Core Viewpoint - The report by Wells Fargo strategists indicates that once the debt ceiling issue is resolved and the Treasury releases a significant amount of short-term securities to rebuild its cash balance, the Secured Overnight Financing Rate (SOFR) is likely to be sustained at or above the federal funds rate by late 2025 [1] Group 1 - Wells Fargo's economic team anticipates that the debt ceiling resolution will occur before August 1, with a deadline (X-Date) around early September [1]

Group 1 - The core viewpoint is that President Trump and Senator Elizabeth Warren share a common stance on the debt ceiling issue [1]

Domestic News - The China Automobile Association reported that from January to May, China's automobile sales reached 12.748 million units, with new energy vehicles accounting for 44% of total sales [3] International News - Tensions in the Middle East have escalated, with Trump expressing reduced confidence in reaching an Iran nuclear deal, and Iran's defense minister stating that if negotiations fail, Iran will target U.S. military bases in the region [2] - International crude oil prices surged by 5%, and gold prices increased by over $20 amid the rising tensions [2] - The U.S. Customs total tax revenue reached a record $23 billion in May, with a year-on-year increase of nearly four times [2]

Report Industry Investment Ratings No information provided in the content. Core Views of the Report - The stock market risk appetite has gradually recovered, and it is recommended to go long on IH or IF stock index futures related to the economy, or IC or IM futures related to "new productive forces" on dips. The short - term bond market will fluctuate, and it is advisable to enter on dips. The silver price will continue to be strong. Most metal prices will show different trends of shock, and some agricultural product prices will also fluctuate. [4][6][7] Summary by Category Macro - Financial Stock Index - The previous trading day, the Shanghai Composite Index rose 0.43%, the ChiNext Index rose 1.07%, etc. The total turnover of the two markets was 1286.4 billion yuan, an increase of 134.4 billion yuan from the previous day. The CPI in May decreased by 0.2% month - on - month and 0.1% year - on - year. The PPI decreased by 0.4% month - on - month and 3.3% year - on - year. China's exports in May increased by 4.8% year - on - year, and imports decreased by 3.4%. [2] - The financing amount decreased by 3.116 billion yuan. The overnight Shibor rate rose 3.30bp to 1.411%. The 3 - year enterprise bond AA - level interest rate decreased 1.46bp to 2.9709%. The 10 - year treasury bond rate decreased 0.89bp to 1.6543%. The US 10 - year interest rate rose 11bp to 4.51%. [3] - It is recommended to go long on IF stock index futures on dips, and no arbitrage strategy is recommended. [4] Treasury Bond - On Monday, the TL main contract rose 0.35%, the T main contract rose 0.09%, etc. In May, the CPI decreased slightly, and the core CPI increased year - on - year. China's total import and export value in the first five months of 2025 increased by 2.5% year - on - year. [5] - The central bank conducted 173.8 billion yuan of 7 - day reverse repurchase operations, achieving a net investment of 173.8 billion yuan. The short - term bond market will fluctuate, and it is advisable to enter on dips. [6] Precious Metals - Shanghai gold rose 0.18%, Shanghai silver rose 2.07%. COMEX gold fell 0.24%, COMEX silver rose 0.45%. The US economic data is weakening, and the Fed's further interest rate cut is necessary, which will drive the silver price to be strong. [7] - It is recommended to maintain a long - term view on precious metals, and the silver price will be stronger. The reference operating range of Shanghai gold is 756 - 809 yuan/gram, and that of Shanghai silver is 8545 - 9500 yuan/kilogram. [8] Non - Ferrous Metals Copper - LME copper rose 1.01%, Shanghai copper closed at 79330 yuan/ton. The LME inventory decreased by 10000 tons, and the domestic social inventory was basically flat. China's copper imports in May decreased by 16.9% year - on - year. The copper price is expected to oscillate at a high level. [10] Aluminum - LME aluminum rose 1.28%, Shanghai aluminum closed at 20060 yuan/ton. The domestic aluminum inventory decreased, and the aluminum price is expected to rise limitedly. [11] Zinc - Shanghai zinc index fell 2.22%. The zinc ore is in surplus, and the zinc price may decline further if there is no production control. [12] Lead - Shanghai lead index fell 0.07%. The downstream consumption of lead is weakening, and the lead price is expected to be weak. [13] Nickel - Shanghai nickel fell 0.27%, LME nickel fell 0.81%. The nickel ore supply is tight, and the nickel price is expected to be short - term bullish but long - term bearish. [14] Tin - Shanghai tin rose 0.05%. The supply of tin ore may decrease, and the demand is weak. The tin price is expected to oscillate. [15] Carbonate Lithium - The spot index of carbonate lithium was flat, and the futures price rose 0.43%. The lithium salt production is high, and the price is expected to oscillate at the bottom. [16] Alumina - The alumina index fell 0.34%. The alumina production capacity is in surplus, and it is recommended to go short on rallies. [17] Stainless Steel - The stainless steel price fell 0.32%. The industry is facing high inventory and weak demand, and the price will be under pressure. [18] Black Building Materials Steel - The rebar price rose 0.201%, and the hot - rolled coil price rose 0.097%. The market is in the off - season, and the demand is weakening. [20][21] Iron Ore - The iron ore price fell 0.64%. The supply is increasing, and the demand is weakening. The ore price is expected to oscillate. [22] Glass and Soda Ash - The glass price fell, and the soda ash price is expected to be weak. The supply and demand of both are in a state of change. [23][24] Manganese Silicon and Ferrosilicon - Manganese silicon rose 0.25%, ferrosilicon rose 1.37%. Both are in a downward trend, and it is not recommended to buy on dips. [25] Industrial Silicon - The industrial silicon price rose 2.54%. The industry has over - capacity, and the price may fall further. [29] Energy and Chemicals Crude Oil - WTI, Brent, and INE crude oil all rose. It is recommended to wait and see in the short term. [33] Methanol - The methanol price rose. The supply is high, and the price may fall further. It is recommended to go short on rallies. [34] Urea - The urea price fell. The supply is high, and the demand is weak. It is recommended to wait and see. [35] PVC - The PVC price rose. The supply is strong, and the demand is weak. The price is expected to oscillate weakly. [36][37] Ethylene Glycol - The ethylene glycol price fell. The supply and demand are changing, and there is a risk of valuation adjustment. [38] PTA - The PTA price fell. The supply is in the maintenance season, and the price will continue to decline in inventory. [39] p - Xylene - The p - xylene price fell. The supply and demand will change, and the price will oscillate at the current valuation. [40][41] Polyethylene - The polyethylene price rose. The supply pressure will ease, and the price will oscillate. [42] Polypropylene - The polypropylene price rose. The supply will increase, and the price is expected to be bearish in June. [43] Agricultural Products Live Pigs - The pig price rose slightly. The demand is weak, and the price is expected to oscillate weakly in the near term and wait for short - selling opportunities in the far term. [45] Eggs - The egg price was mostly stable. The supply is increasing, and the price is expected to be short - term bearish. [46] Soybean and Rapeseed Meal - The US soybean price fell slightly. The domestic soybean meal supply is increasing, and the price is expected to oscillate. [47][48] Oils and Fats - The palm oil production and export are increasing. The oil price is expected to oscillate. [49][50][51] Sugar - The sugar price fell slightly. The international supply is increasing, and the domestic sugar price may weaken. [52][53] Cotton - The cotton price rose. The supply is decreasing, and the price is expected to oscillate in the short term. [54]

Group 1 - The overall sentiment in the precious metals market is mixed, with gold expected to experience a correction while silver shows potential for strength due to recent commodity rebounds and geopolitical tensions [1][2] - The expectation of a marginally accommodative monetary policy from the Federal Reserve is likely to support silver prices, with recommendations to maintain a bullish strategy in precious metals [1][2] - Technical indicators suggest that gold may face short-term corrections but still holds potential for upward movement, with support levels identified around $3300 to $3280 [3] Group 2 - The ongoing trade discussions between the U.S. and China have eased pessimism regarding the trade war, although uncertainty remains high in the macroeconomic environment [2] - Recent strong U.S. employment data has led to increased market speculation about a stronger dollar, which may negatively impact gold's appeal as a safe-haven asset [2][3] - The gold-silver ratio has shown signs of recovery, indicating a potential for silver to catch up after a period of divergence from gold prices [2]

Core Viewpoint - The article discusses the impact of recent geopolitical events, particularly involving Trump and the U.S.-China trade negotiations, on the U.S. stock market and outlines potential investment strategies moving forward [1][3]. Group 1: U.S.-China Relations and Market Impact - The U.S. stock market has seen stagnant returns since 2025, primarily due to the unrealistic valuations set before Trump's presidency being adjusted through EPS [3]. - The ongoing tariff negotiations have shifted from aggressive stances to more pragmatic approaches, with tariffs becoming less impactful on market dynamics [4]. - The recent U.S.-China economic discussions in the UK may provide short-term market boosts, especially regarding the potential removal of the 20% tariff on fentanyl [4][5]. Group 2: Domestic Economic Policies and Fiscal Challenges - Trump's domestic reforms have faced significant challenges, with the failure to effectively alter the balance of power within the U.S. government being a notable issue [5][6]. - The "Beautiful America" plan is expected to pass, but its implementation raises questions about fiscal requirements and potential impacts on capital markets [6]. - The U.S. Treasury's TGA account has seen a decline, indicating an urgent need for fiscal financing as it dropped below $400 billion, far from the necessary $800 billion baseline [7][8]. Group 3: Debt Ceiling and Market Reactions - The debt ceiling issue is projected to resurface in 2025, with critical deadlines approaching in July and August, which could lead to significant market volatility [10]. - Historical patterns suggest that budget adjustment bills typically involve raising the debt ceiling, which could lead to increased bond yields and market reactions [10][12]. - The current economic data presents a mixed picture, with soft indicators suggesting a recession while hard data remains robust, complicating the Federal Reserve's interest rate decisions [16]. Group 4: Investment Strategy and Portfolio Performance - The article suggests that the U.S. stock market may experience a correction following a period of bond issuance, particularly if the debt ceiling is raised without a corresponding interest rate cut [20]. - The Alpha Dolphin virtual portfolio has achieved an absolute return of 88% since its inception, outperforming the MSCI China index by the same margin [21]. - Recent stock performance in the portfolio has been influenced by the resumption of U.S.-China trade talks and the popularity of certain consumer brands, such as Pop Mart [23]. Group 5: Individual Stock Contributions - Pop Mart's stock rose by 11.1% due to strong product cycles and improved supply chain capabilities [24]. - TSMC's stock increased by 6.1%, maintaining a growth outlook despite tariff uncertainties [24]. - Tesla's stock saw a significant decline of 14.8% amid concerns over regulatory impacts from the ongoing conflict between Musk and Trump [24]. Group 6: Asset Allocation - The Alpha Dolphin portfolio is diversified, with a 52:48 ratio between equity assets and defensive assets like gold and U.S. Treasuries [25].

Core Viewpoint - Senator Warren calls for bipartisan tax legislation to permanently address the debt ceiling issue [1] Group 1 - The proposed legislation aims to provide a long-term solution to the recurring debt ceiling crisis [1] - Warren emphasizes the importance of bipartisan support for the legislation to ensure its passage [1] - The call for action reflects ongoing concerns about fiscal responsibility and government funding stability [1]

Group 1: USD Outlook - The USD index has shown a downward trend since the beginning of the year, primarily influenced by tariff policies, with a peak at 109 in early 2025 and a drop below 100 in April[1][7]. - Short-term fluctuations in the USD index are expected, with limited downward space before potential Fed rate cuts, while medium to long-term pressures include ongoing US debt issues, recession risks, and de-dollarization narratives[1][7]. - Key factors suppressing the USD include the continuous evolution of US debt issues, recession risks compounded by high interest rates, and the narrative of de-dollarization[1][7]. Group 2: HK Stock Market Strategy - Following a joint statement from China and the US on May 12, the Hang Seng Index rose nearly 3%, but the upward trend did not sustain, leading to a "wait and see" market attitude[2][10]. - Southbound capital inflows continue but at a slower pace, with over HKD 16.5 billion net inflow into the banking sector, while the technology sector faced a net outflow exceeding HKD 20.5 billion[2][10]. - The current valuation of the Hang Seng Index is slightly below pre-tariff levels, indicating a gradual recovery in market sentiment[2][10]. Group 3: US Economic Outlook - The outlook for the US economy remains unclear due to fluctuating tariff policies and their impact on inflation, with a potential rise in overall inflation post-tariff implementation[3][14]. - The US federal budget deficit for the first half of 2025 has exceeded USD 1.3 trillion, marking the second-highest deficit for a half-year period in history[3][14]. - The combination of rising interest rates and upcoming debt ceiling negotiations presents significant challenges for US fiscal policy in the latter half of 2025[3][14]. Group 4: US Stock Market Outlook - Major US indices have recovered from significant declines, reflecting investor confidence in the US economic fundamentals and policy adjustments[4][17]. - The anticipated tax cuts from the "Beautiful America Act" are expected to create structural opportunities in the US stock market, particularly benefiting traditional energy and local automotive sectors[4][17]. - Despite the challenges posed by fluctuating tariff policies, the US stock market is projected to exhibit a volatile upward trend in the second half of 2025[4][17]. Group 5: US Treasury Yield Trends - US long-term treasury yields have risen above 5%, with the 20-year and 30-year yields maintaining levels above 5.0% since late May[5][21]. - The increase in yields is attributed to the downgrade of the US credit rating by Moody's and concerns over the debt ceiling, which may lead to increased treasury supply and liquidity withdrawal[5][21]. - The expectation of delayed Fed rate cuts due to inflation concerns is likely to keep treasury yields elevated for an extended period[5][21].

Core Insights - The report discusses the recent rise in long-term US Treasury yields, with both 20-year and 30-year yields surpassing 5% and remaining above this level since late May 2023 [3][4][8] - The downgrade of the US credit rating by Moody's from Aaa to Aa1 on May 16 is identified as a primary factor contributing to the increase in yields, leading to a disappointing auction for 20-year bonds on May 21, where the final yield was 5.047%, up 24 basis points from April [4][6] - Concerns regarding the US debt ceiling have resurfaced, particularly following the passage of the "Beautiful Bill" on May 22, which allows for a $4 trillion increase in the debt ceiling, suggesting a return to expansionary fiscal policies [4][6][7] - Market fears of inflation and delayed interest rate cuts are also contributing to the sustained high yields, with the report indicating that the Federal Reserve's reluctance to lower rates could keep yields elevated for an extended period [8] Summary by Sections Recent Yield Trends - Long-term US Treasury yields have recently risen above 5%, with specific reference to the 20-year and 30-year bonds [3][5] - The yields have been influenced by a combination of credit rating downgrades, debt ceiling issues, and inflation concerns [4][8] Credit Rating Impact - The downgrade by Moody's has led to increased market volatility and higher yields, as all three major rating agencies have now rated US debt below the highest level [4][6] - The immediate effect was seen in the auction results, which reflected a significant increase in yield compared to previous months [4][6] Debt Ceiling Concerns - The passage of the "Beautiful Bill" has raised expectations of increased debt supply, which could further pressure yields upward [4][6][7] - Historical context is provided, noting that after previous debt ceiling resolutions, yields have tended to rise, indicating a potential pattern [6][7] Inflation and Interest Rate Outlook - The report highlights that inflation fears and the Fed's cautious stance on rate cuts are likely to maintain high yield levels [8] - The probability of a rate cut in June has dropped significantly, indicating a shift in market expectations regarding monetary policy [8][11]

Group 1: Tariff Adjustments - The US and China have significantly reduced extreme tariffs, with the US canceling 91% of tariffs and suspending 24%, while retaining a 10% base tariff[1] - The 10% tariff may serve as the lower limit for US tariffs on China, with potential adjustments ranging from 10% to 30%[1] - The suspension of the 24% tariffs is temporary, with a possibility of reactivation after 90 days[1] Group 2: Economic Implications - The reduction in tariffs is expected to alleviate risks for Chinese exports to the US, thereby stabilizing the economic outlook[1] - The trade negotiations are anticipated to positively impact A-shares and the overall market, with short-term boosts expected[1] - Long-term economic recovery may be accelerated by domestic monetary policies, benefiting export-oriented companies[1] Group 3: Risks and Considerations - Geopolitical risks, unexpected increases in international oil prices, and a weaker-than-expected US job market are potential risk factors[1] - The ongoing US debt ceiling issue complicates fiscal stability, making tariff revenue more critical than extreme tariffs[1] - The political pressure from midterm elections may influence further tariff adjustments by the Trump administration[1]