Report Industry Investment Rating - The investment rating for the US dollar bond and US stock industries is "Underperform the Market" [1][4] Core Viewpoints - Geopolitical disturbances reshape interest - rate cut expectations, and in the shadow of stagflation, a defensive approach is prioritized [1] - The US bond market is caught in a dual - game of macro - data verification and geopolitical shocks, leading to a significant shift in market policy bets [1] - The Fed faces a dilemma, and inflation expectations are the key variable in determining the future monetary policy [2] - It is recommended to adopt a defensive strategy, focus on short - term bonds, and wait for the geopolitical situation to become clear [3] Summary by Relevant Catalogs Macro - Game - The US bond market is deeply involved in the dual - game of macro - data verification and geopolitical shocks. Although the February CPI data met expectations, the surge in energy prices due to Middle - East geopolitical conflicts has increased concerns about secondary inflation and strengthened the expectation of core inflation stickiness [1] - Market policy bets have been significantly revised. The probability that the Fed will keep interest rates unchanged in March is nearly 100%, the expected mid - year interest - rate cut window has been postponed, the expected first interest - rate cut has been shifted from June to October or later, and the expected number of interest - rate cuts this year has been reduced from 2 - 3 times to only 1 time [1] Market Performance - The US bond yield curve shows a complex tug - of - war situation. The 10 - year US bond yield fluctuates between 4.1% - 4.3% [2] - High - interest rates, large fiscal deficits, and bond - issuing plans of the US government have made the supply - demand structure of long - term bonds tight, and the attractiveness of US bonds as a traditional safe - haven asset has been suppressed in the short term [2] - Unless geopolitical conflicts lead to a sharp increase in the risk of economic recession and trigger safe - haven buying, the US bond market is likely to maintain a pattern of high volatility and range - bound consolidation [2] Policy Outlook - The Fed will face a difficult choice between combating inflation and promoting growth at next week's meeting. It is expected to keep the federal funds rate in the 3.50% - 3.75% range and avoid making specific commitments about the future path [2] - The current rise in inflation expectations is mainly short - term, and long - term inflation expectations remain stable. The evolution of inflation expectations in the next few months will be the core variable in determining the shift of monetary policy [2] Investment Advice - The future market situation depends highly on the duration of the conflict. If the conflict is short - lived, inflation may resume its downward trend, providing conditions for the Fed to cut interest rates 1 - 2 times in the second half of this year. Otherwise, the high - interest - rate environment may last longer [3] - It is recommended to adopt a defensive strategy, strictly control the duration, take profit when the safe - haven demand surges, focus on 2 - 5 - year short - and medium - term bonds to obtain stable coupons and avoid the risk of sharp interest - rate fluctuations, and wait for the situation and inflation path to become clear [3] Market Trends (Not detailed in the given content, skipped) US Macro - Economy and Liquidity (Not detailed in the given content, only figure references provided, skipped) Exchange Rate (Not detailed in the given content, only figure references provided, skipped) Chinese - Issued US Dollar Bonds - The report shows the return trends of Chinese - issued US dollar bonds since 2023 (by level and industry), as well as the yield and spread trends of investment - grade and high - yield Chinese - issued US dollar bonds [63][71] - It also presents the returns in the past two weeks (by level and industry) [69] Rating Actions - In the past two weeks, the three major international rating agencies took 10 rating actions on Chinese - issued US dollar bond issuers, including 2 rating withdrawals, 5 rating upgrades, 2 rating downgrades, and 1 first - time rating [73]

Industry Insights - The U.S. software and IT services sector is focusing on client value creation, with leading companies emphasizing their competitive advantages in enterprise data, product deployment, and workflow governance [5] - There is a notable shift towards hybrid pricing models in application software, driven by the need to demonstrate value based on results [5] - Network security and infrastructure software are facing lower concerns regarding AI replacement, making them areas of focus for investment [5] Company Insights - Li Auto (LI US/2015 HK) reported a slight increase in gross margin to 17.8% for Q4 2025, exceeding expectations due to supplier rebates and strong performance from the i6 model [6] - The upcoming L9 model is critical for Li Auto's strategy, as its success may influence the positioning of future models like the L8 and L7 in a competitive SUV market [6] - Li Auto has revised its 2026 sales target down to approximately 490,000 units, reflecting challenges in inventory clearance and subsidy impacts, with expectations of a gross margin drop to around 5% in Q1 2025 [7][8]

Core Insights - The report discusses the current dynamics between the "Technology + Overseas" and "Resource" sectors, highlighting an inherent contradiction that may lead to a decisive outcome between AI technology and traditional resource commodities [2][3] - The report emphasizes that the ongoing geopolitical tensions, particularly the military conflict between the US and Iran, have led to a surge in oil prices, disrupting the previously balanced relationship between the two sectors [2][3] - It suggests that the current "HALO" trading strategy, which is based on AI technology's creative destruction, may lead to a disconnection between asset values and fundamentals, driven by emotions rather than cash flow [3][4] Summary by Sections Current Market Dynamics - The report notes that the "Technology + Overseas" sector has recently faced challenges, with the rise in oil prices contributing to a narrative of "secondary inflation" that disrupts the previous balance with resource sectors [2][3] - It highlights that the current market is characterized by a shift from growth chasing to embracing certainty and scarcity, particularly in sectors less likely to be replaced by AI [7] HALO and TACO Trading Strategies - "HALO" trading is defined as a strategy focusing on heavy assets and low obsolescence, which seeks to hedge against uncertainties exacerbated by geopolitical tensions [7] - "TACO" trading, originating from Trump's tariff policies, is viewed as a short-term trading strategy that capitalizes on market volatility and is expected to lead to a recovery in oil prices, which could benefit the "Technology + Overseas" sector [4][7] Future Outlook - The report concludes that 2026 will not be a year dominated by either technology or cyclical sectors, but rather a period of coexistence, termed "New and Old Dance Together," emphasizing the importance of balanced portfolio management [4][15] - It identifies four key sectors for investment: non-ferrous resources, cyclical chemicals, AI applications, and overseas engineering machinery, advocating for a strategy that balances these sectors [4][15]

Key Insights - The report highlights a significant decline in U.S. non-farm employment, with February showing a decrease of 92,000 jobs, which is far below the expected increase of 59,000 jobs. This decline indicates a weakening trend in job creation capacity, even when excluding temporary factors like weather and government shutdowns [4][11][20]. - The unemployment rate has slightly increased to 4.44%, up by 0.16 percentage points from January, with a notable drop in labor force participation and employment rates, raising concerns about the labor market's health [12][22]. - Inflation expectations are rising due to high oil prices, with the potential for a "second inflation" scenario if the conflict in Iran continues, which could push global inflation rates back up to 6% or 7% from 4.1% in 2025 [14][15]. Group 1: Employment Data - The U.S. non-farm payrolls saw a significant drop, with a three-month moving average of only 6,000 jobs added, indicating a persistent weakening in job creation [11][20]. - The private sector also experienced job losses, with a reduction of 86,000 jobs in February, particularly in the goods-producing and service sectors [11][20]. - The labor force participation rate fell to 62.0%, the lowest since the pandemic recovery began, with a reduction of nearly 1.4 million in the labor force population [12][22]. Group 2: Inflation and Economic Outlook - The report notes that average hourly earnings increased by 3.84% year-on-year, indicating wage rigidity despite job losses, which may contribute to rising living costs [13][24]. - If oil prices remain between $80 and $100 per barrel, global inflation could rise by 2-3 percentage points, significantly impacting economic stability [15][14]. - The Federal Reserve's monetary policy path is under scrutiny, with expectations for potential interest rate cuts later in the year, influenced by the ongoing inflation concerns [15][14]. Group 3: European Economic Indicators - The Eurozone's GDP for Q4 was revised down to a growth of 0.2%, with contributions from fixed investment and household consumption being lower than previously estimated [31]. - The Eurozone's CPI unexpectedly rose to 1.9% year-on-year, surpassing expectations, indicating inflationary pressures in the region [33]. - Retail sales in the Eurozone showed a slight decline, with January figures reflecting a seasonally adjusted decrease of 0.1% [35].

Economic Factors - Ongoing conflict in the Strait of Hormuz is expected to push oil prices higher, exacerbating inflation concerns in the U.S.[1] - A 10% increase in oil prices could lead to a 0.15% rise in U.S. CPI and a 0.06% rise in core CPI within the first year[1] - High oil prices may hinder the new Federal Reserve Chair's ability to justify interest rate cuts, potentially leading to rate hikes to control inflation[1] Political Factors - Long-term military actions in the Middle East contradict Trump's "America First" promise, risking domestic voter support[1] - Recent polls show 43% of Americans oppose military action against Iran, with only 27% in support[1] - If military actions lead to rising oil prices, only 18% of respondents would still support such actions[1] Legal Factors - Deploying ground troops would classify as an act of war, requiring Congressional authorization under the War Powers Resolution[2] - Current Republican majority in Congress may face challenges due to internal dissent regarding military actions[2] Strategic Outlook - The conflict is anticipated to last approximately 4 weeks, with potential risks from Iran's new leadership and Israel's hostile stance towards Iran[1] - Market expectations for a ceasefire by April 30 are at 56%, with a 70% probability by June 30[1] - The geopolitical situation remains uncertain, with risks of prolonged conflict due to Iran's new leadership and Israel's aggressive policies[1]

Core Conclusions - The trend in 2026 is entering an acceleration phase due to the "three invariants" during the Kondratiev depression period [2] - The direction of RMB appreciation remains unchanged, with adjustments mainly in the pace of appreciation [13][14] - Global secondary inflation is inevitable, driven by factors beyond consumer support [24][29] - The logic of the commodity supercycle is accelerating due to geopolitical tensions and strategic stockpiling [32][33] Group 1: RMB Appreciation - The offshore RMB exchange rate has reached new highs, indicating accelerated cross-border capital inflows [13] - The central bank's adjustments focus on the slope rather than the direction of the exchange rate [14] - Historical data suggests that similar regulatory policies have limited impact on long-term exchange rate trends [14][18] Group 2: Global Secondary Inflation - The market's expectation of a "soft landing" is merely a short-term illusion, with secondary inflation being unavoidable [24] - The January PPI data in the US exceeded expectations, indicating inflation driven by core goods and trade rather than consumer spending [24][25] - The correlation between PPI and effective exchange rates has strengthened since 2022, suggesting a more robust inflationary trend [29][30] Group 3: Commodity Supercycle - Geopolitical risks are driving demand for strategic stockpiling, marking the acceleration of the commodity supercycle [32] - Historical patterns indicate that during wartime, credit currencies depreciate rapidly, leading to significant increases in commodity prices [33] - The current geopolitical landscape is reminiscent of past commodity cycles, emphasizing the importance of physical asset allocation [33][34] Group 4: Dollar Tides in the Kondratiev Depression - The "three invariants" suggest that the trend in 2026 is not a turning point but an acceleration [38] - The dollar's influence has shifted through various phases, with the current phase favoring US assets due to AI-driven capital inflows [38][39] - The commodity supercycle is expected to expand, with A-shares potentially outperforming US stocks as liquidity issues arise in the latter [39] Group 5: Embracing the Commodity Supercycle - The year 2026 is anticipated to witness a wave of prosperity for "catch-up" countries, driven by moderate inflation and improving profits [43] - Investment strategies should focus on sectors benefiting from the commodity supercycle, including refining, precious metals, and coal [43]

1. Report Industry Investment Rating - Not provided in the document. 2. Core View of the Report - Since mid-December 2025, the black commodity sector has shown a pattern where coking and steel mill profits on the futures market have been compressed. The prices of coking coal and iron ore have increased more, while finished steel products and coke have followed. The key factors are the expectation and realization of the bottoming - out and rebound of hot metal production, the strong performance of non - ferrous metals, and news of coal mine production capacity contraction. After the New Year's Day, the raw material supply - demand situation has improved, and coking coal inventory accumulation has slowed down, entering a state of "raw material valuation repair"[8][9]. 3. Summary by Relevant Catalogs 3.1 Market Review - Since the report on October 21st, the black sector has seen compressed coking and steel mill profits on the futures market. Before January, the black market was in a situation of weak steel demand, declining hot metal production, and a loose raw material supply - demand pattern, with continuous inventory accumulation of coking coal as the core trading point. After the New Year's Day, hot metal production rebounded as expected, and the supply - demand situation of raw materials improved, with coking coal inventory accumulation slowing down. The strong performance of non - ferrous metals and equity assets also led to an optimistic sentiment spill - over, driving the rebound of low - price varieties[8][9]. 3.2 Coking Coal Delivery - The delivery volume of jm2601 was the second - largest in 2025, second only to jm2505. More futures companies participated in the delivery, especially on the receiving side. The delivery parties were still mainly concentrated in Guotai Junan Futures, CITIC Futures, and Donghai Futures. The increasing activity of coking coal delivery participants is a positive development trend for the effectiveness of coking coal monthly spread and basis pricing, reflecting the essence of financial services for the real economy[11][12][13]. 3.3 Reality of Double Coking (Coking Coal and Coke) - **Weekly Coking Coal Supply**: Domestic mines' production has recovered, while the growth of external supply has slowed down[16]. - **Coking Coal Inventory**: The pattern of coking coal inventory accumulation continues, but the amplitude has slowed down, and the inventory is still concentrated in the mid - stream[21]. - **Coke Inventory**: Coke has turned to de - stocking, and the number of available days is at a neutral level[28]. - **Direct Demand for Double Coking since New Year's Day**: The negative growth of direct demand for double coking has narrowed[34]. 3.4 Coking Coal Inventory in January - **Import Profit Compression**: The import profit of coking coal has been compressed, and the future arrival of overseas coking coal is expected to decrease[43]. - **Expected Increase in Hot Metal**: Hot metal production is expected to continue to rise[55]. - **Steel Demand**: Steel demand is hard to be optimistic, but it should not be overly pessimistic. If domestic mine production decreases seasonally and imports decline, coking coal inventory accumulation may slow down[57][61].

Group 1 - The article discusses the completion of a full fiscal, monetary, and economic cycle in the U.S. since 2020, questioning whether the stock market will thrive in the new cycle starting in 2026 [1] - The U.S. economy's growth over the past few years has been driven by debt expansion and increased productivity due to AI, but the efficiency of debt-driven growth appears to be declining [6] - By 2025, the U.S. national debt is projected to reach approximately $32 trillion, with a macro debt ratio of 257%, indicating a structural increase compared to pre-pandemic levels [1][6] Group 2 - In 2026, the Federal Reserve is expected to adopt a "fiscalized" approach, releasing short-term liquidity to address tightening conditions in the banking system [7] - The U.S. Treasury is projected to issue around $2 trillion in net debt in 2026, corresponding to a fiscal deficit of approximately $2 trillion and a need for liquidity support from the Federal Reserve [9] - The long-term bond market is expected to remain under pressure with rates above 4%, while short-term debt instruments may become more attractive due to favorable rates [11][14] Group 3 - The Federal Reserve may continue to lower interest rates and implement "small-scale quantitative easing" to support the financing needs of the Treasury, particularly in light of the "Beautiful America" plan [14][15] - The economic growth in 2026 is anticipated to be driven by a combination of government debt and private sector AI investment, leading to a scenario of a depreciating dollar and inflationary pressures [15]

Core Viewpoint - The recent sharp decline in precious metal prices, including gold and silver, has caused significant panic among investors, driven by increased margin requirements and market speculation [1][4][5]. Price Decline Analysis - The primary trigger for the price drop was the CME Group's decision to raise margin requirements for gold and silver contracts, significantly increasing trading costs for investors [4]. - Prior to the decline, precious metals had experienced substantial price increases, with silver rising by 173% and gold by over 71% since 2025, creating a speculative bubble that was unsustainable [5]. - Market rumors regarding a major bank's potential default due to silver futures positions further exacerbated investor panic, leading to increased selling pressure [6]. Impact on Market Participants - Investors faced severe asset losses, particularly those who bought at high prices, with many accounts experiencing significant reductions in value [8]. - The decline in precious metal prices triggered a domino effect in financial markets, leading to sharp declines in mining company stocks and related ETFs, as well as broader impacts on major stock indices like the S&P 500 and Nasdaq [9]. - The volatility in precious metal prices has raised concerns about macroeconomic expectations, with fears of inflation control and potential deflation affecting market confidence [10]. Future Outlook and Investment Recommendations - Experts suggest that precious metal prices may experience further fluctuations, with potential for excess returns in 2026 due to factors such as a weakening dollar and increased demand for industrial silver [11]. - However, there are warnings about the current overbought conditions in silver, which may lead to a rapid correction or prolonged consolidation [11]. - Investors are advised to maintain a diversified asset allocation strategy and to stay informed about macroeconomic indicators and central bank policies that could influence precious metal prices [12].

Core Viewpoint - The report from Zhongyou Securities indicates that gold is expected to be the standout performer in 2025, driven by a shift from U.S. Treasury bonds. Gold prices are currently stable above $4,000 per ounce, while silver has seen a higher percentage increase compared to gold due to liquidity factors [1]. Group 1: 2025 Market Outlook for Precious Metals - The precious metals market in 2025 is anticipated to unfold in two phases: the first phase involves a diversified asset allocation driven by tariff expectations from the Trump administration, leading to a correlation between U.S. Treasury yields and gold prices, with London gold surpassing $3,500 per ounce in April 2025 [2]. - In the second phase, starting in mid-August, a rate cut cycle is expected as the market begins to price in the Federal Reserve's rate cuts, resulting in significant inflows into Western gold ETFs. During this phase, gold is projected to break through $4,300 per ounce, setting a new historical high, while silver is expected to exceed $55 per ounce, outperforming gold and leading to a decrease in the gold-silver ratio [2]. Group 2: 2026 Market Outlook for Gold - The outlook for gold in 2026 suggests continued upward momentum, potentially exceeding expectations due to several factors: the perceived weakening of U.S. dollar credibility following the U.S. National Security Strategy report, which acknowledges the limitations of U.S. power in a multipolar world, thereby reinforcing gold's role as an alternative to U.S. Treasury bonds [3]. - The likelihood of secondary inflation is increasing, with expectations of further rate cuts from the Federal Reserve, which could drive up gold prices as inflation metrics rise alongside persistently high long-term Treasury yields [3]. - Historical trends indicate that following rate cuts, there is typically an influx into ETFs in the U.S. and Europe, which, combined with dovish expectations and the Fed's balance sheet expansion, is likely to encourage continued investment in gold ETFs [3]. Group 3: 2026 Market Outlook for Silver - Silver is expected to continue its upward trajectory in 2026, primarily due to its supply-demand imbalance, which has persisted for five consecutive years, making it potentially stronger than copper despite a large existing market [4]. - The anticipated rate cuts from the Federal Reserve are expected to drive silver prices higher, as the metal has shown greater elasticity in response to market conditions, particularly following its outperformance against gold after April 2025 [4]. - Continuous supply shortages are likely to create tension in the physical market, with some countries considering silver as a reserve asset, thereby enhancing its monetary attributes and increasing its investment value [4].