Core Insights - The report highlights the ongoing discussions between U.S. Secretary of State Marco Rubio and Chinese Foreign Minister Wang Yi, indicating potential diplomatic engagement ahead of a summit between the two nations [8][13] - OPEC+ is reportedly considering pausing further production increases starting in October to prevent a decline in oil prices, following a recent increase in production that has led to oversupply concerns [8][13] - The Hong Kong Monetary Authority has intervened in the currency market for the fourth time in two weeks, purchasing approximately HKD 13.3 billion to maintain the currency peg [8][13] - China's excavator sales surged over 20% year-on-year in the first half of the year, suggesting a stabilization in the construction industry [8][13] Market Performance - The Shanghai Composite Index rose by 0.48% to close at 3509.68 points, reaching a nine-month high during the trading session [1] - The Hang Seng Index increased by 0.57% to close at 24028.37 points, while the Hang Seng Tech Index fell by 0.29% [1][5] - The trading volume in the Hong Kong market was approximately HKD 246.73 billion [1] Company-Specific Developments - Rui Ming Technology is planning to issue H-shares overseas and list on the Hong Kong Stock Exchange, with a projected net profit increase of 53.64% to 77.9% for the first half of the year [12] - WuXi AppTec anticipates a net profit of approximately RMB 8.561 billion for the first half of the year, representing a growth of about 102% [14] - NIO's new vehicle model, the L90, is set to be delivered next month, with a starting price of approximately RMB 279,900 [14]

Core Viewpoint - Federal Reserve Governor Christopher Waller suggests that the U.S. central bank should have the capability to gradually reduce bank reserves from the current $3.26 trillion to around $2.7 trillion, while also emphasizing the importance of a measured approach to balance sheet reduction [1][2] Group 1: Balance Sheet Reduction - Waller indicates that the overall balance sheet size could decrease from $6.7 trillion to $5.8 trillion when including the Federal Reserve's currency holdings and the U.S. Treasury's general account balance [1] - He proposes that the reduction of reserve balances could be achieved through the natural expiration and early repayment of securities [1] - Waller highlights the critical nature of determining a "sufficient" reserve level to assess the upper limit of balance sheet reduction, which directly impacts the overnight funding market [1] Group 2: Interest Rate Policy - Waller reiterates his belief that the federal funds rate is set too strictly and may support a rate cut in the upcoming Federal Reserve meeting [2] - This stance places him in the minority among his colleagues, despite recent calls from the Trump administration for the Federal Reserve to lower interest rates [2] - Critics argue that the Federal Reserve should restore its balance sheet size to pre-financial crisis levels, which saw an increase from approximately $800 billion to over $2 trillion during the 2008 crisis [2] Group 3: Asset Composition - Waller suggests increasing the proportion of short-term assets in the Federal Reserve's balance sheet, with long-term securities used primarily to hedge against monetary liabilities [2] - He addresses a proposal from market participants to mimic the U.S. Treasury market by setting the short-term asset ratio at 20%, arguing that while it may alleviate pressure on the yield curve, it could extend the balance sheet's duration and increase potential income loss risks for the Federal Reserve [2]

Core Viewpoint - The Federal Reserve's balance sheet size is influenced by uncontrollable external factors, and a rough benchmark for "adequate reserves" is set at $2.7 trillion [1] Group 1 - The Federal Reserve agrees that its balance sheet should be reduced, but it may not need to be cut as drastically as some believe [1] - An adequate reserves system contributes to the stability of the financial system [1] - Paying interest on reserves does not impose a cost burden on the Treasury [1] Group 2 - Once reserves reach adequate levels, the Federal Reserve can increase its holdings of short-term Treasury bills [1] - There is a consideration to shift the structure of the balance sheet towards short-term Treasury bills [1]

Core Viewpoint - The Federal Reserve's meeting minutes indicate that market participants expect the balance sheet reduction to conclude in February 2026, a shift from the previous expectation of January 2026 [1] Summary by Relevant Categories Federal Reserve Actions - The New York Fed's Open Market Account (SOMA) head reported on the expectations regarding the timeline for the balance sheet reduction [1]

Core Viewpoint - The Federal Reserve's meeting minutes indicate that respondents in a market participant survey have shifted their expectations for the end date of balance sheet reduction from January 2026 to February 2026 [1] Summary by Relevant Categories - **Federal Reserve Actions** - The Federal Reserve System Open Market Account (SOMA) head reported a change in market participants' expectations regarding the timeline for balance sheet reduction [1]

Core Viewpoint - The Federal Reserve Chairman Jerome Powell indicated that there is still room for reduction in the balance sheet and believes that the current pace can be sustained for a while [1] Group 1 - The Federal Reserve's balance sheet has the potential for further contraction [1] - Powell's comments suggest a continued commitment to monetary policy adjustments [1] - The current pace of balance sheet reduction is viewed as manageable in the near term [1]

Group 1: Economic Policies - The U.S. plans to implement tariffs on Mexico and Canada as scheduled on March 4, with further tariffs on EU goods expected soon[3] - The Federal Reserve officials express concerns about inflation risks and economic growth, suggesting a cautious approach to interest rate adjustments[4] - Japan's central bank is closely monitoring U.S. policies and their potential impact on global and domestic economies[15] Group 2: Market Performance - U.S. stock indices showed mixed results, with the S&P 500 down 1.0%, while the Dow Jones increased by 1.0% and the Nasdaq fell by 3.5%[17] - The 2-year U.S. Treasury yield dropped by 20 basis points to 3.99%, and the 10-year yield fell by 18 basis points to 4.24%[21] - The dollar index rose by 0.86% to 107.56, while the euro and pound fell by 0.79% and 0.42% respectively against the dollar[25] Group 3: Economic Indicators - U.S. new home sales in January were annualized at 657,000, below the expected 680,000, marking a 10.5% month-over-month decline[6] - The PCE price index in January rose by 2.5% year-over-year, aligning with expectations, but personal consumption expenditures weakened[6] - Durable goods orders in January increased by 3.4% year-over-year, significantly higher than the previous -3.5%[8]