Morning News

Source: Wall Street News

Market Overview

The new US budget bill has sparked traders' concerns about the deficit, the results of the US bond auction were poor, and the US stocks, bonds and foreign exchanges were three times defeated.

U.S. stocks recorded their biggest drop in a month, with the Dow Jones Industrial Average falling nearly 2%. Google rose nearly 3%, with the top seven technology giants rising. Target fell by more than 5% after the financial report. Nawei once rose by more than 200% after the market. Baidu's financial report fell by more than 4%, while Xiaopeng Motors rose by 13%.

The US dollar fell for three consecutive days. Bitcoin broke through the historical high and approached $110,000. Gold rose by more than 1%.

After the U.S. bond market sales, the bond market sales accelerated, the 10-year U.S. bond yield rose by more than 10 basis points in the day, the U.S. dollar index fell to a two-week low, and Bitcoin fell from a new high of more than $3,000.

During the Asian period, A-shares collectively rose, gold and solid-state batteries rose sharply, Hang Seng Index and Hengke Index both closed higher, and BYD Hong Kong stocks hit record premiums over A-shares.

Important news

The 20-year U.S. bond auction was bleak, with the bidding interest rate exceeding 5%, and the U.S. stocks, bonds and foreign exchanges were three times beaten. The thunder of Japan's government bonds has not been relieved at all and continues to be "no one cares about it".

Extreme conservative Representatives threatened to ban Trump’s tax cuts, and the White House warned that the demise would be “ultimate betrayal.” The House Speaker has since said the House could vote on Wednesday night or Thursday.

The EU pointed out that the US negotiation proposal was unrealistic and was exposed for launching a new plan, intending to exempt some products from tariffs, and jointly invest in AI and other fields.

Bitcoin hit a new record high, approaching $110,000, and US stablecoin legislation has made progress. The US stablecoin bill is questioned: Tech giants become "banks", and the financial crisis is "slow-motion"?

The Legislative Council of the Hong Kong Special Administrative Region passed the "Stablecoin Bill" in the third reading. The United States is also anxious that behind the stablecoins is the "digital coin right".

Baidu's Q1 net profit increased by 42% year-on-year, the growth rate of smart cloud reached 42%, and the order volume of radish fast running increased by 75%; phone call: Focus on application-driven AI innovation, accelerate search and AI transformation, and the profit path of radish fast running was clear.

OpenAI's largest acquisition in history: it won $6.5 billion in AI hardware startups.

In sharp contrast to Walmart, Amazon CEO: Tariffs have not affected consumer spending.

Market closing

European and American stock markets: The Dow Jones Industrial Average fell 1.91%, the S&P 500 fell 1.61%, and the Nasdaq fell 1.41%. The European STOXX 600 index closed down 0.04%.

A-shares: The Shanghai Composite Index rose 0.21%, the Shenzhen Component Index rose 0.44%, and the ChiNext Index rose 0.83%.

Bond market: U.S. 10-year benchmark Treasury bond yield rose 11.16 basis points to 4.5985%. The two-year U.S. Treasury yield rose 4.90 basis points to 4.0194%.

Commodity: COMEX gold futures rose 1.01% to $3317.80 per ounce. WTI July crude oil futures closed down 0.74% at $61.57 per barrel. Brent July crude oil futures closed down 0.49% at $64.91 per barrel.

**Details of Major News**

**Global Highlights**

The 20 - year US Treasury bond auction was dismal, with the winning yield breaking through 5%. The auction of the 20 - year US Treasury bond on Wednesday, while not as disastrous as the 20 - year Japanese government bond auction earlier this week, was almost one of the worst performances since the bond was introduced five years ago. After the auction results were released, US stocks, US bonds, and Bitcoin all declined.

From investment banks to traders, Wall Street is bracing for the 10 - year US Treasury bond yield to hit 5%. Data on open interest contracts from the CME shows that there has been a large - scale options trade betting that the 10 - year US Treasury bond yield will climb to 5% in the coming weeks, with an amount as high as $11 million.

Deutsche Bank: Everyone knows that US bonds are unsustainable, but no one knows when they will collapse. Deutsche Bank analyst Jim Reid said that tariffs may have accelerated the collapse. The US's "exorbitant privilege" (the ability to borrow at a cost far below fair value) is gradually fading, and the US dollar's status as a reserve currency is also weakening. The debt - to - GDP ratio is expected to soar above 200% in the next decade.

Taiwanese who bought US bonds in recent years have suffered heavy losses. With the sharp appreciation of the New Taiwan dollar and the slump in US bonds, not only has the life insurance industry in Taiwan, China, fallen into trouble, but a large number of retail investors in Baodao Bond ETFs (whose underlying securities are mainly US bonds) are also facing severe losses. In May, investors in Taiwan, China, have on average suffered losses of about 11% - 12%, and the redemption wave is accelerating, which may further impact the market.

The crisis in Japanese government bonds shows no sign of relief and remains "unattended". For the second consecutive day, there were no bids in the Japanese bond market, and the yields on 30 - year and 40 - year Japanese government bonds remained at record highs. Market sentiment is likely to remain under pressure in the coming weeks as auctions of 30 - year and 40 - year bonds are approaching. As the Bank of Japan gradually withdraws from the market, bond prices will be more affected by the behavior of price - sensitive investors.

Extreme - conservative congressmen threaten to block Trump's tax - cut bill, and the White House warns that killing the bill would be an "ultimate betrayal". House Speaker Johnson announced that he had reached an agreement with lawmakers from high - tax states to raise the SALT deduction cap to $40,000. However, several hard - line Republicans later said that the Republican leadership in the House of Representatives had not fulfilled the concessions promised to them by the White House. Trump and Johnson planned to meet with some extreme - conservative congressmen at the White House on Wednesday. Johnson later said that the meeting with Trump was "very productive", and the House of Representatives may vote on Wednesday night or Thursday.

Investors question whether Trump's tax - cut bill will aggravate the debt, saying "it's like the ship is about to hit the rocks, but the helmsman is arguing about which way to turn". Institutions predict that this tax - cut bill will increase the public debt by at least $3.3 trillion by the end of 2034, raising the debt - to - GDP ratio from the current 100% to a record - high 125%. Veteran market analyst Edward Yardeni said: "The bond market vigilantes are ready."

The EU says the US negotiation proposal is unrealistic and is reported to have put forward a new plan, proposing to exempt some products from tariffs and jointly invest in areas such as AI. Media reports say that the EU has proposed gradually reducing tariffs on non - sensitive agricultural and industrial products to zero, reciprocal investment and strategic procurement plans in the fields of energy, AI, and digital connectivity, and also involving cooperation in dealing with common challenges such as overcapacity in the steel and automotive industries. The EU hopes to reach a balanced and mutually beneficial agreement, and the two sides are still feeling each other out.

Bitcoin hits a new all - time high, approaching $110,000, and progress is made in US stablecoin legislation. Bitcoin broke through its record high set on January 20 this year when Trump took office during US stock trading on Wednesday, reaching as high as $109,800. Later, affected by the poor 20 - year US Treasury bond auction, it fell more than $3,000 from its daily high. Bitcoin's performance is significantly stronger than that of US stocks and even gold. Thanks to the enthusiastic participation of enterprises and the adoption by Wall Street, and the progress in US stablecoin legislation, investors are optimistic about the US regulatory policy.

The US stablecoin bill is questioned: Tech giants become "banks", and the financial crisis is "playing out in slow motion"? Analysts believe that this bill hardly sets any limits on tech giants such as Meta, Amazon, and Google issuing their own stablecoins, which may indirectly empower these tech giants to become shadow banks. Given the scale of these tech giants, once there is a serious run - on stablecoins, the impact will be no less than that of the 2008 financial crisis.

Hong Kong is advancing its legislation, and the US is also in urgent need. Behind stablecoins is the "right to mint digital currency". On May 21, the Legislative Council of the Hong Kong Special Administrative Region passed the "Stablecoin Bill" on its third reading, marking the official inclusion of stablecoins, a type of virtual asset, into the legal regulatory system. At the same time, the US government is also stepping up efforts to promote stablecoin legislation. As major financial centers around the world are establishing their own digital currency systems to ensure greater control over currency in the digital finance era, this "battle for the right to mint digital currency" may have just begun.

Baidu's net profit in the first quarter increased by 42% year - on - year, its intelligent cloud grew at a rate of 42%, and the order volume of Luobo Kuaipao increased by 75%; Conference call: Focus on application - driven AI innovation, accelerate the transformation of search to AI, and the profit path of Luobo Kuaipao is clear.

Baidu's total revenue in the first quarter was 32.45 billion yuan, exceeding expectations, with a year - on - year growth of 3%, and its profit increased by 42% year - on - year. The growth rate of its intelligent cloud reached 42%, and the order volume of Luobo Kuaipao increased by 75% year - on - year. The number of global travel services exceeded 11 million. Baidu said on the conference call that the demand for AI has driven a significant increase in the revenue of its intelligent cloud, and Baidu will focus its resources on application - driven AI innovation. The current transformation to AI - powered search will inevitably bring significant pressure on short - term revenue and profit margins, but it is believed to be the right path to achieve long - term growth. The conference call also revealed that Luobo Kuaipao now covers 15 cities worldwide, with more than 1,000 self - driving vehicles deployed, and "a clear profit path has been seen".

OpenAI's largest - ever acquisition: It has acquired a $6.5 - billion AI hardware startup founded by the "Father of the iPhone". The acquisition will bring about 55 hardware engineers, software developers, and manufacturing experts from the startup io to OpenAI. Ive and his design company LoveFrom will not join OpenAI but will take over its creativity and design, including software. Ive and Altman expect that the first device after OpenAI's acquisition of io will be unveiled in 2026. It is said that Altman and LoveFrom have been secretly cooperating for two years to develop new devices to free consumers from the limitations of screens.

In sharp contrast to Walmart, Amazon's CEO says tariffs have not affected consumer spending. Andy Jassy said that in the face of President Donald Trump's comprehensive tariffs, the company has not seen any signs of consumers tightening their belts. Amazon's diversified supply chain and scale advantages may have helped it resist some of the tariff pressure. As of the close of US stocks on Wednesday, Amazon followed the broader market trend and closed down 1.35%.

**Domestic Macroeconomy**

The Ministry of Commerce on the "US attempt to globally ban Chinese advanced computing chips": Implementing US measures will be suspected of being illegal. According to CCTV News, China emphasized that the US measures are suspected of constituting discriminatory restrictive measures against Chinese enterprises. Any organization or individual that implements or assists in implementing the US measures will be suspected of violating laws and regulations such as the "Anti - Foreign Sanctions Law of the People's Republic of China" and shall bear corresponding legal responsibilities.

The gold price has returned to $3,300, and Chinese buyers are back. Goldman Sachs said that during the night trading session in China, the buying behavior on the Shanghai Futures Exchange (SHFE) triggered buying on the New York Mercantile Exchange (COMEX). The total open interest in gold contracts on the New York Stock Exchange increased by 3% (and that of silver increased by 4%), and at the same time, the arbitrage space between SHFE and COMEX is also expanding.

**Domestic Companies**

A global super - IP! Is Labubu the "Hello Kitty" of the new era? The search popularity of Labubu has increased exponentially in the past year and exceeded that of Hello Kitty in May 2025. JPMorgan Chase believes that Labubu has advantages in appearance innovation, celebrity influence, marketing activities, etc. It is expected that by 2027, Labubu will be able to reach 100% of the search popularity of Hello Kitty, and the annual sales of its THE MONSTERS series are expected to reach 14 billion yuan.

Xiaopeng Motors' conference call: It will achieve profitability in the fourth quarter of this year, the Turing chip will be mass - produced in the third quarter, and a humanoid robot will be launched in 2026. He Xiaopeng, the chairman of Xiaopeng Motors, said that the company expects the delivery volume in the second quarter of 2025 to reach 102,000 - 108,000 units, with a year - on - year growth of up to over 250%, and is expected to achieve profitability in the fourth quarter. In the next stage, Xiaopeng will sprint for the research and development of L3/L4 - level autonomous driving. The self - developed Turing chip has successfully completed the tape - out, and will be mass - installed in vehicles in the third quarter. It will be deployed in the fifth - generation humanoid robot in the future. Xiaopeng plans to officially launch a humanoid robot in 2026 to reach the leading intelligent level in the industry.

iQIYI rose more than 2% before the market, its first - quarter revenue exceeded expectations, and its net profit was 182 million yuan.

The IPO price of Hengrui Medicine in Hong Kong is 44.05 Hong Kong dollars, at the top of the range, with a 25% discount to the A - share price.

**Overseas Macroeconomy**

Is the rebound of US tech stocks about to fizzle out? Just as it approaches the high before the "DeepSeek shock", the "smart money" begins to retreat in large numbers! Hedge funds are short - selling US tech stocks at a record pace. Nomura warns that US tech stocks have recovered to the level before the Chinese AI shock and are starting to approach the high set in January. Without new driving factors such as a further acceleration of technology investment or a rate cut by the Federal Reserve, tech stocks may have difficulty continuing to rise. As the positions of the "smart money" and retail investors diverge, market volatility is likely to continue to increase.

Howard Marks of Oaktree Capital: Still believes in "American exceptionalism", but the stance is no longer so firm. Howard Marks recently said that the US is still the top destination for investors, but he also admitted some doubts. The managing director of the Kuwait Investment Authority also expressed a similar view, clearly stating that the Kuwait Investment Authority will not sell its US assets, but did not directly answer whether it will significantly increase its investment in the US.

Morgan Stanley's medium - term strategy: The US dollar will continue to decline in the second half of the year, but overweight US stocks and bonds, and timing is key. Morgan Stanley believes that the easing of tariff threats reduces the likelihood of an economic recession. Coupled with substantial monetary easing and regulatory relaxation, it is expected that the S&P 500 index will rise 9% by the second quarter of next year, and the 10 - year US Treasury bond yield is expected to fall to 3.45%. It is expected that the US dollar index will depreciate 9% to 91 by the middle of 2026, because the two core driving forces behind the strong US dollar era are disappearing: the US's growth advantage and yield advantage relative to other G10 economies will be significantly weakened.

The ECB warns: US assets are seriously questioned, and there is a risk of triggering a chain reaction in the global financial system. The ECB said that after Trump announced the trade policy in April, there was an "atypical shift" in the market, and investors began to move away from traditional safe - haven assets such as the US dollar and US bonds, which may indicate the occurrence of a "fundamental institutional change". This shift will trigger "broader changes in global capital flows" and have a potentially far - reaching impact on the global financial system.

Following the US, Europe also "raises taxes" on small packages. The EU plans to levy a 2 - euro fee on imported small packages. Reports say that this fee is applicable to goods sent to consumers, and packages sent to warehouses will be charged 0.5 euros per piece. Currently, Japan is also considering taxing imported small packages.

Under the shadow of tariffs, Japan's exports slowed down for the second consecutive month. Japan's export growth rate in April dropped to 2% year - on - year, the lowest since October last year. As a pillar industry of Japan's exports to the US, the automotive commodity will bear a 25% high - tariff, directly impacting the profitability of the country's manufacturers.

The "dual - objective" of OPEC + 's production increase: Punish over - production and, more importantly, hit US shale oil! Analysts believe that OPEC + 's production increase this time is not only to punish over - producing allies but also to compete for market share with US shale oil producers by pushing the oil price below $60. Unlike ten years ago, the cost of US shale oil producers has increased, making them more vulnerable.

**Overseas Companies**

Target's sales in the first quarter fell sharply by 2.8%, and comparable sales decreased by 3.8%. The company lowered its annual forecast. Worried about tariffs and the economic outlook, the company lowered its annual forecast, expecting a low - single - digit decline in sales in the 2025 fiscal year, while the previous forecast in March was for a 1% increase.

Navitas Semiconductor soared 200% after - hours. It cooperates with Nvidia on the next - generation 800V power architecture, and gallium nitride and silicon carbide are the keys. On May 21, local time, Navitas Semiconductor announced a cooperation with Nvidia to develop the next - generation 800V high - voltage direct - current (HVDC) architecture to power the "Kyber" rack - level system that supports GPUs including Rubin Ultra. Navitas' gallium nitride and silicon carbide technologies will play a key role in this cooperation.

**Industries/Concepts**

1. Robots: A research report by GF Securities points out that for humanoid robot start - ups in the early stage of the industry, finding suitable application scenarios is the core pain point. Judging from the current industry trends, leading companies in industries such as textile, packaging, and logistics that have application scenarios have entered the humanoid robot field. In the future, it is expected to form a business model of self - research, self - production, and self - sales.

2. Innovative drugs: Sansheng Pharmaceutical has licensed the overseas rights of its self - developed innovative PD - 1/VEGF bispecific antibody drug (SSGJ - 707) to Pfizer, a large - scale multinational pharmaceutical company. For this reason, Sansheng Pharmaceutical is entitled to receive a down - payment of $1.25 billion, milestone payments of $4.8 billion, and subsequent double - digit percentage - gradient royalty fees based on the net sales of the product. This transaction is expected to become a new benchmark for Chinese biopharmaceutical License - out, and the certainty of domestic innovative drug technologies and products being recognized by MNCs continues to increase.

3. Apparel and jewelry: Consumer demand is relatively stable, but consumer trends are always changing. For example, in the apparel track, new popular trends are emerging in products and channels, including the rapid growth in demand for running and outdoor sports categories. The sales of traditional - style gold in the jewelry sector are excellent.

4. 5G: 5G - A is an upgraded version of 5G network capabilities and a necessary stage for the transition from 5G to 6G. Compared with 5G, 5G - A has been significantly improved in terms of capacity, rate, delay, positioning, reliability, etc., which can bring a faster and better communication experience.

**Preview of Today's Major News**

China's share of the global payment in RMB via Swift in April.

The State Council Information Office holds a press conference on the relevant situation of science and technology finance policies.

The preliminary values of the manufacturing, service, and composite PMIs in the US, the eurozone, the UK, and Japan in May.

The number of initial jobless claims in the US last week.

Existing - home sales in the US in April.

Speech by New York Fed President Williams.

The European Central Bank releases the minutes of the monetary policy meeting in April.

Xiaomi holds a strategic new product launch event and will launch the Xuanjie O1.

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