Note: This column publishes historical research reports of companies in chronological order from old to new for readers' retrospective reference. The views and data in this article are based on the original research time, and some information may have changed.

Macro Overview

Overall environment:

The dialogue between China and the United States has eased some of the temporary conflicts, but we should not have too high expectations and should be wary of divergence in US economic data and the outward transfer of potential conflicts.

Global economic data and central bank trends:

The Fed kept interest rates at 4.25%-4.5% in May, waiting to see inflation and employment data. The European Central Bank cut its deposit rate by 25bp to 2% on June 5, opening a path of gradual easing, but trade tensions may bring risks. China's PPI in May was 3.2% year-on-year, and CPI was 0.2% year-on-year, and deflationary pressure continued to emerge. The US non-farm data in May showed strong employment expansion (+139K): initially easing market concerns about a hard landing of the economy, while also making the inflation and interest rate path more complicated. Japan's Q1 GDP may turn negative, confirming the slowdown in global growth: May data showed that Japan's GDP may have fallen by 0.2% month-on-month, reflecting weak external demand.

Important macro events this week

1. US-China economic and trade talks (June 9, London) : The high-level teams resumed dialogue. Although there are still unresolved issues regarding technology and rare earth exports, the market remains cautiously optimistic about the prospect of "tariff reversal".

2. The European Central Bank cuts interest rates by 25bp to 2%. There are clear signs of a decline in inflation. The ECB may start a gradual easing path. This news boosted the euro and the European bond market.

3. Signals from the G7 Finance Ministers' Meeting: Focusing on currency fluctuations and trade frictions, the United States urged Japan and other countries to relax exchange rate mechanisms. The Russia-Ukraine conflict and US-China trade frictions remained the main topics of the meeting.

Investment Tips and Major Asset Class Strategies

1. Interest rate bond market analysis market performance:

The bond market is generally improving, with short-term interest rates continuing to decline, and long-term interest rates remaining restrained. The central bank announced a 1 trillion yuan reverse repo ahead of schedule to stabilize market expectations, changing from a secret operation to an advance notice, directly addressing the debt problems of large banks that the market is concerned about and coordinating with the issuance of primary markets. There is a high probability that liquidity will be safe in June.

Domestic interest rate bond strategy at this stage - build positions on the left, fast in and fast out. Pay attention to the phenomenon of certificate of deposit price increase and changes in funding prices, fast in and fast out. Build positions on the left to collect coupons and wait for opportunities. The core theme is still the fundamentals and loose monetary policy.

2. Credit bond market analysis Market status:

The shortage of credit bond assets continues, and the credit bond spreads of various maturity dimensions continue to narrow. Institutional allocation demand is strong, and convertible bonds have become a hot spot. Last week, Yuntianhua's EB primary subscription was hot, and the valuation gains of high-coupon assets were significant.

The valuation gains of high-coupon assets are very obvious. The valuation of the 25-percent high-density bonds in the previous phase of the pure bond portfolio, which were deployed in the primary market, has now risen to 104, and there is also an actual transaction price. If you choose this type of credit bond asset, the overall return will be considerable.

Domestic primary and secondary credit bond markets: The central rate for new issuance is about 3.5%, and about 4% in weak-quality regions such as Guizhou; transactions in the secondary market are sluggish and high-quality assets are scarce.

Overseas primary and secondary markets: There are fewer new issues in the primary market, and the prices are all below 10. The secondary market is also reluctant to sell, and the transaction rate is all below 10. During this stage, asset management institutions increase their allocations to high-yield and convertible bonds overseas from Chinese companies, and financial management funds begin to establish a short-term + long-term dumbbell strategy, betting on the loosening of funds.

The strategy for domestic credit bonds at this stage is to appropriately extend the duration and strive for primary market opportunities for high-quality bonds.

Under the premise of controlling liquidity risk, we adopt a long-term strategy to narrow the credit spread of transactions. We differentiate pricing targets and strive for primary market opportunities for high-quality credit bonds and tradeable bonds.

3. Analysis of A-share and Hong Kong stock market

The market generally believes that the call between the Chinese and US leaders was mainly a strategic exchange of chips, and the market expectations for reaching an agreement are low. The market performance of stock index futures and commodities also reflects this cautious sentiment.

A-share market : There is still a lack of incremental capital injection this week. Funds flowed back from new consumption and innovative drugs to the TMT sector, and some funds bet on the resumption of trading of Haiguang and Sugon. The military industry sector was boosted by news of Indonesia's military aircraft procurement, and the military parade in August may drive short-term attention.

Hong Kong stock market : The enthusiasm for the primary market of Hong Kong stocks continues, and the capital activity is stronger than that of A-shares. The AH premium rate has fallen to a three-year low. At the same time, the Hong Kong interbank lending rate has fallen to a historically low value (Hibor-1W has fallen to 0.1%), which means that there is a lot of capital inflow and the market is full of funds. The performance of Hong Kong stocks that is stronger than A-shares is expected to continue further, but we need to be vigilant against the valuation adjustment caused by the adjustment of capital costs.

A-share and Hong Kong stock strategies at this stage :

A-shares: Build a dividend-technology dumbbell portfolio and pay attention to Invitrogen and the military industry sectors.

Hong Kong stocks: Increase holdings of core Hong Kong stocks. When the AH premium rate deviates too much, try to use the "long A/short H" price difference regression strategy. Focus on the layout of the Hong Kong stock IPO anchoring strategy, and the high-quality AH stock anchoring quota can be used for short-term primary and secondary arbitrage transactions.

4. Convertible bond market analysis

Rating adjustment verification period : The impact of rating adjustment this year is relatively weak. After excluding Dongshi convertible bonds, a total of 8 convertible bonds were downgraded, and the decline was generally small. The strength of small and micro-cap stocks supported the ratings, and market preference increased.

Valuation and liquidity : As of June 5, the median convertible bond price was 121.92, and the median YTM was -1.84%, which was at the median level of the past four years. The daily turnover of A-shares increased to 1.16-1.32 trillion, and the convertible bond turnover increased to 55.4-67.7 billion.

Convertible bond strategy at this stage : Maintain appropriate cash position, the position is the same as last week, and the position is diversified. Pay attention to the missed kill opportunities of the rating downgrade targets and buy on the left side.

5. Commodity market analysis

Macro level : The call between the Chinese and US heads of state has limited expectations for improvement, with rare earth control as the focus. The US non-farm payrolls in May were slightly better than expected, but the growth momentum is questionable.

At the meso level : In the first week of June, the production start-up rate fell, and the growth rate of automobile and home appliance trade-in consumption declined. The rush to install photovoltaic power plants has ended, and the production schedule of home appliances has dropped sharply. The weakening demand needs to be verified.

In summary, against the backdrop of limited positive macroeconomic data and declining meso-data, commodities are expected to experience weak fluctuations.

Commodity futures (subjective) strategy at this stage:

Shanghai Gold: Tariffs are still fluctuating, and the negative impact is gradually emerging; the negative effect of the Fed's delay in cutting interest rates has weakened, and it faces the risk of being dealt with by Trump; the US dollar index fell in five waves on a weekly basis. If 3350 cannot be supported, reduce the position, and double the position at the next support level;

Shanghai Copper: Processing fee is low, supply disturbance is large, demand is resilient, and inventory is destocked; but tariff disturbance factors still exist, so it is expected to fluctuate; place orders at low levels, sell high and buy low;

Shanghai Aluminum: The inventory of aluminum ingots and aluminum bars remained the same month-on-month, with LME destocking of 0.9 to 364,000 tons, and overseas inventory continued to destock. With the completion of the photovoltaic rush installation and the decline in home appliance production, it is expected that the destocking turning point will come, and the off-season inventory is approaching. Pay attention to the expected trading opportunities of inventory.

Shanghai Nickel : The market changes at the mining end are relatively small, and downstream demand has not seen a significant improvement. It is expected that Shanghai Nickel will still fluctuate in a narrow range. Close attention should be paid to the market correction caused by unexpected events.

Ferrous steel : Finished product output decreased, demand decreased, destocking, and profit was acceptable; molten iron slightly decreased from a high level; coking coal news was disturbing. The overall price was in an awkward position, so wait and see; build a position below 0 for thread 9-1 positive set;

Oils and Fats : Pay attention to short selling drive.

6. Macro highlights of overseas markets in the past week

The global bond market weakened significantly yesterday, mainly affected by the European sell-off (German 10-year bond +5bp, US 10-year bond +4bp). Although the ECB cut interest rates by 25bp as expected and lowered its inflation forecast to 1.6% in 2026, Lagarde took a hawkish stance at the press conference, emphasizing that the current interest rate level is appropriate and is close to the end of the interest rate cut cycle. The market immediately lowered its expectations for further interest rate cuts this year, and there were reports that ECB members did not expect a rate cut in July. GS predicts that the ECB is expected to make the last 25 basis points rate cut in September (18 basis points in September and 27 basis points in December; the Fed cut 22 basis points in September, 36 basis points in October and 53 basis points in December). After the ECB meeting, the focus of swap market transactions shifted to interest rate curve flattening positions, which contrasted with the market's main interest rate curve steepening positions in the previous few weeks. The 10-year and 30-year bond spreads finally remained at 7 basis points, narrowing 3 basis points from the beginning of the week.

We believe that the fundamentals of the US economic data released this week have not changed much, and are basically in line with expectations and better than expected. Under the disturbance of tariff policies, employment and consumption remain relatively stable and resilient. The data did not show much volatility, which is better than expected. The recent market focus may not be determined by a single economic data, but by a group of data. There will be more inflation data next week. In addition, the recent disturbance to the long-term debt side is more about the auction situation, rather than economic data that is not much different from expectations.

US bonds and US stocks strategies at this stage : US bonds: It is hard to say that the risk of US bonds has been eliminated in the short term. Look at the valuation and cost-effectiveness of the allocation. Hold a bottom position on the left side and wait for the right side or when the market is extremely fearful to increase the position. US stocks: The market continues to fluctuate, and focus on buying opportunities when technology stocks pull back.

The content of this article only represents the analytical views of the team's investment research personnel, and does not represent the authoritative views of any organization. The data does not constitute any investment advice, and the information in this article does not constitute any investment opinions. It is for readers' reference only.

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