Core Viewpoint - The current bond market is characterized by weak coupon protection, heavy speculation, and strong sentiment-driven trading, leading to suboptimal investment experiences [1] Group 1: Market Conditions - The short-term bond market is still facing headwinds, but interest rates are likely to have an upper limit [1] - The upper limit for the ten-year government bond is around 1.8%, with a maximum position at 1.9%, indicating potential overshoot risks mainly from institutional behavior [1] Group 2: Future Outlook - After October, a "counterattack" opportunity may arise due to a supply off-season, sentiment turning point, and high base effects in consumption [1] - The risk of continued tightening in the funding environment is low, and a recommendation for a steepening curve trade is suggested [1] Group 3: Investment Recommendations - 30-year government bonds and perpetual bonds are likely to act as sentiment amplifiers, and it is advised to temporarily avoid these [1] - Bonds with maturities of 5-7 years and below possess defensive characteristics, with shallow leverage arbitrage suggested [1] - For credit bonds, a focus on the mid to short end is recommended, as 3-5 year ordinary credit bonds have become relatively attractive after recent declines [1] - Convertible bonds should maintain equity beta exposure [1]

Core Viewpoint - The financial markets are actively seeking "Powell hedge" strategies in response to Trump's threats to dismiss Federal Reserve Chairman Jerome Powell, indicating growing concerns over the independence of the Fed and potential inflation risks [1][4]. Group 1: Market Reactions - Wall Street is advised to buy 2-year Treasury bonds and sell 10-year Treasury bonds as a hedge against the risks associated with Powell's potential dismissal [1]. - The probability of Powell leaving office by 2025 has increased from 18% to 22% according to Polymarket [1]. - Long-term Treasury yields spiked following news of Trump's potential actions, with the 30-year Treasury yield rising by 11 basis points in less than an hour [1]. Group 2: Investment Strategies - The "Powell hedge" strategy focuses on the potential shift in Federal Reserve policy, with expectations that a new chair could favor rate cuts under White House pressure, leading to a steepening yield curve [1][2]. - Investors are also considering inflation expectations as a more effective hedge, with Bank of America strategists highlighting the importance of inflation-linked securities [2]. Group 3: Internal Fed Dynamics - There is increasing uncertainty within the Federal Reserve, with one-third of respondents in a survey indicating that Governor Waller is a preferred successor to Powell [3]. - Waller has suggested that he would oppose a vote to maintain interest rates if the FOMC decides to do so in the upcoming meeting [4]. Group 4: Future Outlook - The upcoming quarterly refinancing announcement from the Treasury on July 30 will be a key focus for investors, as it may impact the effectiveness of the steepening yield curve strategy [4].