Core Viewpoint - The risk of stagflation in the U.S. economy is re-emerging, with inflation expected to rise and economic growth slowing down in the second half of the year. The Federal Reserve is likely to be cautious regarding interest rate cuts, which may occur later and be smaller than market expectations [2][3]. Group 1: Causes of Rising Inflation - The impact of tariffs is not fully realized yet, as U.S. companies imported significantly in the first quarter to avoid high tariffs, leading to high inventory levels. Once these inventories are depleted, companies will need to import again, potentially passing on tariff costs to consumers [4]. - Stricter immigration policies have led to labor shortages in key sectors such as construction, agriculture, and elder care, which may drive up wage levels and contribute to inflationary pressures [4]. - Moderate fiscal policies are expected to contribute 0.4 to 0.5 percentage points to GDP growth in the next 12 months, increasing inflation risks [4]. Group 2: Economic Growth Projections - U.S. GDP growth is projected to be below trend levels, with estimates of 1.3% for this year and 1.2% for next year [5]. Group 3: Long-term Fiscal Concerns - The rapid passage of the "Big and Beautiful" bill, which makes the 2017 temporary personal income tax cuts permanent, is expected to increase the budget deficit by over $3 trillion in the next decade. This level of fiscal stimulus is unusual given the already low unemployment rate [8]. - The U.S. government debt has reached about 100% of GDP, with interest payments consuming 3% to 4% of GDP, which is unsustainable. The buyer structure of U.S. debt has shifted, with foreign central banks reducing their purchases, leading to increased volatility in bond yields [8]. - Long-term solutions to the debt issue may require fiscal consolidation, which could involve spending cuts, tax increases, or new tax sources. Alternatively, forced purchases of more government bonds or quantitative easing by the Federal Reserve could lead to inflation [8]. Group 4: Global Economic Outlook - Outside the U.S., other regions are expected to experience slower growth but easing inflation, providing more room for central banks to cut rates. Asian exports are anticipated to decline further in the second half of the year, while Germany's fiscal and infrastructure spending may take time to support economic growth [9]. - The Nomura team holds a "soft dollar" stance due to stagflation pressures in the U.S., despite current interest rate differentials favoring the U.S. The dollar is considered significantly overvalued, and the persistent trade deficit will constrain its performance [9]. Group 5: Monetary Policy Uncertainty - The potential for the Federal Reserve to maintain low interest rates could lead to rising inflation, causing foreign investors to lose confidence in U.S. assets, which may result in higher long-term interest rates and a weaker dollar [11]. - The possibility of appointing a "shadow Federal Reserve Chair" by Trump could create additional uncertainty in monetary policy, complicating the current Fed Chair Powell's role and the FOMC's decision-making process [11].

Group 1 - The French government aims to save €43.8 billion by 2026 and reduce the budget deficit to 4.6% of GDP as part of a long-term fiscal consolidation plan [1][2] - The plan includes a "stop debt" initiative to gradually balance the debt over four years, targeting a deficit of 2.8% of GDP by 2029, in line with EU regulations [1][2] - The government plans to cut 3,000 public sector jobs, with 1,000 to 1,500 positions being eliminated from ineffective state institutions [1][2] Group 2 - In social spending, 2026 is designated as a "blank year," freezing annual increases in social welfare and pensions to save approximately €7 billion [2] - The government intends to halve the increase in healthcare spending to €5 billion, with changes to patient drug reimbursement policies [2] - The current public debt-to-GDP ratio stands at 114% as of Q1 2025, with a projected deficit of 5.8% of GDP for 2024 [2]

Core Viewpoint - The report from ING analysts indicates that if French Prime Minister Borne fails to implement spending cuts to reduce the budget deficit, the euro may face downward pressure [1] Group 1: Spending Cuts and Budget Deficit - Prime Minister Borne is expected to announce a plan to cut spending by €40 billion in an upcoming fiscal consolidation plan [1] - The failure of the spending cut plan could negatively impact local fixed income products and the foreign exchange market, similar to recent events in the UK [1] Group 2: Market Reactions - Recent policy reversals by the UK government regarding welfare reforms have raised new concerns about its fiscal situation, leading to significant declines in UK government bonds and the pound [1]

Core Insights - The UK government has reversed its plan to cut welfare benefits, highlighting the significant challenges faced in fiscal consolidation [1] - The success of the broader plan to control public spending remains uncertain [1]

Core Viewpoint - Fitch Ratings indicates that Pakistan's budget reflects progress in fiscal consolidation [1] Group 1 - The budget demonstrates improvements in revenue collection and expenditure management [1] - Fiscal measures are aimed at reducing the budget deficit and enhancing economic stability [1] - The government is focusing on structural reforms to support long-term fiscal health [1]

Group 1 - The Japanese government advisory panel urges authorities to intensify fiscal consolidation efforts due to rising debt repayment costs exacerbated by the Bank of Japan's ongoing monetary tightening actions [1] - The Fiscal System Council warns that the Bank of Japan's interest rate hikes and reduction in bond purchases are leading to a steady increase in government bond yields, necessitating greater attention to Japan's fiscal situation [1] - The council emphasizes the need for urgent fiscal management to prevent rising debt costs from crowding out essential policy expenditures [1]

这位BIS总经理的警告正值美国、日本、欧州债券收益率持续攀升之际——市场普遍预期这些政府将通 过扩大债务融资来增加支出。 卡斯滕斯强调，若政府债务违约，可能引发全球金融体系动荡并威胁货币稳定，因为央行可能被迫为政 府债务融资，导致"财政支配货币政策"的困局。"其后果将是通胀攀升与汇率急剧贬值。基于这些风 险，财政当局遏制公共债务攀升已刻不容缓。" 国际清算银行（BIS）总经理卡斯滕斯（Agustin Carstens）周二在日本央行主办的东京会议上发出严厉 警告：随着利率攀升导致部分国家财政路径不可持续，全球各国政府必须遏制公共债务的"无休止"增 长。 卡斯滕斯指出，全球金融危机后的长期低利率环境曾让巨额赤字和高负债显得"可以承受"，使得财政当 局能够回避削减开支或增税等艰难抉择。然而，"超低利率时代已经结束。在公众对政府承诺的信任开 始动摇之前，财政当局整顿财政的窗口期非常短暂。" 他警告称，"市场已逐渐意识到，某些财政路径根本不可持续。面对巨大的财政失衡，金融市场可能突 然失稳。"因此，他强调，"多数经济体必须立即启动财政整顿，敷衍应对已行不通。" 作为"央行的央行"，BIS致力于促进各国央行间货币与财政 ...

Core Viewpoint - The General Manager of the Bank for International Settlements, Carstens, emphasizes the critical importance of fiscal authorities curbing the ongoing growth of public debt as the era of ultra-low interest rates comes to an end [1] Group 1 - Fiscal authorities have a narrow window to improve fiscal conditions before public trust in their commitments begins to wane [1] - There should be no expectation that central banks can stabilize inflation in a short time frame and within a limited scope [1]

Group 1 - The era of ultra-low interest rates has ended, indicating a shift in monetary policy dynamics [1] - Fiscal authorities must act to curb the rising public debt, which is becoming increasingly critical [1] - Public trust in the commitments made by fiscal authorities is beginning to wane, highlighting the need for accountability [1]

Group 1: Conflict Overview - The India-Pakistan conflict escalated unexpectedly but ended with a comprehensive ceasefire agreement on May 10, 2023, after intense military exchanges [1][3][4] - The ceasefire was announced by both countries' officials, with military communication established to facilitate the agreement [3][4] - Despite the ceasefire, small-scale skirmishes continued in the border regions shortly after the announcement [3][4] Group 2: Military Actions - Prior to the ceasefire, India launched missile strikes on three military bases in Pakistan, marking a rare direct attack near the capital Islamabad [4][6] - In retaliation, Pakistan initiated a military operation targeting over 20 Indian military sites and claimed to disrupt 70% of India's power grid, although this was later contested [6][10] - The military actions and subsequent ceasefire negotiations highlight the precarious balance of power and the potential for escalation between the two nuclear-armed nations [8][10] Group 3: Economic Implications - The ongoing conflict poses significant risks to both countries' economies, with potential negative impacts on Pakistan's growth and fiscal stability, especially after recent IMF support [10][11] - India's economic growth is also at risk, with projections indicating a decline from 8.2% to 6.4% in the upcoming fiscal year due to the conflict and other external factors [11] - The situation underscores the importance of economic stability as a deterrent against further military escalation, as both nations are at critical junctures in their economic development [10][11] Group 4: Diplomatic Efforts - Multiple countries, including China and Saudi Arabia, are involved in diplomatic efforts to mediate the conflict, emphasizing the international community's interest in regional stability [8][10] - The involvement of over 30 countries in diplomatic negotiations indicates a broad recognition of the potential consequences of a prolonged conflict between two nuclear powers [8]