Trade Relations - US President stated nearing a deal with China to extend the trade truce [1] - The agreement aims to reduce tit-for-tat tariff hikes between the two countries [1] - The deal includes easing export restrictions on rare earth magnets and certain technologies [1]

Market Trends - Gold price declined following a stronger dollar after a tariff deal between the US and the European Union [1] - Market focus shifts to the potential extension of a trade truce between the US and China [1]

Trade Talk Expectations - The most likely outcome of the US-China trade talks is a continuation of dialogue, an extension of the trade truce, and a potential fall meeting between the presidents [2][3] - A grand deal is unlikely even after a 90-day extension due to the need for structural reform in China's non-market economy [6] China's Economic Constraints - China's economy faces significant pressure, including a slowing economy, deflation, youth unemployment, a housing crisis, and demographic challenges [4] - These economic pressures weaken China's negotiating position [5] Trade Dynamics - China's exports to the US are down, but exports to other Asian countries are increasing significantly [7] - Approximately 17% of Chinese exports go to the United States, leaving 83% of the world for continued trade [7][8] - China and Canada are not analogous because Canada's exports mostly go to the United States [7] Structural Reform Challenges - Achieving a more balanced trading relationship with China requires structural reform, which will be difficult and time-consuming for China to implement [6] - Addressing overcapacity in industries like steel and electric vehicles would require provincial leaders to close factories and furlough large numbers of workers, posing a significant challenge [6]

Economic Outlook - Despite the trade truce, economic numbers appear soft, necessitating a broader perspective [1] - Macro policy improvements in September of last year, along with front-loaded activity in Q1, led to solid data in Q4 of last year and Q1 of this year [2] - The underlying economic momentum is moderating due to trade tariff issues with the US and increasing external uncertainty [2][3] - The baseline expectation is for sequential growth of the Chinese economy to slow from approximately 66% quarter-on-quarter in Q1 to around 35% in Q2, and further to 3% in Q3 [3] - PMI numbers align with expectations of moderating economic momentum [4] Sector Performance - Diverging trends exist across different sectors, with China's exports to the US down 40% in April and May [5] - Sectors receiving policy support, such as training subsidies and equipment upgrades, are performing well [6] - The housing sector continues to be a drag on the economy and has not yet bottomed out [6] - Consumer sentiment outside of policy support areas remains at a historical low [7] Policy Implications - Domestic and consumption support are crucial for policy focus this year [7] - Subsidies for consumer durables and autos have shown some impact, but their effect will fade by year-end [7] - Further policy support, particularly for services consumption, is needed [8]

Market Trends - S&P 500 指数小幅上涨 0.1% [1] Geopolitics - 美国和中国启动会谈，提升了贸易休战的乐观情绪 [1]