Group 1: Interest Rate Expectations - The market anticipates three interest rate cuts within the year and five by the end of 2026, according to CME's FedWatch tool[3] - The Federal Reserve's rate cut pace may be more complex than the market's linear expectations due to unaccounted input inflation from a weaker dollar[4] - A 10% depreciation of the dollar could increase U.S. imports to approximately $3.6 trillion and widen the trade deficit beyond $1.2 trillion, raising inflationary pressures[4] Group 2: Inflation Dynamics - Historical data indicates that a declining dollar often leads to increased input inflation, which may have a lagging effect on prices[5] - The U.S. CPI year-on-year low point likely occurred in April or May, with expectations for inflation to rise above 3% by year-end if monthly CPI growth remains around 0.2%[5] - The impact of tariffs on inflation may take time to manifest, complicating the inflation outlook further[4] Group 3: Demand Response to Rate Cuts - Rate cuts may not stimulate demand as effectively as anticipated, as evidenced by the slow recovery in the Eurozone despite over 200 basis points of cuts since 2024[6] - The wealth effect from rate cuts could differ this time, as a significant portion of U.S. Treasury bonds is now held by the private sector, potentially dampening the positive impact on asset values[6] - If the Fed's rate cuts are insufficient, the net financial cost for companies may actually increase, countering the intended benefits of lower rates[7]

Core Viewpoint - The Japanese yen has experienced a significant decline against major currencies, influenced by geopolitical tensions in the Middle East and rising oil prices, which may worsen Japan's trade balance and reduce the yen's attractiveness [2][5][6]. Currency Performance - On June 23, the yen fell sharply against major currencies, with the USD/JPY rising by 1.3% to a high of 148.0335, the highest since May 13 [5]. - The offshore yuan also saw a decline of over 1% against the yen, while the Hong Kong dollar, euro, and British pound appreciated against the yen by 1.22%, 0.74%, and 0.66% respectively [5]. Geopolitical Impact - Analysts suggest that Iran may retaliate against the U.S., potentially affecting oil production and exports in the region, which is crucial for Japan as it relies heavily on oil imports from the Middle East [5][9]. - Japan imports over 90% of its oil from the Middle East, making it vulnerable to fluctuations in oil prices [9]. Economic Implications - The escalation of tensions in the Middle East could lead to increased import-driven inflation in Japan, hindering the normalization of the Bank of Japan's monetary policy, with expectations for the next interest rate hike being pushed to Q1 2026 [7][10]. - Rising oil prices are expected to deteriorate Japan's trade surplus and trade conditions, further weakening the yen [10]. Investment Strategies - U.S. Bank strategists recommend investors buy USD/JPY to hedge against the risks associated with escalating geopolitical tensions in the Middle East [8]. - Citigroup analysts noted that rising oil prices could compound downward pressure on the yen, especially given the Bank of Japan's dovish stance in recent policy meetings [10]. Oil Price Outlook - International oil prices have surged, with Brent crude futures rising over 5% and WTI crude futures increasing over 3% on June 23 [14]. - Analysts predict that even a partial disruption in oil flow through the Strait of Hormuz could lead to significant price increases, potentially reaching $110 per barrel for Brent crude [16][19]. Regional Currency Vulnerability - Other currencies such as the Philippine peso, South Korean won, and Thai baht are also susceptible to rising oil prices, which may limit the monetary policy flexibility of their respective central banks [11][12][13].

Core Viewpoint - The recent Israeli airstrikes on Iran have raised significant concerns for oil-importing countries, particularly Japan, which heavily relies on Middle Eastern oil imports. The situation could lead to increased oil prices and potential economic repercussions for these nations [1][3][4]. Group 1: Impact on Oil Prices - Israeli attacks on Iranian oil facilities could push Brent crude oil prices up to $80 per barrel if tensions escalate [5]. - A potential blockade of the Strait of Hormuz by Iran could threaten global oil supply, leading to prices soaring to $120 per barrel [6]. - If the situation continues to deteriorate, Brent crude prices could exceed the historical peak of nearly $150 per barrel by the end of 2025 [7]. Group 2: Dependency on Middle Eastern Oil - Japan's oil imports are heavily reliant on the Middle East, with 95% of its crude oil coming from this region, especially after the reduction of Russian oil imports due to sanctions [3][10]. - China's oil dependency is also significant, with over 70% of its crude oil sourced from abroad, making it vulnerable to Middle Eastern instability [10]. Group 3: Economic Consequences - The reliance on foreign oil can lead to imported inflation, increasing costs of living and economic operational expenses, reminiscent of the oil embargo in the 1970s that caused stagflation in Western countries [11]. - Countries dependent on oil imports must diversify their sources to mitigate risks associated with geopolitical tensions in the Middle East [12][15]. Group 4: Energy Transition Strategies - Developing renewable energy sources is a strategic approach to reduce dependency on oil and enhance energy security [16]. - China has made progress in this area, promoting electric vehicles and transitioning its energy structure, which serves as a buffer against potential energy crises [17].

Group 1: Geopolitical Conflicts and Energy Market - Geopolitical conflicts, such as the ongoing Russia-Ukraine conflict and tensions in the Middle East, are significantly impacting the energy market, leading to supply uncertainties and price volatility [3] - As of October 2024, the escalation of tensions between Iran and Israel has raised concerns about potential disruptions in Middle Eastern oil supplies, resulting in a continuous rise in international oil prices [3] Group 2: Impact of Energy Price Fluctuations - Energy price fluctuations have a domino effect on global economies, leading to increased inflation rates across major economies. For instance, the inflation rate in the US rose from 2.5% to 3.5% following significant energy price changes [4] - The profit margins of energy companies vary significantly with energy price changes. For example, oil extraction companies see a profit increase of 30% during price hikes, while they face a 20% decline when prices drop [6] Group 3: Stock Market Reactions - The energy sector in stock markets tends to perform well during periods of rising energy prices, with the S&P 500 energy sector index increasing by 20% during such times [7] - Conversely, during price declines, the energy sector experiences a downturn, with the S&P 500 energy sector index dropping by 15% [7] Group 4: China's Economic Challenges and Opportunities - As the largest energy importer, China faces increased import costs due to rising energy prices, which can lead to significant inflationary pressures in various sectors, including transportation and chemicals [8] - Energy-intensive industries in China, such as steel and chemicals, are under pressure from rising energy costs, leading to potential production cuts and financial strain [9] Group 5: Energy Structure Adjustment - The volatility in energy prices is prompting China to accelerate its energy structure adjustment, increasing investments in renewable energy sources like solar and wind power [10] - This shift aims to reduce reliance on imported fossil fuels and enhance energy supply diversification and sustainability [10] Group 6: Investment Landscape - Traditional energy investments are becoming riskier due to price volatility, necessitating careful evaluation of geopolitical developments and market dynamics [11] - In contrast, investments in renewable energy are thriving, driven by government support and growing market demand, particularly in sectors like electric vehicles [12] Group 7: Infrastructure Investment Directions - There is a growing focus on investing in energy-related infrastructure, including the construction of oil and gas storage facilities and the upgrade of energy transmission networks to improve efficiency [14] - These investments aim to enhance energy security and ensure stable supply amidst fluctuating energy prices [14]

Core Inflation Outlook - Singapore's core inflation is expected to remain moderate for the remainder of the year, according to a report by DBS Bank's senior economist Chua Han Teng [1] - The expectation reflects DBS Bank's outlook on curbing input inflation and reducing the pass-through of corporate costs to consumer prices [1] - There are anticipated downward risks to Singapore's inflation, aligning with the Monetary Authority of Singapore's moderate assessment [1] Economic Context - A slowdown in global trade may adversely affect Singapore's export-dependent economy, potentially weakening domestic labor demand and wage growth [1]

Report Investment Rating - Not provided in the given content Core Views - In April 2025, the escalation of Sino-US tariffs put pressure on commodities, but agricultural products were relatively resilient, and the pig market was less directly affected. The far - end breeding cost was difficult to further reduce, and the spot price was stable due to the end of the seasonal off - season [3]. - In 2025, the pig slaughter volume increased year - on - year, but the pressure was not significant. The production efficiency of sows improved, but the overall increase in the number of breeding sows was limited [4]. - From May to June 2025, the probability of pig prices falling below the breeding cost is low. The feed cost is difficult to decline, and the upstream of the pig industry has not accumulated excessive risks [5]. - In the context of the expected increase in pig supply in the first half of 2025, attention should be paid to whether there are unexpected changes in the demand side. It is advisable to go long on pig futures when the price is below 13,000 points or buy call options near the cost [6]. Summary by Directory 1. Review of Pig Futures and Spot Prices in April 2025 - The escalation of Sino - US tariffs in April injected positive factors into the feed and breeding industry chain, with feed raw materials leading the rise in agricultural products [8]. - Pig futures prices opened high and closed low in April, and the 2505 contract made up for the premium to the spot. The current absolute and relative prices of pigs are at historical lows, and the ratio of pig to feed on the disk is close to historical lows [10][12][15]. - In April, the price of 7 - kg weaned piglets stopped rising and adjusted, the price of fattening pigs fell, and the price difference between standard and fat pigs inverted. The price of feed oscillated and rose, and the terminal consumption improved marginally [17][20][21]. - The spot price of pigs in the second quarter is prone to seasonal strength, with an average increase probability of 62% - 82% from May to August in the past [39]. 2. Pig Production Capacity and Slaughter Situation - The inventory of breeding sows has increased by about 5% compared with March 2024. The prices of culled sows and replacement sows remained stable in April [42][43]. - The production efficiency of single - sow has improved, and the gap between leading enterprises has gradually narrowed. Pig slaughter volume in May 2025 continued to increase due to the recovery of sow production capacity and improved production efficiency [45][49]. 3. Situation of Listed Pig Enterprises - In April, the slaughter volume of leading group companies decreased slightly month - on - month but increased significantly year - on - year. The sales volume of piglets of listed companies decreased month - on - month, and the asset - liability ratio of listed companies is at a historical high [54][55][58]. 4. Near - term Supply and Demand Fundamentals - In April 2025, the price difference between standard and fat pigs rebounded rapidly, and the price of fat pigs was lower than that of standard pigs. The slaughter weight in May is likely to fall seasonally and is currently at a historical high [62][65]. - The slaughter volume in May decreased seasonally but was higher than the same period last year, and the supply of standard pigs in the market was sufficient. The import volume of pork and offal decreased from the high level, and the expected import volume of beef in the second quarter will decline month - on - month [68][71][74]. - The frozen product inventory rebounded slightly from the low level in April. The current monthly average profit level is at the historical median. In April, both purchased piglets and self - breeding and self - raising were profitable, but the profit level decreased slightly [77][80][81]. 5. Pig Futures Price and Market Outlook - In April, pig futures prices opened high and closed low, and near - month contracts were more resilient than far - month contracts. The pig index is at a historical low, and the trading volume decreased slightly month - on - month and year - on - year [87][88]. - The 2505 contract rebounded from the low level in April to make up for the premium to the spot. The near - month contract is priced near the breeding cost, and the far - month contract has a low premium in the peak season [92][93][96]. - The basis is stronger than the same period in previous years. Attention should be paid to the regression mode of pig spot and futures in the second quarter. There may be opportunities for inter - month reverse arbitrage [99][102]. - In May, attention should be paid to the possible slaughter pressure when the weight is too high. The market volatility in the second quarter is expected to increase, and attention should be paid to the systematic fluctuations in the agricultural product sector caused by Trump's tariff policy [107][108].

Core Viewpoint - The depreciation of the RMB is under significant pressure due to the ongoing US-China trade war and Federal Reserve policies, marking the largest strain since the 2008 financial crisis [1][4]. Impact on Import Costs - The depreciation of the RMB against the USD directly increases the import costs of commodities such as oil and iron ore, with a 1% depreciation leading to a cost increase of 0.8-1.2% [4]. - In 2024, China's reliance on foreign oil is projected to reach 73%, resulting in a 15% year-on-year increase in procurement costs for energy companies, which will compress profit margins in sectors like petrochemicals and aviation [4]. - High-tech product imports, including chips and precision instruments, will also see a cost increase, with companies like SMIC facing a 12% rise in procurement costs for technical equipment [4]. Inflationary Pressures - The depreciation of the RMB is expected to cause the food and consumer goods import price index to rise by 6.3%, with essential items like beef and milk powder experiencing price increases of up to 9.8% [5]. - The Consumer Price Index (CPI) in China is projected to rise by 3.5% year-on-year in 2024, exceeding the central bank's 3% warning line, complicating monetary policy balancing between growth and inflation control [6]. Debt Implications - The depreciation of the RMB increases the repayment costs for companies and local governments with foreign debt, with a 5% depreciation translating to an additional $140 billion in debt servicing costs for the $2.8 trillion foreign debt [8][9]. - Real estate companies, such as Country Garden and Vanke, are particularly affected, with the proportion of dollar-denominated debt interest payments rising from 12% to 19%, exacerbating cash flow challenges [9]. Capital Outflow Risks - Continuous RMB depreciation poses risks of capital outflow, as foreign investment may decline and domestic capital may seek higher returns in USD-denominated assets, especially given the current high US Federal Reserve interest rates [10]. Export Dynamics - While RMB depreciation theoretically enhances export competitiveness, it may lead to a reliance on low-end manufacturing, with high-tech product export share declining by 2.3 percentage points to 28.7% in 2024 [11]. - The withdrawal of foreign R&D centers and a shift in investment towards Southeast Asia by companies like BMW and Tesla indicate a potential decline in foreign investment attractiveness due to currency volatility [11]. Structural Changes and Future Outlook - Historical trends suggest that significant currency adjustments often accompany industrial upgrades, and the current low point of the RMB may represent a pivotal moment for China to advance beyond the middle-income trap and into higher value chains [12]. - Short-term challenges are anticipated as the economy adjusts to these changes, necessitating innovation and a robust domestic supply chain to enhance resilience against external shocks [12][13].