimistic, believing Trump's policies will drive growth without rising inflation. Warsh sees the economy as fundamentally strong, while Waller aligns with Federal Reserve officials, indicating a moderate economic slowdown [5]. 3. **Policy Preferences on Interest Rates**: All three candidates generally favor continued interest rate cuts and balance sheet reduction. Hassett is the most dovish, advocating for rate cuts to stimulate growth, while Warsh takes a hawkish stance, suggesting that balance sheet reduction should precede rate cuts [6][7]. 4. **Impact of Fiscal Policy on Bond Yields**: U.S. fiscal issues, particularly the proposed tax cuts, are expected to significantly increase the net deficit by $2.8 trillion over the next decade, contributing to high U.S. Treasury yields [8]. 5. **Historical Concerns on Fiscal Expansion**: Past Federal Reserve Chairs have expressed concerns about fiscal sustainability, emphasizing the need for budget balance and prioritizing anti-inflation goals during non-crisis periods [9]. 6. **Candidates' Views on Fiscal Deficits**: Warsh and Waller believe that excessive fiscal expansion is unsustainable, but they assert that debt repayment is not the Federal Reserve's responsibility. Hassett, due to his current role in the White House, has been less vocal on monetary policy [10]. 7. **Upcoming Changes in Monetary Policy Framework**: The Federal Reserve is expected to revise its monetary policy framework in late summer 2025, potentially reverting to a 2% inflation target, which could influence future rate cuts [11][18]. 8. **Differences in Current Economic Environment**: The current economic environment differs from that of 2020, with higher interest rates and elevated long-term inflation expectations, which may affect the Federal Reserve's policy decisions [13][15]. Other Important but Possibly Overlooked Content 1. **Independence of the Federal Reserve**: Regardless of who becomes the next Chair, maintaining the independence of the Federal Reserve is likely to remain a priority for the candidates [10]. 2. **Potential Economic Consequences of Policy Decisions**: Continuing to follow an average inflation target could lead to unnecessary cooling of the job market, potentially increasing unemployment rates [14][17]. 3. **Flexibility in Monetary Policy Operations**: The current higher interest rate environment provides policymakers with greater flexibility in monetary policy operations compared to the previous low-rate environment [16].

Group 1 - The global economic environment in the second half of 2025 is characterized by complexity and fragility, with features of "weak reality, strong shocks, and high volatility" [8][10] - The US economy shows signs of weakening growth momentum, with negative policy effects becoming more pronounced. Key indicators such as consumer confidence and spending are approaching levels seen during the subprime mortgage crisis [11][24] - Inflationary pressures are re-emerging, with upstream cost increases expected to push the Consumer Price Index (CPI) back to around 3% by mid-year [11][32] Group 2 - In the US, the job market is weakening, with increased layoffs in mid-to-high-end positions and reduced support from the service sector and government employment [11][39] - The fiscal deficit risk is rising due to the expansionary policies of the Trump administration, which are expected to increase long-term bond yields [11][51] - The Federal Reserve is expected to maintain a cautious stance, with potential interest rate cuts anticipated in September and possibly 1 to 2 cuts throughout the year [11][45] Group 3 - In Europe, macroeconomic improvement is limited, with Germany's expanding fiscal deficit providing temporary confidence, but consumer investment and spending remain weak. The European Central Bank may have 1 to 2 rate cuts in the second half of the year [9] - Japan faces high inflation that suppresses economic recovery, with wage increases offset by rising living costs. The Bank of Japan may raise interest rates again before the end of the year [9] Group 4 - Asset allocation strategies suggest that US stocks may test previous highs but with significant volatility, particularly in July and August due to high inflation and trade negotiations [10] - US Treasury yields are expected to remain high, fluctuating between 4.2% and 4.7%, with 4.5% acting as a critical support and resistance level [10] - Precious metals are viewed positively, with recommendations to buy on dips, maintaining a consistent strategy since 2024 [10]

Report on the Precious Metals Industry 1. Industry Investment Rating - Not provided in the report 2. Core Viewpoints - The medium - to long - term trend of precious metals may be bullish, while the short - term remains in a high - level oscillation. The resistance levels for London gold are 3300, with strong resistance in the 3440 - 3500 area; support levels are 3200, 3100, and strong support in the 2950 - 3000 area. For London silver, support is in the 31.6 - 32 area, resistance is at 33.3 and 33.7, and if it breaks through, it could reach 34 and 34.5. Short - term corrections are regarded as medium - to long - term buying opportunities, but the market may remain volatile in the near term [4] 3. Summary by Relevant Catalogs 3.1 Market Review - Last week, COMEX precious metals generally saw gold decline and silver oscillate. London gold dropped to around 3120, the lowest since April 10. The Sino - US joint communique on May 12 after the Geneva economic and trade high - level talks boosted market risk appetite, pressuring gold. Since late April, global gold ETFs have shown signs of outflow due to factors such as trade and geopolitical conflicts and the cooling expectation of the Fed's interest - rate cut. Powell's statement on re - evaluating the "key parts" of the 2020 monetary policy framework and the "new Fed newswire" hinting at an interest - rate framework adjustment may lead to higher long - term interest rates. The slightly lower - than - expected US CPI on Tuesday alleviated inflation concerns and slightly improved the prospect of interest - rate cuts. Moody's downgraded the US sovereign credit rating from Aaa to Aa1 on Friday, which may increase the volatility of the US stock, bond, and foreign - exchange markets on Monday and be beneficial for gold. China reduced its US debt holdings by 18.9 billion US dollars to 765.4 billion US dollars in March, becoming the third - largest US debt holder [2] 3.2 Capital and Inventory - **Long - term Fund Holdings**: Last week, the SPDR Gold ETF's holdings decreased by 19.21 tons to 918.73 tons, and the iShares Silver ETF's holdings decreased by 106.06 tons to 13914.9 tons [3] - **Short - term Fund Holdings**: According to the CFTC report as of May 13, the non - commercial net long positions of gold decreased by 1288 to 161209, with long positions increasing by 746 and short positions increasing by 2034. The non - commercial net long positions of silver decreased by 1498 to 47754, with long positions decreasing by 2391 and short positions decreasing by 893 [3] - **Inventory**: COMEX gold inventory decreased by 7.26 tons to 1210.6 tons, and COMEX silver inventory decreased by 44.1 tons to 15619 tons. SHFE gold inventory remained at 17.24 tons, SHFE silver inventory decreased by 47.44 tons to 887 tons, and the Shanghai Gold Exchange's silver inventory decreased by 5.24 tons to 1574.3 tons [3] 3.3 Upcoming Events - This week's economic data is relatively light, with attention on the US S&P PMI data. There are multiple speeches by Fed officials, including Jefferson, Williams, Musalem, Bostic, Harker, and Daly. The G7 finance ministers' and central bank governors' meeting from May 12 - 22 should also be monitored [3] 3.4 Price and Spread Data - **Precious Metals Futures and Spot Prices**: SHFE gold main contract rose 1.62% to 751.8 yuan/gram, SGX gold TD rose 1.58% to 746.98 yuan/gram, CME gold main contract fell 1.19% to 3205.3 US dollars/ounce. SHFE silver main contract rose 1.16% to 8101 yuan/kilogram, SGX silver TD rose 1.19% to 8062 yuan/kilogram, CME silver main contract fell 1.1% to 32.43 US dollars/ounce [5] - **Inventory and Position Data**: SHFE gold inventory was 17238 kilograms, CME gold inventory was 1210.5758 tons, SHFE gold position was 211481 lots. SHFE silver inventory was 887.018 tons, CME silver inventory was 15619.051 tons, SGX silver inventory was 1574.34 tons, SHFE silver position was 325306 lots [13] - **Stock, Bond, and Commodity Market Data**: The US dollar index rose 0.19% to 100.983, the Dow Jones Industrial Average rose 0.78% to 42654.74 points, WTI crude - oil spot rose 1.41% to 62.49 US dollars/barrel, LmeS copper 03 fell 1.67% to 9440 US dollars/ton, the 10 - year US Treasury yield fell 0.45% to 4.43%, and the 10 - 2 - year US Treasury yield spread fell 8.16% to 0.45% [19]

Report Overview - Report Title: Treasury Bond Futures Weekly Report (May 12 - May 16, 2025) [1] - Analyst: Du Shufang [1] - Futures Qualification Number: F0230469 [1] - Investment Consulting Qualification Number: Z0000690 [1] Industry Investment Rating - No investment rating information is provided in the report. Core Viewpoints - After the release of the negative news of the easing of the China - US tariff war, the market returned to a volatile state. Considering the weak fundamentals and the unchanged easing direction of the central bank, the upward space for short - term interest rates may be limited. It is recommended to try to go long on dips [3]. Summary by Section This Week's Market Review - Treasury bond futures declined significantly this week, especially in the ultra - long end. At the beginning of the week, bond futures tumbled due to the China - US Geneva Joint Statement on tariff reduction, and then fluctuated slightly downward [3]. - The joint statement on May 12 led to an increase in market expectations for tariff risk mitigation and economic recovery, weakening the hedging demand for long - term treasury bonds and increasing the resistance to further decline in interest rates. However, the China - US trade relationship has not fully recovered, and there are still uncertainties [3]. - In April, the social financing scale increased by 1.16 trillion yuan but fell short of expectations. The increase was mainly driven by the accelerated issuance of government bonds, while the credit demand of enterprises and residents remained weak. The M2 growth rate rebounded significantly, but the M1 growth rate remained low, reflecting the increased risk aversion of residents and the capital hedging demand under capital market fluctuations [3]. - In April, the CPI year - on - year growth rate was - 0.1%, and the month - on - month growth rate was 0.1%. The PPI month - on - month decreased by 0.4%, mainly affected by imported factors such as the decline in international commodity prices [3]. - In April, exports increased by 8.1% year - on - year (previous value: 12.4%), and exports to the US decreased by 21.03%. The data release caused a slight fluctuation in the bond market. China's exports showed resilience as they did not decline under the influence of US tariff policies [3]. - Overseas, Fed Chairman Powell hinted that the era of "lower interest rates for longer" may be over. The central bank's open - market operations achieved a net withdrawal of 47.51 billion yuan this week, and the short - term interest rates in the money market remained stable [3]. This Week's Important News Review - In April, the CPI month - on - month changed from a 0.4% decline to a 0.1% increase; year - on - year, it decreased by 0.1%. The core CPI month - on - month changed from flat to a 0.2% increase; year - on - year, it increased by 0.5%. The PPI month - on - month decreased by 0.4%, and the year - on - year decline widened by 0.2 percentage points to 2.7% [5]. - From January to April 2025, RMB loans increased by 10.06 trillion yuan, and the cumulative increase in social financing scale was 16.34 trillion yuan, 3.61 trillion yuan more than the same period last year. At the end of April, the balance of broad money (M2) was 325.17 trillion yuan, a year - on - year increase of 8%; the balance of narrow money (M1) was 109.14 trillion yuan, a year - on - year increase of 1.5%; the balance of currency in circulation (M0) was 13.14 trillion yuan, a year - on - year increase of 12% [5]. - In April 2025, China's exports increased by 8.1% year - on - year (market expectation: 2.0%); imports decreased by 0.2% year - on - year (market expectation: - 6.0%). The trade surplus was 96.18 billion US dollars [5]. - Fed Chairman Powell said that the Fed is adjusting its policy framework to address the high - inflation challenges in the post - pandemic era, hinting that the era of "lower interest rates for longer" may be over [5]. Trend Review - The report presents historical data trends of PPI, PMI, CPI, and GDP, but no specific analysis is provided [12][13][15][17] Cash Bond Analysis - The report shows the historical trends of DR interest rates, inter - bank treasury bond yields, and treasury bond term spreads, but no specific analysis is provided [20][24] Basis Analysis - The report shows the historical trends of the CTD bond basis of T2406, TF2406, and TS2406, but no specific analysis is provided [25][26][28]

Economic Indicators - In April, industrial added value year-on-year was 6.1%, a significant drop of 1.6 percentage points from March, indicating a slowdown in industrial production[4] - Fixed asset investment in April grew by 3.5% year-on-year, down 0.8 percentage points from March, with infrastructure investment declining by 3 percentage points to 9.6%[7] - Real estate investment in April saw a year-on-year decrease of 11.3%, a slight decline of 1.3 percentage points from March, with new construction area down by 22.1%[11] Consumer and Market Trends - Retail sales of consumer goods in April increased by 5.1% year-on-year, down 0.8 percentage points from the previous month, but still at a relatively high level[13] - Social financing in April grew by 8.7% year-on-year, an increase of 0.3 percentage points from the previous month, primarily driven by government bond issuance[16] - The A-share market has shifted from initial panic over economic slowdown to a focus on the extent of economic deceleration, with confidence in the economy improving for the second half of the year[20] Tariff Impact and Policy Response - The imposition of reciprocal tariffs has led to a noticeable decline in total demand, with April's PPI showing a month-on-month decrease of 0.4%[5] - The recent U.S.-China trade negotiations have eased expectations regarding tariffs, suggesting a potential moderation in the negative impact on the real economy[5] - The central bank's likelihood of significantly tightening monetary policy appears limited due to greater downward pressure on the economy compared to earlier in the year[22]

Group 1 - The Federal Reserve is considering adjustments to its monetary policy framework due to significant changes in the economic and financial environment since 2020, particularly in balancing employment and inflation goals [1][2][6] - The upcoming review of the monetary policy framework is the first since 2020, with the Fed aiming to adapt to the current high inflation and interest rate environment [2][3] - Despite the potential framework revisions, anchoring inflation expectations remains a critical task for the Fed, as future inflation may become more volatile [3][4] Group 2 - Recent economic data indicates that the U.S. economy has not shown clear signs of "stagflation," with consumer spending and investment remaining robust despite a contraction in GDP [4][5] - The April Consumer Price Index (CPI) showed a year-on-year increase of 2.3%, below market expectations, suggesting a trend of easing inflation [4][5] - However, concerns persist regarding the long-term impact of U.S. trade policies on inflation, which may take time to fully manifest in economic data [5][6] Group 3 - Analysts suggest that while the Fed is poised to adjust its monetary policy framework, it is unlikely to affect current policy decisions, with a preference for a "wait and see" approach [6][7] - The labor market remains strong, and there are no immediate signs of economic deterioration, which diminishes the urgency for the Fed to lower interest rates [6][7] - Market expectations for Fed rate cuts have shifted, with predictions now leaning towards a potential cut in December rather than July, reflecting increased uncertainty [6][7]

Group 1 - Federal Reserve Chairman Powell indicated that decision-makers are considering adjustments to the core elements of the monetary policy framework, including the definition of the U.S. employment "gap" and thoughts on achieving inflation targets [1][5] - The redefinition of the employment "gap" reflects the Federal Reserve's recognition of the complexities and dynamic changes in the labor market, aiming to create more effective monetary policy [3][5] - The average inflation targeting framework, introduced in 2020, allows inflation to exceed 2% for a period to compensate for previous low inflation, but its implementation faces challenges such as short-term volatility and market trust [4][5] Group 2 - Market reactions to Powell's statements suggest that the reconsideration of the employment "gap" and inflation targets may signal future adjustments in monetary policy [4][5] - Long-term adjustments by the Federal Reserve aim to enhance the effectiveness and flexibility of monetary policy in response to changing economic conditions, while also introducing some uncertainty regarding market expectations [5]