Macro Insights - Geopolitical factors are reshaping the global interest rate curve through a "safety" premium, indicating that the rise in long-term rates is a structural change driven by fiscal expansion for national security rather than mere cyclical fluctuations [5] - High inflation coupled with fiscal expansion has significantly weakened the traditional safe-haven attributes of bonds, with the macro narrative from Trump expected to dominate asset price fluctuations ahead of the U.S. midterm elections [5] Energy Sector - The core reason for the electricity shortage in the U.S. is the sustained increase in capital expenditure for data centers, leading to a mismatch between capital expenditure expectations, actual demand, and infrastructure capabilities [5] - The report analyzes the future electricity shortage levels in the U.S. under different scenarios and provides an in-depth analysis of the electricity landscape in regions with dense data center construction, such as ERCOT and PJM [5] - The electricity shortage issue is expected to enhance the demand for reliability in the power system, benefiting sectors like gas turbines, power equipment, and energy storage [5] Materials Sector - The price of rhenium powder has increased for two consecutive months, while prices for other materials such as cobalt, lithium hydroxide, and polysilicon have decreased [6] - Uranium prices have risen, indicating a potential shift in the nuclear power materials market [6] Hong Kong Market Strategy - The Hang Seng Technology Index has formed a "deeply oversold valuation pit" with four key characteristics, suggesting a significant optimization of risk-reward ratios and presenting a golden window for medium to long-term strategic allocation [7] - The recommendation is to prioritize the allocation of Hang Seng Technology ETFs, which encompass internet leaders, AI applications, and computing power across the board, focusing on core stocks with rapid commercialization, stable cash flow, and historically low valuations [7]

Core Viewpoint - Geopolitical factors are profoundly reshaping the global interest rate curve through a "security" premium, with the rise in long-term rates being a structural change driven by fiscal expansion for national security rather than simple cyclical fluctuations. High inflation-driven fiscal expansion has significantly weakened the traditional safe-haven characteristics of bonds. The macro narrative brought by Trump will continue to dominate asset price fluctuations ahead of the U.S. midterm elections, with RMB-denominated assets already showing "safe haven" attributes [4]. Group 1: Long-term Interest Rates - The synchronized rise in long-term interest rates across major economies is not merely driven by economic cycles but represents a structural shift under geopolitical fragmentation. Concerns over uncontrolled fiscal deficit expansion and tariff conflicts following Trump's "first hundred days" have led markets to reprice long-term inflation and sovereign credit risks [5]. Group 2: Pricing of Term Premium - The term premium is undergoing a paradigm shift, where national security, supply chain restructuring, and technological competition are replacing sovereign credit as the new anchor for long-term bond pricing. The "weaponization" of U.S. Treasuries has exposed the wave of "safety" for reserve assets, while competitive fiscal expansion, re-industrialization, and resource hoarding have completely disrupted the self-regulating supply-demand mechanism [6]. Group 3: Potential Disruption of Narratives - The current steepening of the interest rate curve began with Trump's inauguration on January 20, 2025, but the sustainability of this political momentum faces serious challenges from the midterm elections. If political momentum wanes, the "security premium" logic may weaken, leading to significant volatility in commodity and precious metal prices. However, narrative trading will still dominate the market in the first half of 2026, with caution advised for potential bidirectional fluctuations due to policy adjustments in the second half. In this context, RMB-denominated assets stand out as a "safe haven" due to robust fiscal discipline and stable currency value [7].

Group 1: Geopolitical Impact on Interest Rates - Geopolitical factors are reshaping the global yield curve through a "security" premium, with long-term rates rising due to structural changes in fiscal expansion for national security rather than cyclical fluctuations[1] - Major economies' long-term interest rates are rising in unison, driven by structural shifts from geopolitical tensions rather than simple economic cycles, with U.S. fiscal deficit concerns impacting market pricing for long-term inflation and sovereign credit risk[9] - The "safety" premium is being redefined, with national security and supply chain restructuring becoming new anchors for long-term bond pricing, replacing traditional sovereign credit considerations[1] Group 2: Economic Indicators and Trends - From January 20, 2025, to January 20, 2026, long-term bond yields for China, Japan, the U.S., and the Eurozone changed by +41bp, +149bp, +11bp, and +74bp respectively for 30-year bonds, indicating a significant upward trend[9] - The U.S. fiscal deficit has been expanding, with interest payments on federal revenue rising from an average of 15.07% (2015-2019) to 25.04% in 2025, highlighting increasing debt service burdens[20] - The U.S. economy is projected to grow at a stable rate of over 2% in 2025, with the IMF revising growth forecasts upward to 2.4% for 2026[64] Group 3: Risks and Market Dynamics - Potential risks include geopolitical crises escalating beyond expectations and U.S. economic performance weakening, which could lead to a decline in risk appetite[3] - The narrative surrounding U.S. fiscal policy may face challenges during the midterm elections, potentially destabilizing commodity and precious metal prices[2] - The market is currently experiencing a "K" shaped recovery, with disparities in economic performance leading to increased pressures on ordinary citizens, as evidenced by rising loan delinquency rates[62]