Group 1: Gold Market - The Federal Reserve is expected to announce significant adjustments to its policy tools, with a focus on interest payments on reserves to control rates, despite a $2 trillion reduction in its balance sheet since 2022, leaving it at $6.7 trillion [1] - Potential successors to Powell, such as Waller, believe inflation is nearing targets and action should not wait for labor market deterioration, while some officials caution against premature actions due to possible future inflation [1] - Gold prices are currently in a downward trend, with a critical support level at $3,300; a break below this could lead to a target of $3,250 [1] Group 2: Oil Market - OPEC+ announced an increase in production by 548,000 barrels per day starting in August, with expectations of maintaining this level in September, raising concerns about oversupply and limiting price increases [2] - Trade agreements between the U.S. and countries like Japan, the EU, and Indonesia have alleviated recession fears, boosting investor confidence, although OPEC's production increase in May was only one-third of the target [2] - Oil prices have been fluctuating between $64 and $69.50, with strong support at $64; a sustained price above $69.50 could indicate further upward movement [2] Group 3: Copper Market - Copper prices experienced a significant drop, reaching a low of $5.67, with expectations of continued volatility; key support is at $5.40 and resistance at $5.63 [3]

Core Insights - The report highlights the ongoing discussions between U.S. Secretary of State Marco Rubio and Chinese Foreign Minister Wang Yi, indicating potential diplomatic engagement ahead of a summit between the two nations [8][13] - OPEC+ is reportedly considering pausing further production increases starting in October to prevent a decline in oil prices, following a recent increase in production that has led to oversupply concerns [8][13] - The Hong Kong Monetary Authority has intervened in the currency market for the fourth time in two weeks, purchasing approximately HKD 13.3 billion to maintain the currency peg [8][13] - China's excavator sales surged over 20% year-on-year in the first half of the year, suggesting a stabilization in the construction industry [8][13] Market Performance - The Shanghai Composite Index rose by 0.48% to close at 3509.68 points, reaching a nine-month high during the trading session [1] - The Hang Seng Index increased by 0.57% to close at 24028.37 points, while the Hang Seng Tech Index fell by 0.29% [1][5] - The trading volume in the Hong Kong market was approximately HKD 246.73 billion [1] Company-Specific Developments - Rui Ming Technology is planning to issue H-shares overseas and list on the Hong Kong Stock Exchange, with a projected net profit increase of 53.64% to 77.9% for the first half of the year [12] - WuXi AppTec anticipates a net profit of approximately RMB 8.561 billion for the first half of the year, representing a growth of about 102% [14] - NIO's new vehicle model, the L90, is set to be delivered next month, with a starting price of approximately RMB 279,900 [14]

Core Viewpoint - Federal Reserve Governor Christopher Waller suggests that the U.S. central bank should have the capability to gradually reduce bank reserves from the current $3.26 trillion to around $2.7 trillion, while also emphasizing the importance of a measured approach to balance sheet reduction [1][2] Group 1: Balance Sheet Reduction - Waller indicates that the overall balance sheet size could decrease from $6.7 trillion to $5.8 trillion when including the Federal Reserve's currency holdings and the U.S. Treasury's general account balance [1] - He proposes that the reduction of reserve balances could be achieved through the natural expiration and early repayment of securities [1] - Waller highlights the critical nature of determining a "sufficient" reserve level to assess the upper limit of balance sheet reduction, which directly impacts the overnight funding market [1] Group 2: Interest Rate Policy - Waller reiterates his belief that the federal funds rate is set too strictly and may support a rate cut in the upcoming Federal Reserve meeting [2] - This stance places him in the minority among his colleagues, despite recent calls from the Trump administration for the Federal Reserve to lower interest rates [2] - Critics argue that the Federal Reserve should restore its balance sheet size to pre-financial crisis levels, which saw an increase from approximately $800 billion to over $2 trillion during the 2008 crisis [2] Group 3: Asset Composition - Waller suggests increasing the proportion of short-term assets in the Federal Reserve's balance sheet, with long-term securities used primarily to hedge against monetary liabilities [2] - He addresses a proposal from market participants to mimic the U.S. Treasury market by setting the short-term asset ratio at 20%, arguing that while it may alleviate pressure on the yield curve, it could extend the balance sheet's duration and increase potential income loss risks for the Federal Reserve [2]

Core Viewpoint - The Federal Reserve's balance sheet size is influenced by uncontrollable external factors, and a rough benchmark for "adequate reserves" is set at $2.7 trillion [1] Group 1 - The Federal Reserve agrees that its balance sheet should be reduced, but it may not need to be cut as drastically as some believe [1] - An adequate reserves system contributes to the stability of the financial system [1] - Paying interest on reserves does not impose a cost burden on the Treasury [1] Group 2 - Once reserves reach adequate levels, the Federal Reserve can increase its holdings of short-term Treasury bills [1] - There is a consideration to shift the structure of the balance sheet towards short-term Treasury bills [1]

Core Viewpoint - The Federal Reserve's meeting minutes indicate that market participants expect the balance sheet reduction to conclude in February 2026, a shift from the previous expectation of January 2026 [1] Summary by Relevant Categories Federal Reserve Actions - The New York Fed's Open Market Account (SOMA) head reported on the expectations regarding the timeline for the balance sheet reduction [1]

Core Viewpoint - The Federal Reserve's meeting minutes indicate that respondents in a market participant survey have shifted their expectations for the end date of balance sheet reduction from January 2026 to February 2026 [1] Summary by Relevant Categories - **Federal Reserve Actions** - The Federal Reserve System Open Market Account (SOMA) head reported a change in market participants' expectations regarding the timeline for balance sheet reduction [1]

Core Viewpoint - The Federal Reserve Chairman Jerome Powell indicated that there is still room for reduction in the balance sheet and believes that the current pace can be sustained for a while [1] Group 1 - The Federal Reserve's balance sheet has the potential for further contraction [1] - Powell's comments suggest a continued commitment to monetary policy adjustments [1] - The current pace of balance sheet reduction is viewed as manageable in the near term [1]

Group 1: Economic Policies - The U.S. plans to implement tariffs on Mexico and Canada as scheduled on March 4, with further tariffs on EU goods expected soon[3] - The Federal Reserve officials express concerns about inflation risks and economic growth, suggesting a cautious approach to interest rate adjustments[4] - Japan's central bank is closely monitoring U.S. policies and their potential impact on global and domestic economies[15] Group 2: Market Performance - U.S. stock indices showed mixed results, with the S&P 500 down 1.0%, while the Dow Jones increased by 1.0% and the Nasdaq fell by 3.5%[17] - The 2-year U.S. Treasury yield dropped by 20 basis points to 3.99%, and the 10-year yield fell by 18 basis points to 4.24%[21] - The dollar index rose by 0.86% to 107.56, while the euro and pound fell by 0.79% and 0.42% respectively against the dollar[25] Group 3: Economic Indicators - U.S. new home sales in January were annualized at 657,000, below the expected 680,000, marking a 10.5% month-over-month decline[6] - The PCE price index in January rose by 2.5% year-over-year, aligning with expectations, but personal consumption expenditures weakened[6] - Durable goods orders in January increased by 3.4% year-over-year, significantly higher than the previous -3.5%[8]