Core Viewpoint - The long-term allocation value of gold is viewed optimistically by the manager of Huaan Gold ETF, with a focus on the potential impact of future Federal Reserve interest rate cuts and the sustainability of U.S. debt levels [1] Group 1: Federal Reserve Interest Rate Cuts - The market anticipates two interest rate cuts by the end of the year, which could further benefit gold if cuts exceed expectations [1] - The independence of the Federal Reserve and the pace of U.S. debt issuance are critical factors to monitor [1] Group 2: U.S. Debt and Deficit Concerns - Current levels of U.S. debt and deficits are considered excessively high, raising questions about the long-term sustainability of U.S. Treasury bonds [1] - Concerns over former President Trump's interference in the Federal Reserve's rate-cutting actions have sparked global worries, potentially undermining the credibility of the U.S. dollar and influencing gold pricing [1]

Core Viewpoint - The rumors regarding foreign capital selling US Treasury bonds are unfounded, as data from the US Treasury's International Capital Movement report indicates that the turmoil in May was not caused by foreign investors [1][2]. Group 1: Market Conditions - In May, global trade tensions eased, with the US's "reciprocal tariff" policy in a 90-day buffer period, leading to a 27.6% month-on-month decline in the US trade policy uncertainty index [1]. - The US government faced increasing criticism of the Federal Reserve, and Moody's downgraded the US's last AAA sovereign credit rating, raising concerns about the Fed's independence and the sustainability of US debt [1]. - The 10-year and 30-year US Treasury yields rose above 4.5% and 5.0%, respectively, with monthly increases of 24 and 26 basis points, resulting in a significant drop in Treasury prices [1]. Group 2: Capital Flows - In April, international capital experienced a net outflow of $146 billion, reversing a net inflow of $171.2 billion in March, coinciding with a 4.4% drop in the dollar index [2]. - In May, the US financial market rebounded, with the S&P 500 index rising 6.1%, leading to a net capital inflow of $311.1 billion, a month-on-month increase of $3.257 billion, marking the third-highest monthly inflow on record [2]. Group 3: Foreign Investment in US Securities - Foreign investors net purchased $318.5 billion in US long-term securities in May, a month-on-month increase of $369.1 billion, contributing 113.1% to the net capital inflow [3]. - Private foreign capital was the main contributor, with a net inflow of $333.2 billion, a month-on-month increase of $330.4 billion, marking the highest monthly net inflow on record [4]. Group 4: Types of Securities - Foreign investors significantly increased their holdings of US Treasury bonds, with net purchases of $1.463 billion in May, a month-on-month increase of $1.871 billion, contributing 50.7% to the net purchases of long-term securities [5]. - Private foreign investors were the primary buyers of US long-term securities, shifting from a net sale of $50.6 billion to a net purchase of $318.5 billion in May [5][6]. Group 5: Country Contributions - Canada was the largest contributor to the net purchase of US long-term securities in May, with a net inflow of $146.7 billion, accounting for 39.7% of the total [9]. - Other significant contributors included the Cayman Islands, Singapore, China, and Japan, with China ending a 10-month streak of net sales to net purchase $3.2 billion in May [10][11].

Core Viewpoint - The debate over the sustainability of U.S. debt is expected to dominate the U.S. market in the second half of the year, leading to upward risks for long-term U.S. Treasury yields [1] Group 1 - Analysts from Aramea Asset Management highlight that the "big and beautiful" legislation will significantly increase U.S. debt in the short term [1]

Group 1 - The U.S. plans to impose tariffs of 25% on South Korea and Japan, and 30%-40% on other Asian and African countries, with the effective date postponed to August 1, allowing more time for negotiations [1][2] - Market reactions to the tariff announcements have been muted, with major U.S. indices declining less than 1% and Asian markets showing gains, indicating a shift in market sentiment [1][3] - Goldman Sachs has raised its target for the S&P 500 index, reflecting expectations of quicker and deeper interest rate cuts by the Federal Reserve, with forecasts of 6400, 6600, and 6900 points for the next 3, 6, and 12 months respectively [3][4] Group 2 - The U.S. Treasury Secretary indicated that if negotiations do not progress, tariffs could revert to levels seen in April, emphasizing the need for maximum pressure in trade talks [2] - Morgan Stanley suggests that agreements with other countries may be reached before August 1, with potential scenarios including tactical tariff increases if negotiations stall [2][3] - Concerns about U.S. debt sustainability persist, with the Congressional Budget Office estimating that a recent bill could increase national debt by $4.1 trillion by 2034 [5][6] Group 3 - Global investors are increasingly considering hedging against dollar risk, with European investors finding better yields in local bonds compared to U.S. Treasuries after accounting for currency risk [6][7] - The trend of increasing gold holdings among central banks and institutional investors continues, as gold is viewed as a hedge against dollar depreciation and geopolitical risks [8][9] - China's central bank has been accumulating gold, with reserves reaching approximately 2298.55 tons, indicating a sustained interest in gold as a strategic asset [8][9]

Core Viewpoint - The article discusses the recent challenges facing U.S. Treasury bonds, including rising yields, structural imbalances in supply and demand, and declining confidence in U.S. creditworthiness, leading to concerns about the sustainability of U.S. debt [1][2][3]. Group 1: Market Dynamics - U.S. Treasury yields surged in May, with long-term yields exceeding 5% for three consecutive days, indicating an oversupply and insufficient demand for Treasuries [1]. - The total U.S. debt has surpassed $36 trillion, increasing by $1 trillion in less than six months, raising concerns about sustainability [1]. - Moody's downgraded the U.S. sovereign credit rating from AAA to AA1, citing that interest payments on debt have exceeded 10% of GDP, breaching international warning levels [2]. Group 2: Economic Policies and Impacts - The U.S. government's tariff policies have led to increased market uncertainty, contributing to fears of high inflation, high interest rates, and economic downturns [2][3]. - The U.S. GDP experienced a 0.3% quarter-on-quarter decline, further exacerbating concerns about the economic outlook [2]. Group 3: Buyer Trends - Foreign ownership of U.S. Treasuries has decreased, with major holders like Japan and China reducing their holdings, reflecting a broader decline in confidence in U.S. credit [4]. - The proportion of foreign official holdings of U.S. Treasuries fell from 45% in 2014 to 28% in 2023, indicating a significant shift in the international monetary landscape [4]. Group 4: Future Outlook - The U.S. Treasury Department's recent buyback of $10 billion in bonds raises questions about the demand for Treasuries and the need for domestic buyers to fill the gap left by foreign investors [1][5]. - The proposed "One Big Beautiful Bill" tax plan could increase U.S. debt by over $2 trillion, complicating the fiscal landscape and potentially leading to further increases in Treasury yields [6]. - As global investors seek safer assets amid rising uncertainty, the trend of selling U.S. Treasuries is expected to continue, with the Treasury Department increasingly forced to buy back its own bonds [6].

Core Viewpoint - The recent surge in U.S. Treasury yields and the record $10 billion buyback operation by the U.S. Treasury have raised concerns about the sustainability and demand for U.S. Treasuries, indicating structural imbalances in the market [1][2]. Group 1: Treasury Yield Dynamics - In May, U.S. Treasury yields soared while prices fell, reflecting an oversupply and insufficient demand for Treasuries [1]. - Long-term Treasury yields exceeded 5% for three consecutive days in late May, highlighting a structural imbalance in supply and demand [1]. - The total U.S. national debt has surpassed $36 trillion, increasing by $1 trillion in less than six months [1]. Group 2: Credit Rating and Economic Concerns - The decline of the "American exceptionalism" narrative has led to decreased global confidence in U.S. assets, including Treasuries, with Moody's downgrading the U.S. sovereign credit rating from AAA to AA1 [2]. - The interest expense on U.S. debt has exceeded 10% of GDP, surpassing international warning levels [2]. - The U.S. federal government's deficit rate is projected to exceed 6% in 2024, with a debt-to-GDP ratio over 123%, significantly above the Maastricht Treaty thresholds [2]. Group 3: Buyer Dynamics - There has been a notable decrease in foreign buyers of U.S. Treasuries, with Japan and China reducing their holdings [3]. - The proportion of Treasuries held by foreign governments has dropped from 45% in 2014 to 28% in 2023, indicating a loss of confidence in U.S. creditworthiness [3]. Group 4: Domestic Demand and Federal Reserve Actions - The increasing supply of Treasuries coupled with declining demand has led to rising yields, raising questions about who will purchase these bonds [4]. - The U.S. Treasury has been unable to rely on the Federal Reserve for bond purchases, as the Fed has been reducing its balance sheet from nearly $9 trillion to over $6 trillion since 2020 [4]. - The Fed's monthly reduction of Treasury holdings has been adjusted from $60 billion to $25 billion, limiting its capacity to absorb new debt [4]. Group 5: Fiscal Policy Implications - The introduction of the "One Big Beautiful Bill" tax plan is expected to exacerbate the situation, potentially increasing the national debt by over $2 trillion [5]. - The combination of rising Treasury issuance and soaring yields, along with the uncertainty from high tariffs, has led global investors to seek safer assets, resulting in continued reductions in Treasury holdings [5].