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

Important Events

China-US trade relations have improved . The latest official reports from both sides after the London talks stated that substantial progress has been made. The impact of tariffs has been eased to some extent, and the market has given a relatively positive response.

Geopolitical risks in the Middle East have risen sharply . On June 13, Iran and Israel had a rare direct conflict. The intensity and escalation speed of the confrontation exceeded expectations, pushing up global risk premiums.

Data of major global economies and central bank policies

United States: GDP in the first quarter of 2025 fell by -0.3% month-on-month, with a weak rebound; the Federal Reserve’s interest rate decision became the focus this week.

Eurozone : Inflation rate dropped to 1.9% in May, falling below 2% for the first time. Officials said monetary policy has become neutral and the path will still be determined by data in the future.

UK : The Bank of England has not cut interest rates yet, maintaining the policy rate at 4%, but it is expected to cut interest rates in August.

Japan : The overall situation is low growth, and the central bank still maintains an accommodative policy.

Investment Tips and Major Asset Class Strategies

1. Interest rate bond market analysis - interest rates are falling, capital is dominant

Current performance : Yields fluctuated downward across the board, with the 10-year Treasury bond hitting a low of 1.6350%, gradually approaching the historical low of around 1.6% set at the end of last year.

Core logic: At present, with limited external disturbances, the liquidity changes on the liability side of commercial banks' assets have become the main "main line" of the bond market, and the yield curve continues to flatten. From the perspective of market driving factors, as tariff transactions are gradually digested by the market, the funding side has once again become the core variable affecting the bond market. The leverage ratio of the bond market has exceeded the level of 2024, and many bond funds issued purchase restriction announcements in June to curb overheating.

Outlook: There is little pressure from the expiration of reverse repo next week. Pay attention to the disturbance of tax period and the release of multiple macro data. At present, the momentum for yield to break through the new low is not very sufficient. The momentum for long positions may need to wait for the policy interest rate to be lowered again.

2. Credit bond market analysis

Domestic market : Primary issuance rates generally fell by 10-20bp; the coupon rates of newly issued credit bonds were lower than or near the valuation. Secondary market: The activity of high-grade credit bonds decreased, and trading became more cautious; the strong trend of municipal investment bonds (especially those below the medium and low ratings) continued, and some municipal investment bonds in weak-asset regions were traded at a 10-40bp discount in valuation, and institutions had a strong pricing for the scarcity of coupon assets.

Chinese offshore bonds : The overall yields in the primary and secondary markets continued to decline. The pricing of newly issued primary secured bonds was 7.5%, and new issuance was rare. The secondary yields declined to 9% (the overall yield declined by 50-100bp), and the transaction was acceptable. There was a strong demand for high-quality snack bonds.

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

-A-share market: The overall market is active, with the average daily turnover standing at the trillion mark, and the capital side has recovered. Small-cap stocks led the gains, but the valuation and price-performance ratio declined;

Options market : The 1000 Index PCR (the ratio of put option volume to call option volume) rose to a high level, indicating that it is becoming more difficult for market risk appetite to continue to rise;

Financing balance : It continued to remain flat this week. Funds are still focused on small and micro-cap stocks, and funds for industrial logic have not entered the market on a large scale.

Policy impact: As the implementation time of the new quantitative rules in July approaches, the ST sector has shown an early adjustment trend; this week, the BEIJING 50 Index also showed a trend divergence, which may indicate that the market has already expected this.

- Hong Kong stock market : Hong Kong stocks are more affected by the confusion of overseas interest rate cut expectations, and after the AH premium hit a five-year low, it also triggered concerns about the mean reversion of funds;

Hengke : It also failed to break through the previous high smoothly, and the correction range was slightly larger than that of A shares;

New consumption and innovative drug sectors : Both sectors have adjusted, but the adjustment of innovative drug stocks in Hong Kong stocks is still strong. We can pay attention to whether its support is effective. Under the influence of geopolitical conflicts, we can pay attention to the national defense military industry sector of Hong Kong stocks or the high-dividend banks and resource-based central enterprises sectors for hedging.

4. Convertible bond market analysis – low valuation + liquidity recovery

Price : The conversion premium rate of convertible bonds this week is near the low level in the past four years;

Liquidity : The average daily turnover ranged from 69.5 billion to 74.2 billion yuan, higher than the 55.4 billion to 69.5 billion yuan in the previous week, expanding for two consecutive weeks, leaving the trillion yuan psychological line behind, supporting the rebound of A shares.

5. Commodity market analysis

Domestically : CPI in May remained at a low level of -0.1% year-on-year, and PPI fell to -3.3% year-on-year; import and export data were weaker than expected, and exports slowed slightly; real credit in May increased less year-on-year, and social financing was mainly supported by corporate and government bonds. Macro data show that the domestic economy is still in a weak recovery range, which is bearish for commodities.

Internationally : The initial easing of the Sino-US trade war is in line with market expectations. The conflict between Israel and Iran has re-emerged, and there is a risk of closure of the Strait of Hormuz. Gold has broken through its previous high on the daily chart, and crude oil has rebounded sharply. The US CPI is lower than expected, leaving room for interest rate cuts, which is good for commodities.

6. Analysis of US bond and foreign exchange market

US debt is in a state of inflation, causing tensions. On the eve of the FOMC, medium-term bonds are under significant pressure.

• This week's US CPI and PPI data were lower than expected , indicating that inflationary pressure has temporarily eased; however, the significant increase in oil prices caused by geopolitical conflicts is strengthening the pressure for inflationary rebound, making it difficult for the easing trend in the global bond market to continue. Although the fundamental trade-off between growth and inflation has improved and the risk appetite for maturity has stabilized, the macro resistance to a sharp decline in US bond yields still exists.
• Any continued bearish pressure on the US market ahead of the June Federal Open Market Committee (FOMC) decision is more likely to come from intermediate-term bonds rather than long-term bonds.
• Policies in Europe and Japan are different : There are no important macroeconomic dynamics in the European interest rate market except for the warming of inflation transactions; on the Japanese side, the central bank reassessed its bond purchase plan and negotiated with major dealers. Supply factors became the focus, and the yield curve in the 5- to 10-year period was most vulnerable to potential adjustments.

The RMB appreciation momentum continues, but weak domestic demand becomes the core concern

• The easing trend in US-China trade is likely to continue ( London meeting sends positive signals), which has pushed the RMB to its highest level against the USD since early April. We expect the RMB to continue to appreciate relative to the USD - this judgment is based on the competitiveness of China's export sector and the undervaluation of the RMB (especially against the USD) from a real trade-weighted perspective, which supports a stronger RMB to achieve a more balanced trade situation.
• The main risks are currently concentrated on the domestic demand side , rather than the external environment. Specifically, domestic credit expansion continues to be weak, and domestic demand support is overly dependent on monetary easing rather than active fiscal policies, which will weaken support for the currency. However, this risk has not yet fermented substantially and still needs to be monitored. Considering that the counter-cyclical factor remains neutral, given that the counter-cyclical factor remains neutral and there is a willingness to steadily push up the exchange rate fixing price, we can continue to pay attention to the appreciation potential of the RMB and its impact on the region.

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.

Without the prior written permission of Hangzhou Fuyonggu Xianshan Asset Management Co., Ltd., no organization or individual may reprint, copy, publish, reprint or quote in any form. Otherwise, all adverse consequences and legal liabilities caused by such unauthorized reprinting, copying, publishing, reprinting or quoting shall be borne by the person who does so.