Group 1 - The central economic work conference proposed to continue implementing a more proactive fiscal policy in 2026, maintaining necessary expenditure intensity and a deficit scale close to 6 trillion yuan [1][2] - The expected scale of new special bonds in 2026 is projected to reach 5 trillion yuan, with an emphasis on optimizing the government bond tool mix and enhancing the effectiveness of transfer payments [2][4] - Analysts suggest that the fiscal situation in 2026 will likely remain under pressure, but the role of fiscal policy as a foundation for national governance necessitates continued proactive measures to stimulate demand and support consumption [2][3] Group 2 - The expected deficit rate for 2026 is projected to be no less than 4%, with the total new debt scale anticipated to increase to 15 trillion yuan [4][5] - The increase in new special bonds is expected to support infrastructure investment and address local government financial difficulties, with a potential rise in the issuance of long-term special bonds [5][6] - The central government is likely to increase transfer payments to local governments, exceeding 10 trillion yuan, to alleviate fiscal challenges and stimulate local economic development [2][3] Group 3 - The conference emphasized the importance of addressing local fiscal difficulties and improving the local tax system, with potential reforms in consumption tax expected to accelerate in 2026 [7] - Analysts foresee three main directions for fiscal reform in 2026: shifting consumption tax collection to local levels, optimizing the sharing ratio of shared taxes, and merging various local additional taxes into a single local additional tax [7][8] - The proposed reforms aim to incentivize local governments to cultivate tax sources and improve the consumption environment, thereby enhancing the overall supply-demand relationship [7][8]

Core Viewpoint - The article discusses President Trump's pressure on the Federal Reserve to lower interest rates, aiming to align monetary policy with his fiscal priorities, which could lead to inflation and economic stagnation in the long run [2][4]. Group 1: Trump's Objectives - Trump's push for lower interest rates is intended to facilitate financing for the recently passed tax cuts, breaking the traditional link between budget deficits and interest rates [4][5]. - The article warns that this "fiscal dominance" approach is historically associated with economic crises in emerging markets, potentially leading to a dangerous combination of inflation and stagnation [4][5]. Group 2: Economic Indicators and Market Reactions - Despite a projected budget deficit increase to $3 trillion over the next decade, the yield on the 10-year U.S. Treasury bond has decreased from 4.55% in May to 4.35% recently, indicating market expectations of future rate cuts [6]. - Treasury Secretary Mnuchin emphasized that the government will act according to Trump's wishes regarding the Federal Reserve's leadership and criticized current Fed Chair Powell for not lowering rates promptly [8]. Group 3: Federal Reserve's Position - The Federal Reserve has maintained its interest rate policy, with the target range set at 4.25% to 4.5%, while the two-year Treasury yield has fallen to around 3.88%, suggesting a disconnect in market signals [8]. - The upcoming Federal Reserve meeting on July 10 is anticipated to provide insights into their monetary policy stance, especially in light of strong employment data [9].

Core Viewpoint - The U.S. Treasury Secretary emphasizes that tariffs and budget are interconnected, suggesting a holistic approach to fiscal policy [1] Summary by Relevant Categories Fiscal Outlook - It is believed that the deficit size will be lower in 2025 compared to the previous year [1] - By 2028, the ratio of U.S. debt to GDP is expected to stabilize [1] Political Sentiment - There is sympathy towards deficit hawks, indicating a recognition of concerns regarding fiscal responsibility [1]