Market Overview

Abnormal Market Signals

This week, the financial market experienced a rare "triple kill" of stocks, bonds, and foreign exchange:

• The US stock market experienced significant fluctuations, with the S&P 500 index rising by 5% in a single week.
• The 10-year U.S. Treasury yield soared to a high of 4.47%.
• The dollar index fell below the 100 mark.

Divergence in the performance of safe-haven assets:

• Gold price breaks through 3200 USD/ounce
• Traditional safe-haven currencies like the Japanese Yen and Swiss Franc strengthen.
• The safe-haven status of the US dollar is being questioned.

Economic Data Contradictions

Signs of stagflation appearing early:

• CPI data has declined, mainly benefiting from the decrease in gasoline prices.
• Core inflation ( housing, food ) remains stubborn.
• PPI decreased by 0.4% month-on-month, reflecting a coexistence of shrinking demand and rigid costs.

It should be noted that the current data has not yet reflected the impact of the new tariffs, and the market's pessimistic expectations may have reacted in advance.

Liquidity Crisis Looms

The U.S. Treasury market is experiencing a sell-off spiral:

• Long-term bonds fell sharply
• The value of collateral has decreased.
• Hedge funds forced to sell
• Yield rate further rises

Increased pressure in the repurchase market:

• The spread between BGCR and SOFR has widened
• Reflects the sharp rise in collateral financing costs
• Market liquidity stratification intensifies

Policies and External Risks

The tariff game continues:

• Tariffs on China rise to 145%
• China retaliates to 125%
• Trade war partially eases but long-term risks remain.

Pressure of refinancing US debt:

• Approximately $9 trillion in US debt will mature in 2025
• Foreign holders selling off or exacerbating liquidity pressure

Outlook for Next Week

Market Shift to Defensive Logic

• Funds are shifting towards non-USD safe-haven assets ( gold, yen, Swiss franc )
• Stagflation trading dominates, long-term U.S. Treasury bonds and high-leverage equity assets face selling risks.

Key Monitoring Indicators

• US Treasury liquidity ( Will the 10-year yield break 5% )
• Changes in China's debt holdings
• Bank of Japan currency intervention
• Changes in high-yield bond spreads