U.S. Fiscal Outlook and Treasury Market - The U.S. faces an unsustainable fiscal path, with the interest expense becoming untenable due to high budget deficits and sticky interest rates [1][4] - The average coupon on Treasuries has risen from below 2% to pushing 4%, creating a building problem as trillions of bonds mature and are re-issued at higher rates, a difference of 400 basis points [4][5][6] - The long-term Treasury bond is no longer behaving as a legitimate flight to quality asset, and is not responding to lower interest rates or an inflation rate around 25%, with potential for it to go higher [6][7] - The U.S national debt is approaching $37 trillion, requiring creative solutions, and markets are starting to acknowledge this [7][8] Investment Strategy and Market Dynamics - A paradigm shift is occurring where money is no longer flowing into the United States, and the long bond is not acting as a flight to quality asset, with gold emerging as an alternative [16] - The dollar is falling, and some of the $25 trillion net investment position that flowed into the U.S over the past two decades could potentially flow out, suggesting increased allocations to non-dollar investments [9][10] - The market environment feels similar to 1999 (dot-com bubble) and 2006/2007 (pre-credit crisis), with AI enthusiasm mirroring the dot-com boom [21][22] - A great buying opportunity is anticipated, but the timing is uncertain [21] Private Credit and Alternative Investments - There is overinvestment in private credit, and the excess reward is not as attractive as it once was, potentially leading to forced selling [32] - Gold has proven to be a source of growth, outperforming Bitcoin year-to-date, and is recommended as an asset class, with central banks accumulating gold [16][17][50] - Dollar-based investors should consider investing in foreign currencies and selective emerging market equities, as the S&P 500 is underperforming MSCI Europe year-to-date [51][52] Restructuring and Long-Term Themes - There is a need to restructure various aspects of the system, including institutions, political parties, and finances, due to wealth inequality and calcified property relations [42][46] - India is highlighted as a long-term investment theme, with a similar profile to China 35 years ago, benefiting from demographic outlook, supply chain shifts, and technology [48][49]

Group 1 - The international precious metals market is strengthening, with spot gold prices holding at $2350 per ounce and silver prices surpassing $34 per ounce, reaching a new high since 2012 [1] - Adrian Day warns of significant valuation discrepancies in mining companies and highlights a potential liquidity crisis in the global financial system, which may compel the Federal Reserve to restart quantitative easing in Q3 [1][3] Group 2 - The gold market is supported by multiple fundamental factors, including accelerated central bank gold purchases, increased demand for safe-haven assets due to geopolitical uncertainties, and growing concerns over fiscal sustainability in major economies [3] - The OECD has significantly lowered its 2024 global economic growth forecast to 1.6%, citing the impact of U.S. protectionist policies on the global trade system, which has pressured the dollar index and supported gold prices for three consecutive weeks [3] - Day suggests that the U.S. Treasury may face a risk of funding exhaustion in Q3, leading the Federal Reserve to provide liquidity support by expanding its balance sheet rather than merely cutting interest rates [3] Group 3 - In terms of asset allocation, Day emphasizes that the mining sector presents significant value opportunities, citing Agnico Eagle Mines, which, despite high profit margins, has an enterprise value multiple (EV/EBITDA) below the 20th percentile of the past decade [4] - There is an expectation of increased merger and acquisition activity among mid-tier miners, with companies like Franco-Nevada and Wheaton Precious Metals identified as having strategic value [4] - Day maintains a bullish outlook on uranium, copper, and other key metals for energy transition, suggesting that the current precious metals market cycle is far from over and recommending investors hold gold mining stocks until at least 2025 [4]

Market Overview - The bond market continued its warm trend on April 28, with most government bond futures rising and interbank bond yields declining by approximately 1 basis point [1] - The central bank conducted a net injection of 103 billion yuan in the open market, indicating sufficient liquidity before the end of the month [1][5] - Analysts suggest that with a weakening fundamental outlook and increasingly accommodative monetary policy, there is potential for yields to break lower in the future [1] Bond Futures Performance - The closing prices for government bond futures showed an increase in the 30-year main contract by 0.30% to 120.180, while the 10-year main contract rose by 0.03% to 108.840 [2] - The yields on major interbank bonds also saw slight declines, with the 10-year government bond yield dropping by 0.85 basis points to 1.649% [2] International Bond Market - In North America, U.S. Treasury yields fell across the board, with the 2-year yield down by 5.94 basis points to 3.7377% [3] - In Asia, Japanese bond yields mostly retreated, with the 10-year yield decreasing by 1.5 basis points to 1.32% [3] - In the Eurozone, yields on 10-year bonds showed an increase, with French bonds rising by 2.2 basis points to 3.185% [3] Primary Market Activity - The results of the Tianjin local bond auction showed strong demand, with bid-to-cover ratios exceeding 19 times for all issues [4] - The 7-year bond "25 Tianjin Bond 22" had a winning rate of 1.80% and a bid-to-cover ratio of 19.25 [4] Liquidity and Monetary Policy - The central bank announced a 2.79 billion yuan reverse repurchase operation at a fixed rate of 1.50%, resulting in a net injection of 103 billion yuan for the day [5] - The deputy governor of the central bank indicated that adjustments to reserve requirements and interest rates would be made as necessary to maintain ample liquidity [6][7] Institutional Insights - Citic Securities noted a decline in overnight funding rates, suggesting that the rates should remain slightly below policy rates to support growth and credit expansion [8] - Huatai Fixed Income emphasized that the current fundamentals favor the bond market, recommending a buy-on-dips strategy [8] - Guosheng Fixed Income indicated that while the bond market may experience fluctuations, a downward breakthrough is more likely, with long bonds offering better value [8]

My thoughts for the rest of 2025 and 2026Lately, I’ve been less vocal about my mid and long-term predictions. I’ve mostly focused on the short-term. That’s because, over the years, I’ve come to believe that the best approach is to focus on current data and the next moves. To stay flexible. It’s all about forecasts vs. adaptability [https://t.co/0nmQyLlPpE]But like everything in life, extremes rarely work. It can’t be 100% predictions, nor 0%. Same goes for adaptability. You need both. The key is finding the ...