Group 1 - The core view is that the US economy remains the cornerstone of the global financial market, with a "soft landing" scenario being the most likely outcome at 65% probability, indicating a moderate slowdown without entering recession [1] - Economic growth in the US is expected to continue at a steady pace, supported by strong real income growth driven by government fiscal support, despite uncertainties from government policies [2] - The labor market will be a key factor in reassessing economic outlooks, particularly with the recent rise in initial jobless claims [2] Group 2 - The European Central Bank has acknowledged that the interest rate cut cycle is nearing its end, with limited rationale for further cuts due to improving economic growth and increasing fiscal stimulus [2] - The UK economy shows signs of a slowing labor market and cooling inflationary pressures, with market expectations for the final benchmark interest rate to remain relatively high, presenting investment opportunities [2] Group 3 - The company maintains a neutral stance on overall bond duration but favors a steepening yield curve strategy, expecting shorter-term bonds to outperform longer-term bonds [3] - A downgrade has been made on the US CDX high yield index due to diminished valuation advantages, while maintaining a negative outlook on overall investment-grade bonds due to high valuations [3] - US government agency mortgage-backed securities are viewed as a preferred choice in fixed income asset allocation due to higher yields and lower volatility compared to US investment-grade corporate bonds [3]

Core Insights - The U.S. inflation is showing signs of rising again after months of stagnation, driven by increasing import costs and the upcoming release of key economic data, including the June Consumer Price Index (CPI) and retail sales report [1][5] - Analysts expect the June core CPI to rise by 0.3% month-over-month, marking the largest increase in five months, with a year-over-year increase projected at 2.9%, the first rebound since January [3][4] - The impact of tariffs on domestic prices is a critical concern, as the market seeks to understand how these policies are affecting inflation [3][5] Inflation and Pricing Dynamics - The core CPI's expected increase reflects potential tariff transmission effects, particularly in goods like appliances and furniture, while service prices remain weak [3][4] - The current labor market shows signs of cooling, with slower wage growth making consumers more sensitive to price changes, complicating retailers' decisions on passing costs to consumers [4][5] - The interplay between consumer resilience and pricing pressure is crucial for the Federal Reserve's monetary policy decisions, especially with the next policy meeting approaching [4][5] Retail Sales and Economic Growth - Following the CPI data, the U.S. Commerce Department will release June retail sales data, which is expected to show a slight rebound after two months of decline [5] - Weak consumer spending momentum aligns with a cooling job market, and lackluster retail performance could support the narrative of a "soft landing" for the U.S. economy [5] - The upcoming CPI and retail sales data will provide a comprehensive view of the U.S. economy's current state, balancing rising inflation pressures against slowing growth [5]

Core Viewpoint - The Federal Reserve's Goolsbee expresses a preference to wait for market anxiety to ease before making a more confident judgment on whether the U.S. economy can achieve a soft landing [1] Group 1 - Goolsbee indicates that current market conditions are characterized by heightened anxiety, which may impact economic assessments [1] - The statement suggests a cautious approach from the Federal Reserve regarding future monetary policy decisions [1] - There is an implication that a clearer economic outlook may emerge as market conditions stabilize [1]

Group 1 - The focus of the global financial market has shifted back to the USD as investors are concerned about the timing of the Federal Reserve's interest rate cuts and the potential for a soft landing of the US economy [1] - The market sentiment has changed from a bullish outlook to a more cautious stance, with the USD index fluctuating around the 105 mark [1] Group 2 - Expectations for a shift in Federal Reserve policy have increased due to ongoing declines in US inflation and a cooling labor market, with over 70% of market bets on a 25 basis point rate cut in September [2] - The USD index has retreated from its yearly high of 107 to around 105, leading to a rebound in non-USD currencies, particularly the Euro, Pound, and Yen [2] Group 3 - Despite the USD's decline, the US economy remains resilient, with strong consumer spending and technology sector investments, suggesting that any rate cuts by the Federal Reserve may be gradual and aimed at risk management rather than responding to a recession [3] - Future USD movements are likely to reflect a range-bound pattern, benefiting from economic stability while being constrained by rate cut expectations [3] Group 4 - The current USD pullback presents new opportunities for investors, with non-USD currencies expected to continue their rebound in the short term [4] - Long-term, global risk aversion is likely to support the USD's position, especially amid ongoing geopolitical risks [4] - Investors are advised to monitor key data releases such as CPI, PPI, and non-farm payrolls, and adjust their positions flexibly to avoid chasing market trends [4]

Group 1 - The core viewpoint of the report is centered around "Dollar Shift: Strategic Decision-Making," emphasizing the favorable conditions for risk assets due to global policy easing, a likely soft landing for the US economy, and a weakening dollar [1][4][21] - The report recommends an overweight position in global equities, particularly increasing the allocation to Asian (excluding Japan) stocks, while maintaining a positive outlook on US stocks due to strong earnings [1][4][21] - In the bond market, the report anticipates a weaker dollar and favors 5-7 year US dollar bonds, as well as an overweight position in emerging market local currency bonds, which are expected to benefit from a soft dollar and potential interest rate cuts by emerging market central banks [1][4][29] Group 2 - The macroeconomic outlook suggests an increased probability of a soft landing for the US economy, with expectations of potential interest rate cuts by the Federal Reserve in the second half of 2025, supported by loose monetary and fiscal policies [2][4][30] - Gold is highlighted as an important diversification tool, with central bank demand expected to support its price, especially when bonds may not perform well [2][30] - The report discusses various asset allocation models, multi-asset income strategies, and insights on client concerns, providing a multi-dimensional analysis of the global market [2][4][46] Group 3 - The report indicates that the dollar is expected to weaken over the next 6-12 months, benefiting the euro, yen, and pound, while the Swiss franc may remain range-bound [1][24][29] - Historical data suggests that a weak dollar typically supports stock performance, particularly for non-US equities, leading to a positive outlook for global stock markets [1][25][28] - The report emphasizes the importance of diversification in investment strategies, particularly in light of potential volatility and geopolitical risks [1][4][30]

Core Investment Strategies and Asset Allocation - The report recommends an overweight position in global equities, particularly in Asian markets (excluding Japan), due to expected earnings growth, policy support, and attractive valuations [2][19] - Non-USD bonds are to be increased, with emerging market local currency bonds being upgraded to overweight due to the anticipated weakening of the USD and significant room for central bank rate cuts [2][19] - Gold is positioned as a core asset, benefiting from de-dollarization, central bank purchases, and inflation hedging, with a 3-month target price of $3,400 [2][19] Macroeconomic Outlook and Risks - The core scenario anticipates a soft landing for the US economy, supported by trade truce, fiscal stimulus, and a projected 75 basis points rate cut by the Federal Reserve in the second half of the year [3][17] - Key risks include the potential end of the tariff suspension in July, Middle Eastern conflicts possibly driving oil prices above $100, and the implications of the proposed Section 899 tax on multinational investments [3][27] Asset Class Views - The USD is expected to weaken over the next 6-12 months, benefiting the Euro, Yen, and Pound, with specific targets set for currency pairs [4][20] - Gold is projected to have upward potential, with a 12-month target of $3,500, while oil prices are expected to stabilize around $65 per barrel, although geopolitical tensions could cause short-term spikes [4][27] - The stock-bond model has shifted to neutral, indicating a mixed outlook for equities, with emerging market local currency bonds requiring caution due to potential short-term reversals [4][24] Key Events and Outlook - Important upcoming events include tariff negotiations in July, central bank meetings in Europe and the US, and the IMF annual meeting in October [5][17] - The report emphasizes the importance of long-term investment principles, diversification, and balancing liquidity, growth, and protection needs in the context of the dollar's transition [5][19]

Employment Data Analysis - In June 2025, the U.S. added 147,000 non-farm jobs, exceeding the expected 110,000[2] - The unemployment rate fell to 4.1%, better than the anticipated 4.3%[2] - The labor participation rate was 62.3%, slightly below the expected 62.4%[2] Market Reactions - Following the non-farm data release, U.S. stock markets rose, with the S&P 500, Nasdaq, and Dow Jones increasing by 0.8%, 1.0%, and 0.8% respectively[3] - The 10-year U.S. Treasury yield rose by 6.3 basis points to 4.34%[3] - The U.S. dollar index increased by 0.4% to 97.1, while spot gold prices fell by 0.9% to $3,326.1 per ounce[3] Federal Reserve Outlook - The probability of a rate cut in July dropped from 25% to 0%, and the September cut probability decreased from 100% to approximately 73%[4] - The expected number of rate cuts for the year was revised down from 2.6 to 2.1[4] ADP Employment Data Discrepancy - The ADP report showed a loss of 33,000 jobs in June, significantly below the expected gain of 95,000[4] - The divergence between ADP and non-farm data is attributed to differences in statistical coverage and tariff impacts, with non-farm data considered more reliable[4] Economic Outlook - The report suggests that the U.S. economy remains resilient, supported by factors such as balance sheet recovery and accommodative monetary policy[4] - Risks include potential economic downturns, inflation pressures, and geopolitical conflicts that could exceed expectations[4]

Core Viewpoint - The U.S. non-farm payroll data is a critical indicator for the Federal Reserve's monetary policy, reflecting labor market health and influencing global asset pricing. The upcoming June data will further validate the cooling pace of the labor market and impact the Fed's interest rate expectations for September [2]. Labor Market Indicators - The unemployment rate stands at 4.2%, with non-farm payrolls showing an increase of 139,000 jobs in May, despite a downward revision of 95,000 jobs from previous data. The labor department's survey methods have raised concerns about data interpretation, particularly regarding potential overestimation of job creation [3][8]. - The market anticipates June non-farm payrolls to show an increase of 120,000 jobs, with a slight rise in the unemployment rate to 4.3%. Wage growth is expected to slow, with a month-on-month increase of 0.3% and a year-on-year increase of 3.8% [6][10]. Institutional Predictions - Goldman Sachs predicts an increase of 140,000 to 160,000 jobs for June, while Wells Fargo is more pessimistic, forecasting only 115,000 new jobs. The market median expectation is for an increase of 130,000 jobs [10]. - The disparity in predictions highlights differing views on the labor market's resilience, with some institutions emphasizing the impact of tariffs and government hiring freezes on employment [10]. Historical Data Review - Historical data shows a trend of slowing job growth, with March's initial figure at 228,000 jobs, revised down to 117,000 in April, and May's figure at 139,000. This indicates a pattern of deceleration in job growth, while wage growth remains relatively stable [8]. Market Impact and Strategies - The non-farm payroll data significantly influences the gold market, with expectations of job growth above 200,000 and an unemployment rate below 4.2% likely to strengthen the Fed's hawkish stance, negatively impacting gold prices. Conversely, lower job growth and a higher unemployment rate could boost expectations for rate cuts, benefiting gold [12][13]. - The upcoming ISM manufacturing PMI data is also crucial, as a rebound could alleviate recession concerns and positively correlate with non-farm payroll performance [15]. Key Events and Data - The Senate's vote on the "Big Beautiful Bill" and statements from Federal Reserve officials will be closely monitored, as they may provide insights into the Fed's stance on inflation and employment ahead of the non-farm payroll release [16][17].

Report Summary 1. Report Industry Investment Rating No information provided in the report. 2. Core Viewpoints of the Report - This week, domestic commodities continued to rebound, with most industrial products rising and agricultural products soaring. The main reasons were the large - scale conflict between Israel and Iran, the improvement of the Sino - US framework agreement, the resilience of the Chinese economy, and the lower - than - expected US inflation boosting the interest - rate cut expectation, which improved market risk appetite [3]. - Multiple factors may cause the commodity market to continue to rebound in the short term, including the Sino - US framework agreement, the improvement of the US economic outlook and the decline of inflation expectations, and the deterioration of the Middle - East situation [3]. 3. Summary of Each Section Overseas Situation Analysis - **Sino - US London Consultation Reached a Principle Agreement**: From June 9 - 10, the first meeting of the Sino - US economic and trade consultation mechanism was held in London. The two sides reached a principle agreement on implementing the consensus of the heads - of - state call and consolidating the results of the Geneva economic and trade talks. China's exports may still have a window period for "rush exports" before July, but the export growth rate may decline in the second half of the year [6][7]. - **US: May CPI Lower than Market Expectations**: In May, the overall CPI in the US rose 2.4% year - on - year and 0.1% month - on - month; the core CPI was flat at 2.8% year - on - year and rose only 0.1% month - on - month, for the fourth consecutive month lower than expected. After the data was released, the probability of the Fed cutting interest rates before September jumped to 75%, and the annual interest - rate cut expectation remained at about 45 basis points. It is believed that the probability of a soft landing of the US economy in recent years is still large, and the Fed may cut interest rates in the fourth quarter [10]. - **US: Confidence Index Rebounded and Inflation Expectation Declined**: In June, the preliminary value of the University of Michigan consumer confidence index was 60.5, a month - on - month increase of 15.9%. The 1 - year inflation expectation dropped to 5.1% from 6.6%, and the 5 - year inflation expectation slightly decreased to 4.1% from 4.2%. The suspension of tariffs and the decline of inflation expectations drove the confidence to rebound, but there are still concerns in the future [13]. - **Middle - East Situation Escalated**: On the early morning of June 13, Israel launched an attack on Iran. Iran launched a series of retaliatory actions. The global economy was shaken, with the Brent crude oil price soaring 8% to $94 per barrel, the global stock markets falling generally, and the gold price breaking through $3400 per ounce [16]. Domestic Situation Analysis - **Financial Data: Mixed Results**: In June, the new social financing was 228.94 billion yuan, with a growth rate of 8.7%. The new RMB loans were 620 billion yuan, with a growth rate of 7.1%. M2 increased 7.9% year - on - year, and M1 increased 2.3%. Overall, the government sector was still the main force of entity - sector financing. The central bank's actions to guide monetary easing and the expectation of restarting treasury bond trading may bring a favorable environment to the capital market [21]. - **Foreign Trade Data Interpretation: Exports Maintained Short - term Resilience**: In May, exports increased 4.8% year - on - year, and imports decreased 3.4% year - on - year. The decline in exports was affected by the weakening of "rush exports" and the high base, and the decline in imports was dragged down by the decline in commodity imports. In the short term, exports are expected to maintain a certain resilience, but there will be pressure in the second half of the year [24]. - **Policy Tracking**: The release of the "Opinions on Further Ensuring and Improving People's Livelihood" may bring development opportunities to multiple fields such as consumption and elderly care. The acceleration of the "one - old - and - one - young" policy may bring development opportunities to multiple industries, including the maternal and infant consumption, elderly care service, and related equipment industries [25]. High - Frequency Data Tracking - **Production End: Industrial Production was Generally Stable**: In the chemical industry, the production load remained stable, and product prices declined. In the steel industry, production declined slightly, and demand slowed down [34]. - **Demand End: Real - Estate Sales Increased Week - on - Week and Passenger - Car Retail Sales Increased Year - on - Year**: As of June 12, the commercial housing transaction area of 30 large and medium - sized cities increased 43.96% week - on - week. In the first week of June, the average daily retail sales of the national passenger - car market were 43,000 units, a year - on - year increase of 19% [41]. - **Price Trends**: As of June 13, most food prices fell this week. The average vegetable price decreased 0.05% month - on - month, the average pork price decreased 1.48% month - on - month, the agricultural product wholesale price 200 index decreased 0.25% month - on - month, and the fruit price decreased 2.01% month - on - month [42].

Core Viewpoint - The foreign exchange options market indicates a potential slowdown in the recent aggressive selling of the US dollar, despite the dollar index trading at a three-year low [1][4][6]. Group 1: Market Sentiment - The pessimism in the foreign exchange options market reached extreme levels in May, but signals of relative calm have emerged as the next Federal Reserve interest rate decision approaches [1][4]. - The Bloomberg Dollar Spot Index's risk reversal indicators for one-week and one-month terms have hit their lowest bearish points in over two months [1]. - Despite the recent calm, the dollar's spot price fell to its lowest since April 2022 due to confirmed moderate producer price inflation and limited cooling in the US labor market [4]. Group 2: Economic Indicators - Recent economic data, including non-farm payrolls and CPI/PPI, suggest that the US economy is showing unexpected resilience, leading to increased expectations of a "soft landing" and minimal changes in Fed rate cut expectations [6]. - The market anticipates only two rate cuts this year, which explains the retreat from extreme bearish positions in the foreign exchange market over the past two months [6]. Group 3: Long-term Outlook - Despite a temporary slowdown in selling pressure, the consensus on Wall Street remains that the dollar will continue to weaken, with projections indicating further declines through 2025 [9]. - Investment confidence in the US is perceived to be declining, with macro traders reassessing the US as a high-risk market due to tariff threats, softening data, and fiscal deficit concerns [10]. - Major investment firms, including Morgan Stanley, warn of significant depreciation of the dollar in the coming year, with predictions of a potential 9% drop in the dollar index [10].