Economic Outlook - The Federal Reserve is expected to make a decision on interest rates this week, with a press conference by Jerome Powell scheduled for Wednesday at 2:30 PM New York time, which is anticipated to be a key data point for the market [2][10] - The Summary of Economic Projections (SEP) will also be released, providing insights from Fed members on their economic outlook [3] Retail Sales and Consumer Spending - Retail sales data is set to be released on Tuesday, with Bank of America's consumer checkpoint indicating a 4% increase in consumer spending for August, contrasting with Jamie Dimon's concerns about a weakening US economy [4][7] - Mixed economic data has been observed, including a significant drop in the Empire State manufacturing index, which fell by 8.7% compared to a positive 11.9% last month [8] Corporate Earnings - Key earnings reports are expected on Thursday, including Darden Restaurants in the morning and FedEx and LAR in the afternoon, marking a significant event for the week [9] Market Sentiment - The markets are currently at all-time highs, with ongoing trade talks between the US and China being closely monitored, as this is the fourth meeting in four months [5][6]

Group 1 - Asia-Pacific markets opened mixed as investors monitored U.S.-China talks in Spain and awaited data from Beijing [1] - U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer met with Chinese officials, including Vice Premier He Lifeng [2] - China is expected to release data on retail sales, fixed asset investment, and urban unemployment rate [2] Group 2 - South Korea's Kospi index rose 0.67% to a record high of 3,420.23, marking its 10th consecutive session of gains [3] - The small-cap Kosdaq increased by 0.4% [3] - Hong Kong's Hang Seng Index was set to open slightly lower, with futures at 26,380 compared to the last close of 26,388.16 [3]

Inflation Data Analysis - Headline CPI came in below expectations at 27%, while core CPI, excluding food and energy, was higher than anticipated at 31% [1] - Markets focused on the headline CPI number, leading to an equities rally and a drop in 2-year yields [2] Monetary Policy Outlook - Weak unemployment data reported on August 1st raised concerns about disinflation [2] - Prior to the CPI release, Fed funds futures priced in an 82% chance of a 25 basis point cut at the September 17th FOMC meeting [3] - Post CPI release, the probability of a 25 basis point cut at the September 17th FOMC meeting surged past 90%, with markets pricing in 60 basis points of easing by the end of 2025 [3] - PPI data on August 14th and retail sales data on August 15th are expected to provide a clearer picture of the Fed's coming moves [3]

Investment Rating - The report indicates a cautious outlook on near-term growth momentum despite a strong GDP print, suggesting the need for more policy stimulus to boost investment demand and support the labor market [6]. Core Insights - China's 2Q25 GDP grew by 5.2% year-on-year, slightly below the 5.4% growth in 1Q25, but above market consensus of 5.1% [1][8]. - Industrial production (IP) showed a surprising increase to 6.8% in June, driven by resilient export activities, with manufacturing IP accelerating to 7.4% [3][8]. - Retail sales growth moderated to 4.8% in June, lower than the previous month and consensus expectations, indicating potential weakness in domestic demand [4][8]. - Fixed asset investment (FAI) growth slowed to 2.8% year-to-date, with a significant contraction in property investment at -11.2% year-on-year [5][8]. - The urban unemployment rate remained stable at 5.0% in June, with disposable income per capita increasing by 5.1% year-on-year [10][11]. Summary by Sections Economic Growth - 2Q25 GDP growth was reported at 5.2% year-on-year, with a sequential increase of 1.1% quarter-on-quarter [1][8]. - In the first half of 2025, real GDP growth reached 5.3%, surpassing the annual policy target of "around 5%" [1]. Industrial Production - IP growth rose to 6.8% in June from 5.8% in May, with manufacturing IP accelerating to 7.4% [3][8]. - Growth was observed in 36 out of 41 industries, with notable increases in industrial robots and integrated circuits [3]. Retail Sales - Retail sales increased by 4.8% year-on-year in June, down from 6.3% in May, influenced by earlier promotions and subsidy halts [4][8]. - Catering services saw a significant slowdown, with growth dropping to 0.9% year-on-year [4]. Fixed Asset Investment - FAI growth moderated to 2.8% year-to-date, with a single-month growth of only 0.5% year-on-year [5][8]. - Property investment continued to decline sharply, with a contraction of -11.2% year-on-year [5]. Labor Market and Income - The urban unemployment rate remained unchanged at 5.0% in June, with average weekly hours worked at 48.5 [10][11]. - Disposable income per capita reached RMB 9,661 in 2Q, reflecting a 5.1% year-on-year increase [11].