Core Insights - The survey indicates that fund managers are the most optimistic since February 2025, with a reduced probability of a hard landing and a historical low cash allocation of 3.9% in assets under management (AUM) [1][15]. Macro and Policy - 68% of respondents predict a soft landing for the economy, while only 5% are preparing for a hard landing. The net global growth expectation remains weak at -41% [2]. - Optimism regarding interest rate cuts has reached its highest level since December 2024, with 54% believing the next Federal Reserve chair will implement quantitative easing (QE) or yield curve control (YCC) [2]. Risks, Crowded Trades, and AI - Tail risks from trade wars/recession have decreased to 29%, while inflation/Fed not cutting rates risks are at 27%. The risk of an AI bubble has risen to 14% [3]. - "Longing the Magnificent Seven stocks" is the most crowded trade at 45%, but 52% of respondents do not believe in an AI bubble, and 55% state that AI is enhancing productivity [3]. Asset Allocation - Global equity overweight has reached a net 14%, the highest since February 2025, with funds shifting from the Eurozone to emerging markets (overweight 37%) and Japan (underweight 2%) [4]. - 91% of respondents believe U.S. stocks are overvalued, marking a historical high, and there is a shift in funds from healthcare to utilities, energy, and financial sectors [4]. Cryptocurrency and Gold - Only 9% of investors hold cryptocurrencies, with an average allocation of 3.2%. For those excluding 75% who do not hold crypto, the exposure is 0.3% [5]. - 48% of investors hold gold, with an average allocation of 4.1%. Excluding 41% who do not hold gold, the overall exposure is 2.2% [5]. Contrarian Trading Strategies - Based on current fund manager positions, the best contrarian long positions are U.S. cash, REITs, and healthcare, while the best contrarian short positions are stocks, emerging markets, banks, and utilities [6].

1. Report Industry Investment Rating There is no information provided regarding the industry investment rating in the document. 2. Core View of the Report The report focuses on the history, overseas experiences, and future prospects of China's central bank's treasury bond trading. It analyzes the development of China's central bank's treasury bond trading from 2024 to 2025, draws lessons from the practices of the Federal Reserve and the Bank of Japan, and discusses the possible future evolution of the tool, including operation mechanisms, targets, and implementation rhythms, as well as potential optimization directions for supporting measures [2][48][94]. 3. Summary According to the Table of Contents 3.1. Treasury Bond Trading History Review - **Before 2024**: The central bank mainly participated in treasury bond trading through repurchase agreements, providing short - term liquidity to the market and smoothing out fluctuations in the capital market. Direct purchases of treasury bonds were rare, mainly for coordinating the issuance of special treasury bonds [12]. - **In 2024**: The central bank began to include treasury bond trading in open - market operations. In August, it carried out "buying short and selling long" operations, with a net purchase of 1 billion yuan in treasury bonds. The operations were mainly for base money injection and liquidity management, with buying aiming to support fiscal efforts and selling to prevent bond market risks [22][25]. - **In the first half of 2025**: In January, the central bank announced a temporary suspension of open - market treasury bond purchases, considering the controllable supply pressure of government bonds at the beginning of the year and the availability of alternative tools for liquidity management. The market's speculation about the resumption of operations emerged in June, but it did not materialize, mainly due to the marginal improvement in the supply - demand relationship of government bonds, the central bank's enhanced precision in liquidity regulation, and concerns about bond market risks [38][40][43]. 3.2. Overseas Insights into Central Bank Bond Purchases - **Federal Reserve's "Scarce Reserves" Framework**: Before 2008, the Federal Reserve used this framework, where treasury bond trading was mainly for liquidity management. Through small - scale open - market treasury bond trading, the Federal Reserve could adjust the reserve level of the banking system, affecting the federal funds rate and other interest rates, forming a transmission chain of "open - market operations - reserve scale - FFR - other interest rates" [48]. - **Federal Reserve's Treasury Bond Trading with Quantitative Easing and Twist Operations**: From 2008 to 2014, the Federal Reserve implemented large - scale asset purchase programs, aiming to influence the yield curve by changing the structure of purchased assets while maintaining a loose liquidity environment. It carried out operations such as lowering short - term interest rates, buying long - term bonds, and selling short - term bonds, and managing market expectations [68][71]. - **Bank of Japan's YCC Practice**: In 2016, the Bank of Japan introduced YCC on the basis of negative interest rates. It controlled the short - end through negative interest rates and set a target for the 10 - year treasury bond yield, promising unlimited buying and selling of 10 - year treasury bonds to achieve the target range. This enhanced the central bank's ability to control the yield curve, alleviated concerns about policy sustainability and market liquidity, and strengthened inflation expectations [74][76]. 3.3. Outlook on Central Bank Bond Purchases - **Current Situation**: Compared with the Federal Reserve and the Bank of Japan, the scale of treasury bonds held by the People's Bank of China is relatively low. Commercial banks are the main holders of treasury bonds in China, accounting for over 60% of the total. The reasons include the short implementation time of treasury bond trading, differences in tool positioning, and the limited liquidity of the treasury bond market [6][78][88]. - **Possible Future Deductions**: - **Operation Mechanism**: There is a possibility of making operations more transparent by announcing operation time, quantity, bond maturity, and pricing standards in advance, following the trend of expected management in monetary policy tools [94]. - **Operation Target**: Treasury bond trading is mainly for liquidity management and may also have the function of regulating the yield curve. Net purchases to inject liquidity are still the general direction, and attention should be paid to the term structure of the treasury bond market and the central bank's holdings [95]. - **Implementation Rhythm**: The supply pressure of government bonds will decrease in July and peak again in August - September. This could be a good observation window for restarting treasury bond trading operations [97]. - **Supporting Measures**: Potential optimization directions include increasing the proportion of discount treasury bond issuance, improving the management of treasury bond underwriters, guiding commercial banks to reduce the proportion of bonds held in the AC account, and expanding the participants in the treasury bond derivatives market [98].

Core Viewpoint - The article discusses the sustainability risks of Japan's public debt amid rising global interest rates and inflation, highlighting the potential for a "stagflation" scenario that could challenge Japan's fiscal stability and economic recovery [1][2][3]. Group 1: Public Debt and Economic Conditions - Japan's government debt-to-GDP ratio is projected to reach 228% by the end of 2024, a significant increase from 67% in 1990, raising concerns about fiscal sustainability [4][8]. - The apparent decline in Japan's public debt ratio since 2020 is attributed to a combination of nominal economic growth driven by inflation and the Bank of Japan's low interest rate policy, rather than genuine fiscal improvement [11][12]. - The long-standing low inflation and low interest rate environment has allowed Japan to maintain high levels of public debt without immediate fiscal repercussions, but this situation may be changing as inflation rises [18][22]. Group 2: Inflation and Wage Dynamics - Japan is experiencing a shift from low inflation to rising prices, with the CPI surpassing 2% since April 2022, driven by both domestic and external factors, including a depreciating yen and supply chain issues [28][34]. - The aging population in Japan is contributing to upward pressure on wages, with expectations for salary increases becoming more entrenched, potentially leading to a wage-price spiral [2][34]. - The current inflation is primarily driven by essential goods, which may lead to increased demands for wage hikes among workers, further complicating the economic landscape [31][32]. Group 3: Future Risks and Market Implications - The potential for a "stagflation" scenario poses significant risks to Japan's public debt sustainability, as rising interest rates could outpace economic growth, leading to higher debt servicing costs [47][48]. - If the Bank of Japan tightens its monetary policy in response to inflation, it could exacerbate the fiscal pressures on the government, leading to a potential increase in the debt-to-GDP ratio [11][48]. - The article warns that Japan's reliance on long-term bonds and the central bank's significant holdings of government debt could lead to increased market volatility if interest rates rise unexpectedly [49][52].

Core Viewpoint - The U.S. Treasury's strategy to increase short-term bond issuance is significantly undermining the Federal Reserve's independence, effectively shifting monetary policy authority to the Treasury [1][13][18] Group 1: Treasury's Strategy and Its Implications - Treasury Secretary Yellen's recent preference for short-term debt financing contrasts with her previous criticism of reliance on short-term bonds, resembling a fiscal version of quantitative easing [1][12] - The shift towards more short-term Treasury issuance is expected to stimulate risk asset prices further away from long-term fair value and structurally raise inflation levels [1][12] - The increase in short-term debt issuance will severely limit the Federal Reserve's ability to independently formulate anti-inflation monetary policy, leading to a fiscal-dominated landscape [1][13] Group 2: Inflation Dynamics - The decision to increase short-term debt issuance may become a structural factor driving inflation higher in the coming years [2][5] - Historical data indicates that fluctuations in the proportion of Treasury bills in total outstanding debt often precede long-term inflation trends, suggesting a causal relationship [2][5] Group 3: Market Liquidity and Short-Term Bonds - The explosive growth of the repurchase market has amplified the impact of short-term bonds, as improved clearing mechanisms and increased liquidity make repurchase transactions resemble money [8][9] - A high net bond issuance relative to fiscal deficits can lead to market troubles, as seen in the 2022 bear market, prompting the Treasury to release a large volume of Treasury bills in 2023 to inject liquidity into the market [9][12] Group 4: Federal Reserve's Policy Dilemma - The combination of irrational asset price growth, high consumer inflation, and substantial short-term debt creates a challenging policy environment for the Federal Reserve [13][14] - Traditionally, the central bank would respond to such a situation with tightening policies; however, in an economy burdened with short-term debt, rate hikes would lead to soaring government borrowing costs [14][18] - The increasing short-term debt burden will constrain the Federal Reserve's ability to raise interest rates, effectively allowing the government's substantial deficits and issuance plans to dominate monetary policy [14][18] Group 5: Long-Term Market Effects - The potential reactivation of policy tools like quantitative easing, yield curve control, and financial repression may increase to artificially suppress long-term yields, marking a significant victory for the Treasury [17][18] - If inflation remains sufficiently high and the government manages to control its budget deficits, the debt-to-GDP ratio could decline, albeit at the cost of the Federal Reserve's hard-won independence [18]

Group 1 - The Bank of Japan (BOJ) maintains the benchmark interest rate at 0.5%, marking the third consecutive meeting of rate stability, aligning with market expectations [1] - The BOJ will continue its bond reduction plan until March 2026, with a quarterly reduction of approximately 200 billion yen starting from April 2026 [1] - Japan's overall economy shows signs of moderate recovery, despite some regional economic activities remaining sluggish [1][2] Group 2 - The consumer price index (CPI) excluding fresh food has increased by approximately 3.5% year-on-year, driven by rising wages, past import price increases, and food price hikes [1] - Core CPI inflation is expected to remain subdued in the short term, but may gradually approach the 2% target in the medium to long term due to labor shortages and economic growth recovery [1][3] - The BOJ emphasizes the importance of flexible adjustments to its bond purchase plan in response to global economic uncertainties and risks, particularly from trade policies [1][3] Group 3 - BOJ Governor Kazuo Ueda expresses a cautious outlook on domestic and international economic conditions, indicating that all monetary policy tools remain on the table [2] - The decision to reduce bond purchases is aimed at preventing bond yield fluctuations and ensuring market stability [2] - Ueda highlights the need for close monitoring of global economic conditions, particularly trade policy uncertainties, and commits to a flexible response strategy [3]

Core Viewpoint - The recent poor performance of long-term government bond auctions in Japan and the United States has raised concerns in global markets, leading to fears of a potential crisis in the bond market, with questions about who will absorb the "unwanted bonds" [1][4][11]. Group 1: Japan's Bond Market - The recent auction of 20-year Japanese government bonds was disappointing, with a bid-to-cover ratio of only 2.5, the lowest since 2012, and a tail difference of 1.14, the highest since 1987 [1][4]. - Japanese insurance companies are reluctant to purchase long-term bonds due to significant losses from rising interest rates, leading to a trend of net selling by domestic investors [4][5]. - Japan's debt-to-GDP ratio exceeds 250%, significantly higher than the U.S. at 120%, yet the bond market has not faced a crisis, largely due to the Bank of Japan's support [5][6]. Group 2: U.S. Bond Market - The U.S. Treasury auctioned $16 billion of 20-year bonds with a final yield of 5.047%, marking the second time yields have surpassed 5%, indicating weak demand [8][9]. - The rising yields in U.S. bonds have led to a significant drop in stock markets, with the VIX index rising by 15% and the dollar index falling below 100 [8][9]. - Concerns about the U.S. fiscal deficit and the potential for further tax cuts are contributing to the weak demand for U.S. bonds, as investors are wary of increasing debt levels [9][12]. Group 3: Future Outlook - Experts suggest that if market conditions stabilize, the critical question will be who will absorb the government bonds, particularly in light of the Bank of Japan's potential need to reconsider its yield curve control (YCC) policy [11][12]. - The U.S. government may need to adjust its bond issuance strategy to avoid overwhelming the market during sensitive periods, while the Federal Reserve could consider implementing YCC to maintain interest rate stability [13].

Group 1 - Japan's 20-year government bond auction on May 20 was disappointing, with a bid-to-cover ratio of only 2.5, the lowest since 2012, and a tail difference of 1.14, the highest since 1987 [1][3] - The demand for U.S. 20-year bonds was also weak following Moody's downgrade of the U.S. credit rating, leading to rising long-term interest rates, with the 10-year yield approaching 4.6% and the 30-year yield exceeding 5% [1][7] - The Japanese bond market is experiencing a trend where foreign investors are buying while domestic investors are selling, with life insurance companies facing significant losses and refusing to purchase long-term bonds [1][4] Group 2 - The poor performance of the Japanese bond auction is attributed to two main factors: regulatory changes prompting insurance companies to buy long-term bonds and an oversupply of long-term bonds due to excessive issuance by the government [3][4] - The Bank of Japan's long-term bond holdings have decreased by 2.2% to 576.6 trillion yen since last July, and it plans to reduce bond purchases further, which may impact market stability [4][10] - Japan's debt-to-GDP ratio exceeds 250%, significantly higher than the U.S. at 120%, yet the Japanese bond market has not faced a crisis due to the Bank of Japan's support [4][5] Group 3 - The U.S. Treasury auctioned $16 billion of 20-year bonds with a final yield of 5.047%, indicating weak demand and a need for higher yields to attract buyers [7][8] - The market is concerned about the impact of rising yields on the stock market, with historical data suggesting that significant increases in yields can lead to stock market pressure [8][9] - Analysts suggest that the U.S. government may need to adjust its bond issuance strategy to alleviate market pressure, and the Federal Reserve could consider yield curve control (YCC) as a potential measure [9][10]

Group 1 - The core viewpoint of the news highlights the recent performance of silver futures, indicating a continuous upward trend in the market, with the main contract price reaching around 8350 yuan [2] - On May 22, the closing price of Shanghai silver futures was reported at 8301 yuan per kilogram, reflecting a daily increase of 1.06% and a trading volume of 763,517 contracts [1] - The spot price of silver in Shanghai was quoted at 8269 yuan per kilogram, showing a discount of 32 yuan per kilogram compared to the futures price [1] Group 2 - The Bank of Japan's committee member, Noguchi Akira, stated that the recent rise in long-term interest rates may not affect the upcoming bond reduction plan to be established in June [1] - He emphasized the need to balance flexibility and market predictability when advancing the bond purchase reduction [1] - Noguchi also noted that the uncertainty surrounding the US-China trade tensions has eased, although the impact of US tariff policies on the Japanese economy remains variable [1]

Group 1 - The current situation is different from the period of implementing Yield Curve Control (YCC) according to Bank of Japan's policy board member Akira Noguchi [1]

Core Viewpoint - Jeffrey Gundlach warns that the US CPI may exceed 4% by the end of the year, and due to liquidity crises and external shocks, the Federal Reserve may ultimately have to lower interest rates in a high-inflation environment, potentially even implementing Yield Curve Control (YCC) [1] Group 1 - Gundlach emphasizes that the Federal Reserve's recent communication indicates significant uncertainty regarding the direction of interest rates, suggesting that they will not make decisions based on "soft data" [1][6] - He predicts that the inflation rate in the US is likely to end the year in the 4% range, which raises concerns about the appropriateness of rate cuts in such an environment [11][12] - Gundlach believes that the Federal Reserve may have to lower rates not because inflation data improves, but due to liquidity issues [14] Group 2 - The Federal Reserve is currently in a position where it is waiting for clearer signals from hard data rather than soft data, which may lead to a lag in their response to economic conditions [6][9] - There is a consensus among analysts that the risks of rising unemployment and inflation are currently balanced, complicating the Federal Reserve's decision-making process [6][12] - Gundlach expresses concern that if interest rates become uncomfortably high, external shocks may prompt the government or the Federal Reserve to implement YCC, which would be a challenging situation [12]