Core Insights - The December Core CPI increased by 0.24%, slightly below Citigroup's forecast of 0.27% and market consensus of 0.3%, indicating a potential slowdown in inflationary pressures by 2026 [1][2] - The overall weak trend in inflation data supports market expectations for a more accommodative monetary policy from the Federal Reserve, with Citigroup economists predicting rate cuts in March, July, and September [1][2] Inflation Data Analysis - Core goods prices remained flat in December, with used car prices dropping by 1.1%, offsetting modest increases in furniture (up 0.5%) and clothing (up 0.6%) [2] - Housing inflation showed slight increases, with primary rent and Owner's Equivalent Rent (OER) rising by 0.26% and 0.31%, respectively, while hotel accommodation prices surged by 2.9% [2] Data Collection Issues - The December data is described as "somewhat abnormal and difficult to interpret" due to data collection issues stemming from the government shutdown, which affected the accuracy of CPI data for October and November [3] - The use of carry-forward imputation in previous months led to downward bias in inflation, resulting in a mechanical rebound in December, particularly affecting prices of clothing and furniture [3] Service Prices Performance - Core service prices, excluding housing, exhibited mixed performance with significant volatility; medical services rose by 0.4%, entertainment services surged by 1.8%, and airfares increased by 5.2% [4] - These increases were countered by declines in education and communication prices, which fell by 0.8%, and personal services prices decreased by 0.2% [4]

Group 1 - The core focus of the upcoming 2026 midterm elections will revolve around "pricing" issues, as stated by Trump, who believes that the American public will support his economic claims regarding the management of inflation inherited from the previous administration [1] - Recent favorable economic reports indicate a cooling of inflation and better-than-expected economic performance, which the White House is eager to promote amidst concerns over living costs reflected in recent polling data [1][2] - A significant GDP growth rate of 4.3% for the third quarter has provided Trump with positive talking points, reinforcing his narrative that the Democratic Party is struggling with public perception [2] Group 2 - Trump has repeatedly attempted to redefine the affordability issue, attributing rising prices to the Biden administration while claiming that his policies are leading to price reductions [2] - The latest consumer price index report shows a slowdown in inflation to an annual rate of 2.7% in November, marking the smallest year-on-year increase since July [2] - Trump is advocating for the elimination of the "filibuster" rule, arguing that it hampers the Republican Party's ability to govern effectively and pursue key legislative priorities [3]

Economic Growth - The annualized GDP growth rate for the US in Q3 2025 rebounded to 4.3%, exceeding Bloomberg's consensus estimate of 3.3%[1] - The year-on-year GDP growth rate increased by 0.2 percentage points to 2.3%[1] Consumer and Investment Trends - Private consumption growth accelerated from 2.5% to 3.5%, contributing 2.4 percentage points to GDP, indicating strong resilience in consumer spending[1] - Private investment growth (excluding inventory) slowed from 4.4% to 1.0%, contributing only 0.2 percentage points to GDP[2] Trade and Exports - Export growth rebounded to 8.8%, while import growth continued to decline, leading to a narrowing trade deficit that contributed 1.6 percentage points to GDP[2] - The trade deficit decreased by $0.1 trillion to $0.96 trillion, representing 4.0% of GDP, down 0.5 percentage points from Q2[2] Government Spending - Government investment and consumption growth rebounded to 2.2%, contributing 0.4 percentage points to GDP[3] - Federal government defense investment and consumption accelerated significantly, turning from -5.3% to 2.9%[3] Inventory and Future Outlook - Inventory drawdown's negative impact on GDP narrowed to 0.2 percentage points from 3.4 percentage points in Q2[3] - Despite strong Q3 performance, potential government shutdown may lead to a technical slowdown in Q4, with estimates suggesting a GDP growth reduction of over 1 percentage point[4]

Group 1 - The U.S. stock markets, including Nasdaq and the New York Stock Exchange, will operate as scheduled on December 24 and December 26 despite the federal government shutdown ordered by President Trump [1] - The exchanges will close early at 1:00 PM Eastern Time on December 24 and will have normal trading hours on December 26 [1] - President Trump ordered all federal departments and agencies to close on Christmas Eve and Christmas Day, meaning employees will not be required to work [1]

Core Viewpoint - The market remains optimistic about the Federal Reserve lowering interest rates twice in 2026, despite initial reactions to non-farm employment and retail sales data showing a pullback [1] Group 1: Employment Data - Delayed employment data due to government shutdown has created limitations, leading to a reduction in optimism regarding last month's unexpected job growth [1] Group 2: Market Expectations - Current market expectations for rate cuts are more dovish than the Federal Reserve's own stance, indicating a divergence in outlook [1]

Core Viewpoint - The current economic environment is seen as an opportune moment for the Federal Reserve to consider a "cautious rate cut" [1] Economic Outlook - The impact of a potential government shutdown is expected to be larger than previously anticipated, yet a stronger economic rebound is projected for the first quarter of next year [1] - Economic growth rates of 3% in the first and second quarters of next year would be considered disappointing [1] Productivity and Technology - Productivity in 2026 may reach 4%, indicating a significant long-term growth potential [1] - The development of the artificial intelligence economy is advancing faster than the internet economy did in the 1990s [1] Trade and Tariff Concerns - There are warnings regarding potential chaos if the Supreme Court ultimately overturns current tariff policies [1]

Investment Rating - The report indicates a strong profit growth for S&P 500 companies, with a year-on-year increase of 12% in Q3 2025, despite macroeconomic concerns [7][8]. Core Insights - The U.S. government shutdown negatively impacted Q4 economic growth by approximately 1.1 to 1.2 percentage points, but a rebound to 3.1% growth is expected in Q1 due to government spending [1][2]. - The Supreme Court's skepticism regarding the President's authority to impose tariffs under IEEPA may lead to partial overturning of tariffs, although significant presidential power remains [1][4]. - The labor market is anticipated to weaken, potentially prompting the Federal Reserve to lower interest rates in December, although uncertainty remains [1][5]. - The AI sector is experiencing significant capital expenditure growth, with projections for large-scale data centers raised from $470 billion to $530 billion [8][9]. Summary by Sections Economic Impact - The government shutdown has caused a drag on economic growth, but a rebound is expected due to increased government spending [1][2]. - The labor market's performance will be crucial for the Federal Reserve's decisions on interest rates [5][10]. Tariff and Legal Considerations - The Supreme Court's upcoming decision on tariffs could reshape the landscape of U.S. trade policy, with implications for specific countries [4][1]. Corporate Performance - S&P 500 companies showed strong profit growth, with a notable increase in guidance for Q4, indicating positive market expectations [7][8]. - AI companies are financially robust, with strong cash flows and low debt levels, positioning them well for future growth despite market volatility [9][18]. Currency and Market Outlook - The U.S. dollar is expected to gradually depreciate as economic performance weakens, influenced by labor market data and potential interest rate cuts [10][12]. - Emerging market currencies may perform better if the U.S. economy underperforms, with the potential for a stable yuan to support the Asian region [12][10].

Core Viewpoint - There is a significant division within the Federal Reserve regarding whether to continue interest rate cuts in December, with concerns about persistent inflation and tariff effects versus worries about weak employment and slowing demand [1] Group 1: Federal Reserve's Internal Disagreement - Some officials advocate for pausing interest rate cuts due to concerns over sticky inflation and tariff impacts [1] - Dovish members emphasize the importance of addressing weak employment and declining demand [1] - The government shutdown has interrupted key economic data, exacerbating the division among decision-makers [1] Group 2: Current Interest Rate Context - The current interest rate is in the range of 3.75% to 4% [1] - Market expectations indicate a slightly higher probability of a rate cut in December, despite the internal Fed conflict [1] - The situation reflects a rare "hawk-dove standoff" within the Federal Reserve in recent years [1]

Report Summary 1. Report Industry Investment Rating No investment rating is provided in the report. 2. Core Viewpoints - The PNBP policy in Indonesia restricts the supply of nickel resources, increasing the cost of nickel supply. The production of nickel - iron in Indonesia remains high, and the amount flowing back to China is expected to increase. Recently, the price of nickel - iron has dropped significantly, leading to a decrease in raw material costs [2]. - Steel mills' production profits have been restored. With the end of the traditional consumption peak season and the expected demand from infrastructure and real estate, stainless - steel mills are expected to increase production, resulting in increased supply pressure [2]. - Downstream demand shows a weak peak - season characteristic. The market's purchasing willingness is low, and the overall inquiry and transaction performance is average. As a result, the national stainless - steel social inventory shows a narrow increase [2]. - Technically, the position increases while the price drops, with a strong short - selling atmosphere and a downward - channel trend. It is recommended to wait and see or adopt a short - selling strategy near the MA30 resistance level, and pay attention to the support at 12,400 [2]. 3. Summary by Relevant Catalogs Futures Market - The closing price of the stainless - steel futures main contract is 12,465 yuan/ton, a decrease of 140 yuan; the 12 - 01 contract spread is - 55 yuan/ton, a decrease of 50 - 8008 yuan; the net long position of the top 20 futures holders is - 9,426 lots, a decrease of 305 lots; the main - contract position is 38,421 lots; the warehouse receipt quantity is 71,735 tons, a decrease of 296 tons [2]. 现货市场 - The price of 304/2B rolled stainless - steel in Wuxi is 13,350 yuan/ton, unchanged; the price of scrap stainless - steel 304 in Wuxi is 8,900 yuan/ton, unchanged; the SS main - contract basis is 415 yuan/ton, a decrease of 40 yuan [2]. Upstream Situation - The monthly production of electrolytic nickel is 29,430 tons, an increase of 1,120 tons; the total monthly production of nickel - iron is 21,700 metal tons, a decrease of 300 metal tons; the monthly import volume of refined nickel and alloys is 28,570.87 tons, an increase of 4,144.03 tons; the monthly import volume of nickel - iron is 1.0853 million tons, an increase of 211,200 tons; the SMM1 nickel spot price is 121,300 yuan/ton, an increase of 100 yuan; the average price of nickel - iron (7 - 10%) nationwide is 920 yuan/nickel point, unchanged; the monthly production of Chinese ferrochrome is 757,800 tons, a decrease of 26,900 tons [2]. Industry Situation - The monthly production of 300 - series stainless - steel is 1.7627 million tons, an increase of 24,800 tons; the weekly inventory of 300 - series stainless - steel is 570,800 tons, a decrease of 10,000 tons; the monthly export volume of stainless - steel is 458,500 tons, a decrease of 29,500 tons [2]. Downstream Situation - The cumulative monthly new - construction area of houses is 453.99 million square meters, an increase of 55.9799 million square meters; the monthly production of excavators is 31,600 units, an increase of 4,000 units; the monthly production of large and medium - sized tractors is 26,200 units, a decrease of 500 units; the monthly production of small tractors is 10,000 units, an increase of 1,000 units [2]. Industry News - The State Council's General Office issued 13 measures to further promote private investment. - The government shutdown is likely to end before this weekend. The Senate plans to resume deliberation at 11 am on Monday. Senate Republican leader Thune said that bipartisan cooperation is needed to speed up the process; otherwise, it may take most of this week to complete the legal procedures. - Private - sector data shows that the consumer - price increase in the US slowed for the first time in three months in October. - Trump - appointed Federal Reserve Governor Milan said that the government shutdown will not affect his view of the US economy, and the Fed should cut interest rates by 50 basis points in December [2].

Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core View of the Report - Macroeconomic factors include the potential end of the US government shutdown by the weekend, 13 measures proposed by the State Council to boost private investment, and a slowdown in US consumer - price inflation in October. - On the supply side, zinc ore imports are rising due to long - term contract ores arriving at ports and refineries' raw material reserves for winter. However, domestic zinc ore processing fees are down, sulfuric acid prices are falling, squeezing smelter profits and limiting refined zinc output growth. Overseas zinc supply is tight, the SHFE - LME ratio has dropped significantly, and the export window has opened, with a shift towards net exports expected. - On the demand side, the traditional peak seasons of "Golden September and Silver October" were lackluster. The real - estate sector is a drag, while the automotive and home - appliance sectors show some policy - supported bright spots. Downstream demand recovery is weak, with spot premiums low and domestic inventories increasing. LME zinc de - stocking is slowing, and spot premiums are high. - Technically, positions are decreasing, prices are adjusting, and the bullish sentiment has weakened slightly. Attention should be paid to the MA10 support. It is recommended to wait and see for now [3]. 3. Summary by Relevant Catalogs 3.1 Futures Market - The closing price of the SHFE zinc main contract is 22,675 yuan/ton, up 5 yuan; the spread between the 12 - 01 contracts of SHFE zinc is - 30 yuan/ton, up 10 yuan. - The LME three - month zinc quote is 3,085.5 dollars/ton, up 19 dollars. - The total SHFE zinc open interest is 226,896 lots, down 1,204 lots; the net position of the top 20 in SHFE zinc is 15,406 lots, down 421 lots. - SHFE zinc warehouse receipts are 70,518 tons, up 649 tons; SHFE inventory (weekly) is 100,208 tons, down 3,208 tons; LME inventory is 34,900 tons, unchanged [3]. 3.2现货市场 - The spot price of 0 zinc on the Shanghai Non - ferrous Metals Network is 22,660 yuan/ton, up 90 yuan; the spot price of 1 zinc in the Yangtze River Non - ferrous Metals Market is 22,660 yuan/ton, up 240 yuan. - The basis of the ZN main contract is - 15 yuan/ton, up 85 yuan; the LME zinc cash - 3 months spread is 176.55 dollars/ton, up 24.29 dollars. - The arrival price of 50% zinc concentrate in Kunming is 18,310 yuan/ton, down 20 yuan; the price of 85% - 86% crushed zinc in Shanghai is 16,050 yuan/ton, up 50 yuan [3]. 3.3 Upstream Situation - The WBMS zinc supply - demand balance is - 27,800 tons, down 5,700 tons; the ILZSG zinc supply - demand balance is 47,900 tons, up 17,700 tons. - The global zinc mine production by ILZSG is 1.0976 million tons, up 21,400 tons; domestic refined zinc production is 651,000 tons, up 34,000 tons. - Zinc ore imports are 505,400 tons, up 38,100 tons [3]. 3.4 Industry Situation - Refined zinc imports are 22,677.51 tons, down 2,979.32 tons; refined zinc exports are 2,477.83 tons, up 2,166.92 tons. - Zinc social inventory is 161,700 tons, down 100 tons [3]. 3.5 Downstream Situation - The production of galvanized sheets is 2.32 million tons, up 10,000 tons; the sales of galvanized sheets are 2.28 million tons, down 90,000 tons. - The new housing construction area is 453.99 million square meters, up 55.9799 million square meters; the housing completion area is 311.2888 million square meters, up 34.3534 million square meters. - Automobile production is 3.227 million vehicles, up 474,600 vehicles; air - conditioner production is 18.0948 million units, up 1.276 million units [3]. 3.6 Option Market - The implied volatility of at - the - money zinc call options is 12.23%, up 0.04%; the implied volatility of at - the - money zinc put options is 12.23%, up 0.03%. - The 20 - day historical volatility of at - the - money zinc options is 8.51%, down 0.86%; the 60 - day historical volatility of at - the - money zinc options is 8.98%, down 0.03% [3]. 3.7 Industry News - The State Council's General Office proposed 13 measures to further promote private investment. - The US government shutdown may end before this weekend. The Senate plans to resume deliberation on Monday morning, and bipartisan cooperation is needed to speed up the process. - US consumer - price inflation slowed for the first time in three months in October. - Trump - endorsed Fed nominee Milan believes the government shutdown won't affect his view of the US economy and that a 50 - basis - point rate cut is needed in December [3].