Core Insights - The actual impact of the trade war on the US economy is significantly less severe than commonly perceived, with the effective tariff rate estimated at only 9%-10%, compared to a theoretical rate of about 18% [1][2] - The lower-than-expected tariff impact is primarily due to policy exemptions rather than transshipment practices, indicating a deliberate choice by policymakers [1][3] Group 1: Tariff Rates and Their Implications - The theoretical effective tariff rate based on announced tariffs is estimated to be 17%-18%, the highest since the Smoot-Hawley Tariff Act, while the actual effective rate is around 10% [2] - The discrepancy between theoretical and actual tariff rates suggests that the trade war's real effects are not as alarming as they appear [2] Group 2: Factors Mitigating Tariff Impact - Policy exemptions (Carveouts) are identified as a key reason for the lower effective tariff rate, with a significant number of exemption applications approved historically [4] - Transshipment activities, while present, have a limited effect on reducing overall tariff rates, contributing only about 1 percentage point to the effective rate reduction [4] Group 3: Future Risks and Market Reactions - US companies have built up significant inventory buffers prior to the implementation of tariffs, which are now nearing depletion, potentially leading to increased inflation in the coming months [5] - Evidence supporting the notion that companies are absorbing tariff costs by compressing profits is limited, as profit margins for the S&P 500 remain stable [6]

Core Viewpoint - The article discusses the recent performance of the U.S. stock market, inflation data, and the implications for investment in Chinese assets, highlighting a potential shift in investor focus towards China due to favorable conditions. Group 1: U.S. Stock Market Performance - On September 11, the three major U.S. stock indices all closed higher, with the Dow Jones up 1.36%, the S&P 500 up 0.85%, and the Nasdaq up 0.72%, all reaching historical highs [1]. - Major tech stocks showed mixed results, with Tesla rising over 6% due to strong demand expectations, while other tech giants like Apple and Google saw modest gains [3][4]. Group 2: U.S. Inflation Data - The U.S. Consumer Price Index (CPI) for August increased by 0.4% month-on-month, with a year-on-year increase of 2.9% before seasonal adjustment. Core CPI, excluding volatile food and energy prices, rose by 0.3% month-on-month and 3.1% year-on-year [3]. - Specific price pressures were noted in various categories, including a 1.6% increase in fruit and vegetable prices and a 1.8% rise in automotive fuel prices, indicating ongoing inflationary pressures [3]. Group 3: Chinese Market Insights - The Nasdaq Golden Dragon China Index rose by 2.89%, with significant gains in Chinese stocks such as Alibaba, which increased by 8%, marking a nearly four-year high [5][7]. - Morgan Stanley reported that U.S. investors' interest in the Chinese market has reached its highest level since 2021, driven by a combination of external and internal factors [9]. - The article highlights that the recent rebound in Chinese assets is supported by a weaker dollar, a shift in Chinese policy towards stabilizing expectations and cash flows, and improved earnings from leading companies [10]. Group 4: Future Outlook for Chinese Assets - Analysts predict that the Nasdaq Golden Dragon China Index may enter a phase of "stepwise upward movement with high volatility," with potential to reach between 8500 and 9000 points, although frequent pullbacks are expected [10]. - The future performance of Chinese assets will depend on fundamental, macroeconomic, and microeconomic factors, including the sustainability of earnings from leading companies and ongoing capital market reforms [11].

Core Viewpoint - The U.S. labor market is showing signs of cooling, with expectations for a 25 basis point rate cut by the Federal Reserve in September fully priced in, and two additional cuts anticipated for the year [1] Group 1: Labor Market and Economic Indicators - The non-farm payroll data needs to be significantly worse than expected to alter the current narrative of rate cuts and exert pressure on the U.S. dollar [1] - Conversely, if the data exceeds expectations, the U.S. dollar may strengthen again [1] Group 2: Inflation and Market Sentiment - There are ongoing concerns regarding inflation driven by tariffs, and any signs of rising inflation could challenge bearish positions on the U.S. dollar [1] - The U.S. dollar index has declined alongside softening U.S. Treasury yields, indicating a potential shift in market sentiment [1] Group 3: Technical Analysis - Daily momentum indicators are showing mild bullish signs, while the Relative Strength Index (RSI) remains neutral, suggesting that the U.S. dollar may face risks of two-way fluctuations in the short term [1]

Group 1 - The Ministry of Commerce announced China's first anti-circumvention investigation ruling, determining that U.S. exporters circumvented anti-dumping measures on non-dispersive single-mode optical fibers by exporting related cutoff wavelength shifted single-mode optical fibers to China. Anti-circumvention measures will be implemented from September 4 [1] - In August, the U.S. ADP employment increased by 54,000, significantly below the market expectation of 65,000, with a revised figure of 104,000 for July. The ISM services PMI for August was reported at 52, marking the fastest expansion in six months, driven by the strongest growth in orders in nearly a year [1][5] Group 2 - In the dual-fuel market, the main contract showed a strong trend, with a continued decrease in coking coal positions. Steel production from the five major materials decreased week-on-week, while total inventory continued to accumulate, particularly in hot-rolled coil [2][25] - Methanol prices increased by 1.18% in the night session, with a significant rise in the number of imported cargoes arriving at ports. Coastal methanol inventory reached 1.3985 million tons, a historical high, with a week-on-week increase of 99,000 tons [3][14] - In the precious metals market, gold prices fell after a period of consolidation, with market focus on upcoming non-farm payroll data. Concerns arose regarding potential import tariffs on silver as the U.S. Geological Survey proposed including silver in a list of critical minerals [4][18] Group 3 - The State Council issued opinions to enhance the potential of sports consumption and promote high-quality development in the sports industry, emphasizing increased financial support and encouraging sports enterprises to go public [6] - The Ministry of Industry and Information Technology and the State Administration for Market Regulation released an action plan for stable growth in the electronic information manufacturing industry, targeting an average growth rate of around 7% for major sectors from 2025 to 2026 [7]

Group 1 - The Jackson Hole meeting highlighted three key messages from Powell: increasing downside risks in the labor market, temporary inflation due to tariffs, and a still tight policy stance [1] - The probability of a rate cut by the Federal Reserve in September has increased, with expectations of a 25 basis point cut to align with Powell's gradual and data-driven approach [1] - Market focus is on whether the Fed will implement a moderate 25 basis point cut or a larger 50 basis point cut, depending on upcoming labor market data [1] Group 2 - The expectation of rate cuts may lead to depreciation pressure on the US dollar, influenced by concerns over the independence of the Fed under the Trump administration [2] - The company prefers currencies supported by hawkish central banks, such as the Japanese yen and euro, as well as high-yield Asian currencies like the Indian rupee [2] - In Asia, markets driven by domestic demand are favored, with China benefiting from monetary easing and fiscal stimulus, while India’s GST reform and lower loan rates are expected to support consumption and stock market performance [2]

Group 1: Monetary Policy Outlook - The Jackson Hole meeting indicated a shift towards a dovish stance, lowering the threshold for a rate cut in September[1] - Powell highlighted a significant slowdown in job growth, with an average of only 35,000 non-farm jobs added over the past three months, compared to 168,000 per month in 2024[1] - The current policy rate is between 4.25% and 4.5%, above the neutral rate of 3%, suggesting a need for adjustment in monetary policy[1] Group 2: Economic Indicators - The GDP growth rate for the first half of 2025 is only 1.2%, significantly lower than the 2.5% growth rate in 2024[1] - Powell noted that inflation risks from tariffs are likely to be one-time events rather than persistent, as the labor market is weak and long-term inflation expectations remain anchored[1] - The market currently prices in an expectation of 2.2 rate cuts for the year, which may be overly optimistic given the upcoming economic data releases[3] Group 3: Future Projections - In an optimistic scenario, the expectation is for rate cuts in September and December, with a total reduction of no more than 50 basis points for the year[5] - By May 2026, with a new Fed chair, the monetary policy is expected to become more accommodative, with projections of 4 to 6 rate cuts next year under different scenarios[5] - Following the September FOMC meeting, market expectations for rate cuts in 2026 are likely to increase, impacting the 2-year Treasury yield and the dollar index[5]

Monetary Policy Insights - Powell's shift from a hawkish stance in July to a dovish outlook at the Jackson Hole meeting indicates a changing risk balance, with employment risks now outweighing inflation risks[2] - If August's inflation and employment data align with Powell's expectations, a 25 basis point rate cut in September is deemed reasonable[2] - The Fed's previous tariff-induced inflation shocks are expected to persist longer than anticipated, suggesting a potential for preemptive rate cuts[2] Economic Indicators - U.S. tariff revenues are projected to be around $300 billion per year over the next two years, potentially alleviating fiscal deficit pressure by approximately 1 percentage point[3] - Employment risks are rising due to a simultaneous decline in labor supply and demand, which could lead to increased layoffs and higher unemployment rates[7] Market Reactions - Following Powell's remarks, the probability of a rate cut in September increased from 73.3% to 89.2%[11] - Major U.S. stock indices saw gains, with the S&P 500, Nasdaq, and Dow Jones rising by 1.6%, 2.0%, and 1.9% respectively[7] Future Outlook - The adjustment in monetary policy framework suggests a higher tolerance for inflation compared to employment risks, indicating a greater likelihood of downward pressure on policy rates in the medium term[7] - The potential for a market correction exists post-rate cut, as recent positive earnings may have already priced in favorable conditions[8]

Group 1 - The core viewpoint of the report is that the effective tariff rate in the U.S. has exceeded 18% and is expected to stabilize around 15% by mid-2026, which will ultimately impact GDP growth and consumer prices [1][9] - Evidence is accumulating that companies are beginning to pass on tariff costs to consumers, although the effects on official inflation data have not yet been significant [1][2] - The report highlights that the price of imported goods, such as electric tools, is already increasing, with specific examples like Festool raising prices by 6% due to tariffs [1][2] Group 2 - The process of passing on costs to consumers takes time, especially for low-frequency purchase items like electric tools compared to high-frequency items like bananas [6] - Since the beginning of the year, border tariffs have been steadily rising as more imported goods are subjected to tariffs, leading to higher effective tariff rates [2][6] - The U.S. dollar has depreciated significantly against other currencies, which adds pressure on exporters and complicates the cost absorption for importers [6][7] Group 3 - The U.S. Treasury's assertion that consumers will not bear the cost of tariffs is deemed implausible unless the dollar strengthens [9] - The expected effective tariff rates correspond to a range of 30%-40% on Chinese goods and 10%-15% on goods from other countries, indicating a significant ongoing impact on trade [9] - The anticipated long-term effects include a projected 1% decrease in GDP growth and a 1% increase in the Consumer Price Index (CPI) compared to a no-tariff scenario [1][9]

Report Industry Investment Rating No relevant content provided. Core View of the Report - The short - term exchange rate of the US dollar against the Chinese yuan is expected to fluctuate within the range of 7.15 - 7.25. The counter - cyclical factor has been activated, and the improvement of onshore assets has enhanced the popularity of the yuan. However, attention should be paid to the volatility risks caused by the Fed's statements during the Jackson Hole Global Central Bank Annual Meeting [46][49]. Summary by Related Catalogs 1. Quantity and Price Observation - The implied volatility curve of the 3 - month US dollar against the Chinese yuan options shows an appreciation trend of the yuan, with the put - end volatility higher than the call - end. The volatility of the US dollar against the Chinese yuan options has continued to decline, indicating a weakened market expectation of future volatility [4]. - In July 2025, the non - bank sector's foreign - related income was 6904 billion US dollars, and external payments were 6981 billion US dollars, with the payment and receipt scale close to balance. Both payments and receipts were at a high level, indicating that cross - border trade, investment, and service activities remained strong. Seasonal factors led to slightly higher payments than income, but the overall operation was still stable [44]. 2. Policy Observation - The policy counter - cyclical factor has been activated, and there has been a fluctuation in the 3 - month CNH HIBOR - SHIBOR spread [10]. 3. Macroeconomic Situation 3.1 US Economy - There is a divergence in the pricing of interest rate cuts between the US and Europe. The TGA account had a balance of 515.4 billion on August 3rd, and the Fed's reverse repurchase balance was 57.2 billion US dollars. Fed Chairman Jerome Powell did not give guidance on a September interest rate cut, stating that it was too early to determine whether the Fed would lower the federal funds rate in September as the financial market expected [18]. - The ratio of hawks to doves among Fed voting members is 6:5. Different Fed officials have different views on interest rate cuts, with some advocating a wait - and - see approach and others supporting interest rate cuts [21]. - The US economic outlook has been revised upward. In July, the decline in fiscal spending was accompanied by a recovery in the service sector's prosperity, which drove the manufacturing industry. However, fiscal spending remained weak. The July non - farm payrolls were significantly revised downward, and the market is waiting for July CPI data [22]. - In July, the US CPI remained flat compared to the previous value, with the core CPI rebounding and the PPI rising more than expected. The rebound in the core CPI was mainly due to the rebound in core services, especially the volatile airline ticket sub - item. The PPI increase was mainly driven by the 2% month - on - month jump in trade services [23]. - US retail sales showed resilience in year - on - year and month - on - month growth rates. Automobile - related, food service and catering, and non - store snacks were the main contributors, and general merchandise stores also remained resilient [26]. 3.2 Chinese Economy - There is a structural divergence in the Chinese economy. In July, exports and consumption showed resilience, but inflation has not recovered, and there is pressure on fixed - asset investment. The fundamentals and market sentiment are increasingly divided [28][29]. - In July 2025, the banking system completed approximately 233.6 billion US dollars in foreign exchange settlement business and 210.8 billion US dollars in foreign exchange sales business, achieving a net surplus of 22.8 billion US dollars. The market showed stable yet dynamic performance, with the foreign exchange market generally in a "stable and positive" state [37]. 4. Domestic Policy - At the 9th Plenary Session of the State Council on August 18th, it was pointed out that efforts should be made to continuously stimulate consumption potential, expand effective investment, consolidate the stabilization and recovery of the real estate market, and promote the construction of a unified national market [45].

Core Points - The article discusses the significant increase in back-to-school expenses for American families due to rising prices of essential items and the impact of tariffs on imported goods [1][4][5] Group 1: Price Increases - The average price of typical back-to-school supplies has risen by 7.3%, nearly three times the overall inflation rate over the past year [4] - Specific items have seen substantial price increases, such as index cards (42.6%), notebooks (17.1%), binders (12.8%), and folders (12.7%) [4] - The cost of preparing lunches for children is expected to increase by $163 compared to the previous school year, with food prices rising significantly since Trump's administration [4] Group 2: Impact of Tariffs - New tariffs on imported goods, particularly from China, have led to increased prices for school supplies, with a 30% tariff on ordinary goods entering the U.S. [3][4] - The price of laptops and tablets has nearly doubled, forcing some school districts to abandon a quarter of their planned updates due to costs rising from $650 to $1200 [5] - Clothing and footwear prices are also affected, with many items facing tariffs of 20% or more, leading to a 1.4% increase in shoe prices and a 0.1% increase in clothing prices in July [5] Group 3: Educational Costs - The "Big and Beautiful" bill signed by Trump has reduced federal aid for students, including cuts to meal subsidies and federal loans for college students, which may lead to increased educational costs [5][6] - A survey indicated that 61% of college students feel the impact of the new loan policies, with over a third considering canceling their plans for further education [6][7] - The hostile policies towards international students have resulted in a 13% drop in enrollment, further exacerbating the financial pressure on domestic students [7]