Global Liquidity Overview - Global liquidity remains tight, with the M2 money supply growth rate near historical lows, indicating a constrained liquidity environment[1] - The strength of the US dollar significantly influences global liquidity trends, following a cyclical pattern every 4-5 years[1] US Dollar Liquidity Analysis - Current indicators show that US dollar liquidity is generally tight, but there is no immediate risk of liquidity shocks[2] - The net liquidity in the US financial system has tightened since 2021, remaining below the long-term trend line, suggesting a constrained liquidity scale[2] - As of May 9, 2025, the 2-year and 10-year US Treasury yields are at 3.88% and 4.37%, respectively, both at historically high levels[2] Future Liquidity Projections - A weaker dollar trend is expected to lead to a loosening of global liquidity, driven by the need to balance fiscal policies and reduce trade deficits[3] - The Federal Reserve is anticipated to restart interest rate cuts in the second half of the year, which would lower dollar interest rates and promote looser global liquidity conditions[3] A-Share Market Valuation - The loosening of global liquidity is likely to benefit global risk assets, particularly non-US assets that have been under pressure due to a strong dollar[5] - The nominal growth rate difference between China and the US has narrowed significantly from 6.6% in Q2 2022 to just 0.1% in Q1 2025, enhancing the relative value of Chinese assets[7] - The "stock-bond yield spread" model indicates that the current A-share market offers attractive investment opportunities, with a yield spread of approximately 4.3%, suggesting high configuration value[8]

Core Viewpoint - The recent volatility in the gold market is driven by various factors, including U.S. economic data and geopolitical tensions, highlighting the importance of maintaining a long-term investment perspective in the face of short-term fluctuations [3][4]. Market Dynamics - Gold serves as both a safe-haven asset and a barometer for the U.S. dollar, with recent price movements reflecting the tug-of-war between positive U.S. economic indicators and concerns over financial stability [3]. - Strong employment data in the U.S. raised expectations for continued interest rate hikes by the Federal Reserve, leading to a temporary decline in gold prices due to increased opportunity costs associated with holding gold [3]. - Subsequent concerns about the U.S. banking system and ongoing geopolitical issues in regions like the Middle East and Eastern Europe reignited demand for gold as a safe-haven asset, causing price fluctuations [3]. Long-term Investment Perspective - The current economic environment remains uncertain, with debates over whether the global economy is experiencing a "soft landing" or a "hard landing," making gold's role as a hedge against uncertainty particularly relevant [4]. - Historically, gold prices tend to rise as the Federal Reserve approaches the end of its interest rate hike cycles, suggesting potential long-term investment opportunities in gold [4]. - Investors are encouraged to focus on two key factors: the trajectory of U.S. real interest rates, which influences gold's mid-term valuation, and the evolving global geopolitical and economic landscape, which affects long-term demand for gold [4].

Global Monetary Policy Tracking - The core viewpoint indicates that major central banks are maintaining their current interest rates amidst increasing uncertainty regarding tariffs, with only the European Central Bank (ECB) implementing a rate cut [2][14] - In the observation period from February 8 to March 23, 2025, among 26 major economies, 7 experienced rate cuts and 1 an increase, while the US, Japan, and the UK kept rates unchanged [2][19] - The Federal Reserve maintained its target federal funds rate at 4.25%-4.50%, reflecting a cautious stance due to heightened economic uncertainty [13][19] Global Rate Cut Expectations - The Federal Reserve's rate cut expectations have fluctuated significantly, with market predictions for a potential cut in May reaching around 50% due to economic indicators falling short of expectations [3][19] - Following the release of better-than-expected employment and inflation data in mid-March, the likelihood of a rate cut in May dropped to approximately 20% [3][19] - The European and UK rate cut expectations remain relatively stable, with a 60% probability of a cut in the Eurozone by April 2025 [19] China's Interest Rate Position - China's real interest rates rebounded from 2.2% in January to a range of 3%-3.1% in February-March 2025, positioning it among the highest globally [4][28] - The increase in real interest rates is attributed to the seasonal effects of inflation dissipating post-Spring Festival [4][28] Global Liquidity Tracking - The Federal Reserve decided to slow down its balance sheet reduction, primarily due to disturbances in the Treasury General Account (TGA) caused by the debt ceiling issue [5][33] - As of March 19, 2025, the Fed's reserve balance expanded by approximately $68.3 billion, despite a total balance sheet reduction of $2.04 trillion [5][34] - The liquidity in the repurchase market has returned to a more relaxed state, with the SOFR-EFFR spread turning negative, indicating improved liquidity conditions [8][41] Global Financial Market Liquidity - The liquidity in the US Treasury market has shown increased volatility, but the market remains stable without significant liquidity risks [10][47] - The Libor-OIS spread has widened, indicating a slight increase in liquidity premium, although it has not reached alarming levels [11][50] - Credit risk premiums have seen a slight increase since March 2025, influenced by rising geopolitical uncertainties and tariff concerns [12][53]