Core Viewpoint - The article discusses the increasing political influence on the Federal Reserve, which is raising the risk premium associated with U.S. dollar assets, prompting investors to reassess their exposure to dollar-denominated investments [1] Group 1: Economic Indicators - The U.S. dollar index is currently at 97.99, reflecting a 0.13% increase from an opening price of 97.87 [1] - The expanding budget deficit and government debt are contributing to the uncertainty in policy direction, which is affecting investor sentiment towards dollar assets [1] Group 2: Federal Reserve and Market Reactions - The market's instinctive reaction to the recent events surrounding Federal Reserve Governor Cook has provided slight support to U.S. short-term Treasury yields [1] - However, if the Trump administration continues to pressure the Federal Reserve to lower interest rates amidst high inflation, this support for yields may not be sustainable [1] Group 3: Market Dynamics - The dollar index is currently oscillating within a range of 97.54 to 98.95, entering a rebalancing phase after a previous upward movement [1] - The rapid increase in the dollar index faced selling pressure near 98.8290, leading to a pullback to around 97.5400, indicating a pattern of "volatility expansion—rapid mean reversion" driven by events [1]

Core Viewpoint - The global stock market experienced a slight increase from August 25 to August 29, with A-shares leading the gains, particularly in the ChiNext and Sci-Tech 50 indices, which rose over 7% [1][2]. Group 1: Equity Market Performance - The global equity market saw a modest rise, with emerging markets outperforming developed markets, particularly in North America compared to Asia and Europe [2]. - In developed markets, U.S. stocks showed resilience with the S&P 500 up by 0.5%, Nasdaq by 1.0%, and Russell 2000 by 0.7%, while European indices faced pressure, notably the French CAC40 which fell by 2.6% [2]. - Among emerging markets, A-shares performed exceptionally well, with the ChiNext index increasing by 7.7% and the Sci-Tech 50 by 7.5% [2]. Group 2: Bond Market Trends - The Chinese bond market exhibited a "bear steepening" trend, with the yield curve showing a downward shift at the short end and an upward shift at the long end, leading to an increase in the 10-year government bond yield to over 1.8% [3]. - In contrast, the U.S. bond market displayed a "bull steepening" characteristic, with an overall downward shift in yields and an expansion of the 10Y-2Y yield spread [3]. - As of August 30, market expectations indicated an 86.4% probability of a Federal Reserve rate cut in September, with potential for two cuts within the year [3]. Group 3: Commodity and Currency Movements - Precious metals led the commodity market, with COMEX silver and gold prices rising significantly, with year-to-date increases of 39.3% and 33.1% respectively [4]. - The domestic and international commodity price trends continued to diverge, with the South China commodity index slightly down by 0.2% while the CRB index rose by 0.8% [4]. - The Chinese yuan appreciated significantly against the U.S. dollar by 0.7%, while the dollar index saw a minor increase of 0.1% [4].

Market Performance - The Sci-Tech 50 Index increased by 7.49% and the ChiNext Index rose by 7.74% over the last five trading days, while the large-cap value index fell by 1.37% [1] - The large-cap growth index gained 5.83%, and the Shanghai 50 Index increased by 1.63%, with the small-cap index represented by the CSI 2000 rising by 0.33% [1] - Communication and non-ferrous metals sectors performed well, while textiles, apparel, and coal sectors lagged [1] Risk Premium Analysis - The static PE of the CSI All Index minus the yield of 10-year government bonds indicates a risk premium, which reached 4.17% on April 26, 2022, and 4.08% on October 28, 2022, leading to a market rebound [1] - As of January 19, 2024, the risk premium indicator was at 4.11%, marking the fifth occurrence since 2016 of exceeding 4% [1] - The indicator as of August 29, 2025, was at 2.92%, with the two-standard deviation boundary set at 4.77% [1] Valuation Levels - As of August 29, 2025, the CSI All Index's P/E TTM percentile was at 78%, while the Shanghai 50 and CSI 300 were at 72% and 70%, respectively [2] - The ChiNext Index was close to 46%, indicating a relatively low valuation level compared to historical averages [2] Technical Analysis - The Deep 100 Index has experienced bear markets every three years, with declines ranging from 40% to 45% [2] - The current adjustment cycle began in Q1 2021, suggesting a potential upward cycle from the bottom [2] Fund Flow and Trading Activity - In the last five trading days, ETF inflows totaled 28.6 billion yuan, and margin financing increased by approximately 96.6 billion yuan [3] - The average daily trading volume across both markets was 29.51 billion yuan [3] AI and Data Analysis - A convolutional neural network (CNN) was utilized to model price and volume data, mapping learned features to industry themes [9] - The latest investment themes include artificial intelligence and related sectors [2]

Core Viewpoint - The article examines the performance of private credit in light of the Federal Reserve's decision to maintain interest rates and Moody's downgrade of U.S. government debt, questioning why private credit consistently performs well [1][3]. Group 1: Analysis of Interest Rates and Private Credit - The analysis shifts from the effective federal funds rate to the "10-year minus 2-year Treasury yield" to compare the cost differences between public and private funding in terms of mid-term premiums [3]. - Historical data shows significant volatility in U.S. Treasury yields, particularly in years like 2000, 2003, 2007, 2020, and 2021, alongside a long-term trend from 2009 to 2019, indicating that declines in Treasury yields often coincide with declines in credit fund returns [4]. - There is a limited correlation between private credit returns and mid-term Treasury yields, with notable volatility in private credit returns during economic downturns when Treasury yields typically rise [5]. Group 2: Trends and Future Outlook - In the years following economic recessions, private credit returns tend to be significantly higher than average, aligning with historical deep value investment returns during such periods [5]. - The 2010s saw a gradual decline in U.S. Treasury yields without economic recessions, leading to a similar decline in private credit returns, although there was a rebound after volatility in 2017 [5]. - The future outlook suggests that private credit may experience short-term volatility in 2025, but could benefit from deep investments once the market stabilizes, despite potential early impacts from the downgrade of U.S. Treasury credit ratings [6].

Core Viewpoint - The ongoing conflict between President Trump and the Federal Reserve is escalating, with significant implications for the Fed's independence and monetary policy direction [2][10]. Group 1: Federal Reserve's Independence - Trump's actions, including the dismissal of Fed Governor Lisa Cook, are seen as unprecedented attacks on the Fed's independence, potentially leading to higher inflation and decreased credibility [9][10]. - Analysts warn that if Trump successfully alters the composition of the Federal Reserve Board, it could lead to a shift towards more accommodative monetary policy, undermining the Fed's traditional data-driven approach [10][11]. Group 2: Impact on Monetary Policy - The Federal Reserve's current stance remains moderately restrictive, with officials indicating that rate cuts may be appropriate in the future, depending on economic conditions [3][4]. - The potential for Trump to influence the selection of regional Fed presidents could significantly impact monetary policy decisions, particularly if he gains a majority on the Fed Board [7][11]. Group 3: Market Reactions - The bond market has begun to show signs of distortion, with a steepening yield curve indicating rising inflation expectations and risk premiums due to perceived threats to the Fed's independence [4][11]. - Despite current market calmness, there is a growing concern that the political influence over the Fed could lead to increased volatility and higher inflation in the long term [10].

Core Viewpoint - The ongoing conflict between President Trump and the Federal Reserve is escalating, with potential implications for the Fed's independence and monetary policy direction [1][11]. Group 1: Federal Reserve Actions - Federal Reserve Governor Lisa Cook is expected to file a lawsuit regarding her dismissal by President Trump [3][4]. - New York Fed President John Williams indicated that lowering interest rates may be appropriate at the right time, while maintaining a moderately restrictive policy stance [1]. - The Trump administration is exploring ways to exert more influence over the 12 regional Federal Reserve banks, particularly regarding the selection process for regional bank presidents [1][5]. Group 2: Implications for Fed Independence - Analysts warn that Trump's actions could signify the end of the Fed's independence, a status it has held since 1951, with financial markets yet to fully absorb this significant risk [1][11]. - Former Fed Vice Chair Lael Brainard views Trump's attack on Cook as part of a broader effort to pressure the Fed, potentially leading to the dismissal of multiple regional Fed presidents [6][8]. - The potential for Trump to control the Fed's monetary policy could result in higher inflation and increased volatility in the financial markets [11]. Group 3: Market Reactions - Current market conditions reflect a distortion in the Treasury market, with long-term yields rising and short-term real yields falling, indicating that the Fed's independence is perceived to be under threat [12]. - Deutsche Bank's report suggests that if Trump successfully removes Cook and appoints a candidate favoring significant rate cuts, the power dynamics within the Fed could shift dramatically, leading to a majority of "dovish" votes [12].

Global Asset Market Performance - The 10-year government bond yields of major economies on August 26, 2025, showed various values and changes. For example, the US was 4.262 with a latest change of -0.014, a one - week change of -0.045, a one - month change of -0.059, and a one - year change of 0.378 [2]. - The 2 - year government bond yields also had different figures. The US 2 - year yield on August 26, 2025, was 3.680 with a latest change of -0.110, a one - week change of -0.070, a one - month change of -0.080, and a one - year change of -0.260 [2]. - The exchange rates of the US dollar against major emerging economies' currencies on August 26, 2025, had different changes. For the Brazilian real, the latest change was 0.37% and the one - week change was -1.34% [2]. - Major economies' stock indices had different performances on August 26, 2025. The S&P 500 closed at 6465.940 with a latest change of 0.41%, a one - week change of 0.85%, a one - month change of 1.49%, and a one - year change of 16.41% [2]. - Credit bond indices showed different changes. The US investment - grade credit bond index had a latest change of 0.04%, a one - week change of 0.25%, a one - month change of 0.86%, and a one - year change of 4.11% [2][3]. Stock Index Futures Trading Data - Index performances: A - shares closed at 3868.38 with a decline of 0.39%. The PE (TTM) of the S&P 500 was 27.49 with a环比 change of 0.11 [4]. - Fund flows: The latest value of A - share fund flow was -952.90, and the near 5 - day mean was -305.08 [4]. - Transaction amounts: The latest value of the Shanghai and Shenzhen stock exchanges' transaction amount was 26790.20 with a环比 change of -4621.17 [4]. - Main contract basis and spreads: The basis of IF was -3.59 with a spread of -0.08% [4]. Treasury Bond Futures Trading Data - Treasury bond futures: T00 closed at 108.185 with a rise of 0.21%, and TF00 closed at 105.620 with a rise of 0.11% [5]. - Fund rates: R001 was 1.3596% with a daily change of -20.00 BP [5].

Core Viewpoint - Deutsche Bank suggests that if Trump successfully gains control of the Federal Reserve Board with four dovish votes, it could lead to aggressive monetary easing policies and allow for unilateral actions to lower the Interest Rate on Reserve Balances (IORB), bypassing the FOMC's decisions [1][3][12] Group 1: Control of the Federal Reserve Board - Trump's administration is seeking to gain control of the Federal Reserve Board by dismissing Governor Cook, which would enable the implementation of aggressive monetary policies [3][6] - Following the resignation of Governor Kuger, Trump has garnered increasing support for dovish monetary policies within the committee [4] - If Trump appoints a candidate favoring significant rate cuts to replace Cook, the power dynamics within the Board will change dramatically, potentially leading to a majority of dovish votes [6][7] Group 2: Impact on Monetary Policy - The emergence of four stable dovish votes within the Board would significantly increase internal pressure for faster and larger rate cuts, even amidst high inflation data [7][12] - The Board's majority could utilize its power to unilaterally lower the IORB, which has historically been aligned with FOMC targets, thus challenging the traditional decision-making framework [9][10] - This unilateral action could lead to unprecedented dynamics in the money market, creating potential chaos and directly impacting the FOMC's traditional decision-making process [11] Group 3: Restructuring the FOMC - The majority within the Federal Reserve Board also holds the long-term power to reshape the composition of the FOMC voting members, as all 12 regional Federal Reserve Presidents require Board approval for reappointment every five years [12][13] - A Board majority seeking aggressive easing could veto the reappointment of hawkish regional Fed Presidents, gradually eliminating opposing voices and paving the way for long-term easing policies [13]

Core Viewpoint - The short-term performance of Hong Kong stocks is expected to lag due to liquidity constraints, with A-shares having a liquidity advantage and ongoing earnings downgrades impacting the market [1][2][13]. Liquidity - The recent increase in Hibor rates indicates tightening liquidity in Hong Kong, with rates rising from near zero to nearly 3% within a week, affecting the secondary market [2][3]. - In contrast, A-shares have seen abundant liquidity, with daily trading volumes exceeding 3 trillion yuan and financing balances surpassing 2 trillion yuan, indicating a strong influx of funds [3]. Fundamental Factors - Earnings for Hong Kong stocks are being continuously downgraded, with consensus estimates for the Hang Seng Index's 2025 earnings showing a negative growth of -1.4%, compared to a positive growth of 17.8% for 2024 [5]. - Approximately 60% of companies within the Hang Seng Index are experiencing earnings downgrades, reflecting a broader economic weakness [5]. Valuation - The AH premium has dropped below 125%, reducing the attractiveness of dividends for many investors, which is consistent with previous analyses [5][13]. - The Hang Seng Index's risk premium is currently at 5.8%, lower than previous lows since October, indicating a challenging valuation environment [9][10]. Market Dynamics - The recent performance of A-shares may be driven more by liquidity than fundamentals, suggesting a potential for some spillover effects to Hong Kong stocks if the liquidity environment continues to strengthen [8][13]. - The Hang Seng Index's reasonable range is estimated between 24,000 and 26,000, with the need for further conditions to be met for a significant breakthrough [9][10]. Structural Opportunities - Long-term structural advantages remain for Hong Kong stocks, particularly in sectors like AI, new consumption, and innovative pharmaceuticals, which could provide stable returns [13][14]. - The market's structural dynamics indicate that capturing the right sector rotations can yield returns significantly above the index, emphasizing the importance of timing and selection [14]. Overseas Mapping - In a liquidity-driven market environment, overseas demand and mapping chains, such as technology narratives and U.S. real estate impacts, present additional investment opportunities [15].

Core Viewpoint - The Hong Kong stock market has been active this year but has recently lagged behind the A-share market, particularly since July, where the Hang Seng Index has struggled to break through the 25,000-point mark, showing only a 3% increase compared to A-shares' significant gains of 9.2% and 20% for the ChiNext Index [2][6]. Group 1: Market Performance - The Hang Seng Index has been stagnant since mid-July, contrasting sharply with the A-share market's performance, which has reached a ten-year high [2]. - Despite a recovery since April, the Hong Kong market has underperformed compared to global peers, with the Hang Seng Tech Index failing to recover losses from March [5][6]. Group 2: Reasons for Underperformance - The underperformance of the Hong Kong market is attributed to three main factors: liquidity tightening (Hibor rising), downward revisions in earnings, and low valuation (AH premium below 125%) [8][19]. - Hibor rates have surged from near zero to close to 3% within a week, indicating a tightening of liquidity in the Hong Kong banking sector [8][9]. - In contrast, the A-share market has enjoyed ample liquidity, with daily trading volumes exceeding 3 trillion yuan and financing balances surpassing 2 trillion yuan [11][12]. Group 3: Earnings and Valuation - Earnings for the Hang Seng Index have been continuously revised downwards, with consensus estimates for 2025 showing a negative growth of -1.4% compared to a positive growth forecast of 10% for the MSCI China A-share Index [19][22]. - The AH premium has dropped below 125%, reducing the attractiveness of dividends for many investors, which has contributed to the market's struggles [26][27]. Group 4: Future Outlook - The expectation of a potential interest rate cut by the Federal Reserve may provide some liquidity support for the Hong Kong market, but it is not seen as a definitive driver [14][17]. - The long-term structural advantages of the Hong Kong market remain, particularly in sectors like AI, new consumption, and innovative pharmaceuticals, which could attract investment despite short-term challenges [44][45]. Group 5: Investment Strategy - The current strategy suggests that while the Hong Kong market may lag in the short term due to liquidity issues and earnings downgrades, it holds long-term structural advantages that could yield better returns [44][45]. - Investors are advised to focus on structural opportunities rather than merely index performance, as the market has shown significant potential for alpha generation through sector rotation [45][46].