Group 1 - The global financial market is experiencing an optimistic wave driven by policy expectations, particularly regarding the unclear "trade understanding" between the US and China and strong bets on an imminent rate cut by the Federal Reserve [1][2] - The recent statement by US Commerce Secretary Howard Lutnick, confirming a formal agreement including rare earth transportation, is seen as a positive signal for easing trade tensions, although the specifics of the agreement remain highly opaque [2] - The upcoming deadline of July 9 for the US to implement reciprocal tariffs on other trade partners adds a layer of risk, particularly for countries like India, Japan, and the EU that have not yet reached agreements [2] Group 2 - The Federal Reserve's monetary policy expectations are a significant pillar supporting current market sentiment, with recent economic data indicating a slowdown, thereby increasing the likelihood of rate cuts [3] - Market speculation around the Fed's potential actions has led to the emergence of the "Fed Put" concept, suggesting that the market believes the Fed will intervene during significant economic slowdowns [3] - Political pressure from the White House is casting a shadow over the Fed's independence, adding uncertainty to future policy decisions, despite assurances from Fed officials that such pressure does not affect their communication [3] Group 3 - Global asset prices have reacted significantly to these macro narratives, with stock markets generally rising, US markets reaching new highs, and a weakening dollar aligning with rate cut expectations [5] - Oil prices have increased, reflecting market optimism regarding economic prospects, while US Treasury yields have declined, particularly at the short end, indicating pricing in of potential Fed rate cuts [5] Group 4 - Japan's economic data presents a mixed picture, with core CPI remaining above the Bank of Japan's target despite a decline, indicating accumulating inflationary pressures, while weak retail sales suggest a need for domestic demand stimulation [6] - The Bank of Japan faces challenges in balancing inflation pressures with economic momentum, with market expectations leaning towards normalization of policy, though the timing remains uncertain [6] Group 5 - The sustainability of the current market optimism largely depends on the actual progress of trade negotiations, the outcome of the July 9 deadline, and key economic data releases from major economies like the US and Japan [7] - The market is currently in a state of exuberance amidst uncertainty, highlighting the need for cautious trading strategies in response to potential unexpected developments [7]