Market Overview - On the first day of China's holiday, global markets experienced a rally, with U.S. stocks rising across the board and the dollar index surpassing the 100 level, while Bitcoin approached the $100,000 mark. In contrast, gold prices fell nearly $90, testing the $3,200 level. This indicates that the Chinese market missed out on a significant upward movement due to a global risk appetite recovery linked to China [1]. U.S.-China Trade Relations - President Trump expressed a high likelihood of reaching an agreement with China. The White House's National Economic Council Director Hassett also conveyed optimism regarding progress on tariff issues. Reports indicated that the U.S. has been proactively engaging with China through various channels to negotiate tariff matters [2][3]. - Despite the positive sentiment, U.S. stock market movements suggested that the market had already priced in improvements in U.S.-China trade relations. Initial gains were followed by a gradual pullback, indicating a developing "news immunity" as the market became less responsive to repeated positive signals from Trump [3]. Interest Rate Expectations - A concerning development emerged as the market began to realize that expectations for a Federal Reserve rate cut may have been overly optimistic. The probability of a rate cut in June dropped to 58% from 68%. Recent data showed a significant increase in initial jobless claims and a decline in the ISM manufacturing PMI, which should have reinforced the necessity for a rate cut. If the market fully unwinds its rate cut bets, liquidity could tighten rapidly, increasing funding costs and exerting pressure on the stock market, credit markets, and emerging markets [3].