Morning News

Source: Wall Street News

**Market Overview**

As Trump's tax bill was submitted to the Senate after being approved by the House of Representatives, investors grappled with concerns over rising interest rates and US inflation. The sell - off of US bonds temporarily halted, and the benchmark stock indexes in the US stock market rebounded across the board during trading, but closed with mixed results.

Apple suffered seven consecutive days of decline, being the only decliner among the seven major technology companies. Tesla rebounded nearly 2%. The tax law revoked the important clean - energy tax credit, causing the photovoltaic sector to plummet. Sunrun dropped 37%. Fannie Mae rose more than 50%. The nuclear - power stock Oklo surged more than 10% after trading. Xiaopeng Motors dropped nearly 8%.

After the US House of Representatives passed the tax - cut bill, the yield on US bonds rebounded in the short term. After the opening of the US market, the yield generally continued to decline.

Bitcoin approached $112,000 for the first time in history during trading, reaching a new high.

Crude oil fell more than 2%, marking three consecutive days of decline. Gold, after reaching a two - week high, once turned down and fell more than 1%.

During the Asian trading session, the ChiNext Index closed down nearly 1%, the North - Exchange 50 Index dropped more than 6%, banks strengthened against the trend, the Hang Seng Tech Index fell 1.7%, and Baidu dropped more than 4%.

**Key News**

By a one - vote margin, Trump's tax - cut bill narrowly passed the House of Representatives, and there is still a difficult hurdle to overcome in the Senate. Fed Governor Waller, who is in the spotlight, said that the tax - cut bill has triggered the sell - off of US bonds, and if tariffs stabilize, interest rates will be cut in the second half of the year.

The United States has suspended Harvard University's eligibility to enroll international students, and foreign students currently enrolled must transfer "or else they will lose their legal status".

The Markit manufacturing and services PMIs in the United States in May both exceeded expectations and expanded, and the price index rose again. The euro - zone PMI unexpectedly shrank in May, and the services sector posted its worst performance in 16 months.

The White House Chief Economic Advisor said that the US dollar policy remains unchanged, and the "strong - dollar" stance is still adhered to. After the meeting of the US and Japanese finance ministers, the US side stated that "exchange rates were not discussed, and the current exchange rate reflects the fundamentals", and the Japanese side said that "US bonds were not discussed". The boss of LV rarely "criticized" the European Union, saying that the negotiation "got off to a bad start", and that it should learn from the United Kingdom and make concessions when necessary.

OPEC + is discussing a significant production increase in July, and Saudi Arabia has taken action to punish "quota violators".

At the Xiaomi press conference, the self - developed Xuanjie O1 chip made its debut. The chip is designed to compete with Apple's. The YU 7 will be launched in July, and a price of 199,000 yuan is out of the question! Lei Jun said that Xiaomi's R & D investment in Xuanjie ranks among the top three in the industry, and the project goals are "the latest technology", "flagship - level", and "the first - tier".

A historic moment: BYD's sales in Europe exceeded those of Tesla for the first time, with a 169% surge in sales in April.

"The world's most powerful programming model" has arrived! Anthropic has released Claude 4, which has stable performance after running for seven consecutive hours.

OpenAI has announced the construction of the world's largest AI data center in Abu Dhabi and is considering expansion to the Asia - Pacific region.

Kunlun Wanwei rose by the 20% daily limit, released the Tian Gong super - intelligent agent, and its Deep Research ability ranks first in the world, surpassing OpenAI and Manus.

**Market Closing Reports**

- **European and US Stocks**: The Dow Jones Industrial Average closed flat, the S & P 500 Index fell 0.04%, and the Nasdaq Composite Index rose 0.28%. The European STOXX 600 Index closed down 0.64%.

- **A - shares**: The Shanghai Composite Index fell 0.22%, the Shenzhen Component Index fell 0.72%, and the ChiNext Index fell 0.96%.

- **Bond Market**: The yield on the 10 - year benchmark US Treasury bond fell 7.38 basis points, reaching a daily low of 4.5247%. The yield on the two - year US Treasury bond fell 2.94 basis points to 3.99%.

- **Commodities**: The WTI July crude - oil futures closed down 0.60% at $61.20 per barrel. The Brent July crude - oil futures closed down 0.72% at $64.44 per barrel. The COMEX gold futures fell 0.57% to $3,294.30 per ounce.

**Detailed Key News**  

**Global Highlights**  

By a one-vote margin, Trump's tax cut bill narrowly passed the House of Representatives, but a tough challenge awaits in the Senate. The bill was approved by the House with 215 votes in favor and 214 against. The thousands-of-pages tax cut bill underwent dozens of revisions just two days before the House vote, highlighting the difficulty for Republican leaders to unite various factions within the party. Multiple Republican senators have stated they will demand major revisions to the bill before approval. Democrats warn that voting for the bill could cost many Republicans their seats in the midterm elections.  

Federal Reserve Governor Waller (a rising star at the Fed): The tax cut bill has triggered a sell-off in U.S. Treasuries; if tariffs stabilize, rates may be cut in the second half of the year. Fed Governor Waller said the Fed will not purchase bonds in primary auctions. If the Trump administration's tariff policy stabilizes at around 10%, the Fed may cut rates in the second half of 2025.  

U.S. Treasury yields are nearing record highs, with investors flocking back to gold and Bitcoin as the market warns about Trump's tax cut bill. After the "protest against Trump" in April, is the market about to repeat the scenario? Similar to last month's tariff issues, the market is trying to gauge at what level bond yields and the S&P 500 need to reach to prompt Trump to correct his fiscal policies.  

Deutsche Bank warns: Even Fed QE can't save this now! Fed QE intervention only treats symptoms, not the root cause. There are only two "solutions" to this problem: either Congress enacts fiscal austerity or the U.S. Treasury depreciates. Additionally, Deutsche Bank notes that the resilience of U.S. stocks will also be tested, and Asian investors' behavior will become a key barometer—closely monitor U.S. Treasury and dollar trends during Asian trading sessions.  

*The best market indicator for U.S. fiscal risks.* Deutsche Bank points out that with rising U.S. yields, the yen has anomalously strengthened, a clear sign of reduced foreign participation in the U.S. Treasury market and the most critical market indicator of accelerating U.S. fiscal risks.  

Will the 30-year Japanese bond rout drag down 30-year U.S. Treasuries? Analysis suggests that structural supply-demand imbalances have trapped Japanese bonds in a "value trap," but their hedged yields remain attractive, potentially causing the U.S. yield curve to steepen further. More broadly, the collapse of Japanese bonds may be a warning signal for structural issues in global bond markets, which face three shared pressures: persistent inflation, declining demand from ALM (asset-liability management) investors, and high government financing needs.  

The U.S. suspends Harvard University's eligibility to enroll international students, requiring currently enrolled foreign students to transfer "or lose legal status." U.S. Secretary of Homeland Security Noem said the order affecting Harvard impacts up to 27% of enrolled students. According to CCTV News, Noem also told Fox News she is considering similar measures at other universities.  

Analysis notes that this decision by the Trump administration comes as the U.S. government freezes billions of dollars in federal funding, marking the latest major blow to Harvard. It signals a further escalation of tensions between the Trump administration and elite U.S. universities, pushing the conflict to unprecedented heights.  

The U.S. May Markit manufacturing and services PMIs both exceeded expectations and expanded, with price indices rising again. Driven by new orders, the U.S. May Markit manufacturing PMI preliminary reading was 52.3, a three-month high (vs. expected 49.9, prior 50.2); services PMI preliminary reading was 52.3, a two-month high (vs. expected 51, prior 50.8); composite PMI preliminary reading was 52.1 (vs. expected 50.3, prior 50.6).  

The eurozone May PMI unexpectedly contracted, with services posting their worst performance in 16 months. The eurozone May composite PMI fell from 50.4 in April to 49.5, with services at their worst level in 16 months—modest manufacturing improvements were offset by service sector declines. French economic activity has contracted for nine consecutive months, and service sector activity has fallen in both Germany and France.  

White House Chief Economic Advisor: The U.S. dollar policy remains unchanged, still adhering to a "strong dollar" stance. White House Council of Economic Advisers Chair Stephen Miller made it clear on Thursday that the U.S. still adheres to a "strong dollar" policy, dismissing speculation about a potential shift to a "weak dollar" or secret currency agreements. Following this statement, the U.S. Dollar Index rose 0.5% to 100.1216.  

Statements after the U.S.-Japan finance ministers' meeting: The U.S. "did not discuss exchange rates, current rates reflect fundamentals"; Japan "did not discuss U.S. Treasuries." The U.S. and Japanese finance ministers said the meeting "did not discuss foreign exchange levels," adding that exchange rates should be market-determined and the current USD-JPY rate reflects fundamentals. The news weakened the yen. Japan also denied discussing U.S. Treasuries, likely to allay market fears of potential Japanese减持 (reduced holdings).  

LV's boss rarely "criticizes" the EU: Negotiations "started terribly," learn from the U.K. and make concessions when needed. "Negotiations must progress constructively, requiring mutual concessions from both sides. Look at how the British did it—they negotiated brilliantly," LV's boss bluntly criticized the EU's poor negotiation performance with the U.S., urging the EU to engage in "constructive" talks.  

OPEC+ discusses a major production increase in July, with Saudi Arabia punishing "quota violators." Reports say OPEC+ plans to increase production by 411,000 bpd in July, the third consecutive monthly increase, aiming to pressure members exceeding production quotas. Brent crude fell briefly to $63.92/barrel, down 1.5% on the day.  

Xiaomi launch event: Self-developed Xuanjie O1 chip unveiled, aiming to rival Apple; YU 7 to launch in July, pricing at 199,000 RMB "impossible"! Key announcements include: Xiaomi's self-developed 3nm Xuanjie O1 chip, scoring in the first tier; Xiaomi's first SUV, the Yu7, positioned as a luxury high-performance SUV with 700TOPS autonomous driving chip算力 (computing power) and standard laser radar across all trims. On pricing, Lei Jun said 199,000 RMB is impossible—with configurations comparable to the Model Y, it will likely sell for around 300,000 RMB.  

Lei Jun: Xiaomi's Xuanjie R&D investment ranks top three in the industry, with project goals of "latest technology," "flagship level," and "first tier." Lei Jun posted on Weibo that as of late April, cumulative R&D investment in Xuanjie has exceeded 13.5 billion RMB. The project set high goals from the start: "the latest process technology, flagship-level transistor count, and first-tier performance and energy efficiency."  

Morgan Stanley: Regarding Tesla, this is Musk's most important statement—and it's related to Xiaomi's YU 7. The Xiaomi YU7 looks like a Ferrari or Aston Martin SUV but is priced like a Toyota Camry. Maybe it's time to consider whether Tesla is truly suited to launch more electric vehicles with steering wheels.  

Historic moment: BYD surpasses Tesla in European sales for the first time, with a 169% surge in April! In the European market, BYD registered 7,231 sales in April, a 169% YoY increase; including plug-in hybrids, total sales surged 359%. Against a backdrop of 28% overall growth in European EV sales, Tesla's sales plummeted 49%. Analysts call this a turning point in the European EV market.  

"The world's most powerful programming model" arrives! Anthropic releases Claude 4, maintaining stable performance over seven consecutive hours. Anthropic claims that as the world's best programming model, Claude Opus 4 maintains stable performance in long-duration tasks requiring focus and thousands of steps—e-commerce company Rakuten verified it can work continuously for seven hours; in the SWE-bench assessment, Claude Sonnet 4 achieved 72.7% accuracy, a significant improvement from 62.3% in Sonnet 3.7; Claude Code officially launched, supported by two Claude 4 models.  

OpenAI announces plans to build the world's largest AI data center in Abu Dhabi and considers expanding to the Asia-Pacific region. The AI data center will have a total capacity of 5GW, occupy approximately 10 square miles, and consume as much electricity as five nuclear power plants. The project is a key overseas expansion of OpenAI's "Stargate" global infrastructure plan, jointly developed with UAE-based AI company G42, which also committed to matching investments in U.S. AI infrastructure.  

Kunlun Wanwei hits a 20% daily limit after launching the Tiengong Super Intelligent Agent, with global No. 1 Deep Research capability surpassing OpenAI and Manus. Tiengong Super Intelligent Agent focuses on an "AI version of Office," building a vertical professional system composed of "5 expert intelligent agents" + "1 general intelligent agent." Expert agents specialize in generating professional documents, PPTs, spreadsheets, podcasts, and web pages, while the general agent accesses dozens of MCPs to handle multimodal creative tasks. Tiengong offers deep research capabilities comparable to OpenAI but at only 40% of the cost. Just three hours after launch, Kunlun Wanwei announced traffic restrictions due to excessive usage.  

**Domestic Companies**  

Even David Beckham is obsessed—Labubu is dominating globally! Driving Pop Mart's 400%+ sales surge in Europe and the U.S. in April, with 68% TikTok follower growth. LABUBU 3.0 has become a hit among欧美 (European and American) celebrities and KOLs. Pop Mart gained 68% new followers on U.S. TikTok in April and ranked first in TikTok sales. Sales in the U.S. and European markets grew approximately 8x and 5x YoY in April, respectively, with long queues at overseas stores.  

Humanoid robots to enter mass production by 2026! Morgan Stanley marvels: Xiaopeng's growth horizon has expanded, and so have other automakers'. Morgan Stanley notes that Xiaopeng has laid a solid foundation in AI smart vehicles, with 70% of its AI technologies reusable—such as autonomous driving large models, Turing AI chips, and algorithm simulation platforms, which can be directly applied to humanoid robots. With synergies across four core capabilities—data, energy, algorithms, and manufacturing—Xiaopeng has a natural advantage in "expanding from vehicles to humans."  

Lenovo's Q4 net profit fell 64% YoY, but revenue grew 23% YoY due to the "order frontloading" effect. Lenovo's net profit fell for the first time after five quarters of growth, plunging 64%. Revenue in the smart devices division grew 13%, but analysts attribute this partly to consumers pre-ordering to avoid tariffs.  

**Overseas Macro**  

G7 finance ministers issue a joint communiqué: Productive exchanges achieved, multiple consensus reached. The communiqué states that participants held fruitful and candid exchanges on the current global economic and financial situation, shared risks and opportunities, and response strategies.  

JPMorgan's Dimon: The U.S. still faces stagflation risks; the Fed is right not to cut rates. The head of America's largest bank said the U.S. economy is far from "optimal," with geopolitics, fiscal deficits, and inflation pressures posing major threats—and that not cutting rates is the right call. Ray Dalio also warned that the Fed is in a tough spot and should not cut rates.  

U.S. existing home sales in April hit their worst level for the month since 2009, with inventory surging YoY and prices hitting new highs. The U.S. secondary housing market unexpectedly cooled in April, with sales falling 0.5% MoM to an annualized 4 million units, the worst April since 2009. Despite a 21% YoY increase in listed homes, a 6.92% mortgage rate continues to suppress buyer demand, and the National Association of Realtors (NAR) lowered its full-year existing home sales forecast.  

ECB: The April rate cut was actually a "premature move for June," with inflation near target but tariff concerns lingering. Some ECB officials believe the April reduction in borrowing costs was effectively a "premature" implementation of a planned June rate cut. Eurozone inflation is "nearing its end," but trade tensions may suppress prices in the short term. Markets price a 90% chance of a rate cut next month and expect one more cut this year.  

**Overseas Companies**  

Report: Apple, Tesla, and Nvidia stocks to be traded as tokens on the Kraken platform. Kraken plans to launch tokenized versions of over 50 stocks and ETFs, allowing non-U.S. clients to trade them, with the new program launching in the coming weeks. These tokens can be traded 24/7—even when U.S. markets are closed. Kraken says tokenized stocks offer international investors a cheaper and simpler way to access U.S. markets.  

JPMorgan praises Google: Leading in AI technology, far exceeding previous innovation speeds; "AI-reinvented search" is taking shape, with monetization plans in place. JPMorgan notes that Google is launching products at an unprecedented pace, and its full-stack AI strategy gives its foundational models an edge in efficiency and cost. Google Search's AI Mode is "the biggest revolution since the invention of search engines." Additionally, Google plans to commercialize AI technologies through models like Gemini and Gemma.  

Google's partnership with Character.AI under review. The U.S. Department of Justice is investigating whether Google violated antitrust laws through its AI technology partnership with chatbot company Character.AI. The DOJ is currently ramping up antitrust scrutiny of Google. The U.S. government has urged judges to ban Google from charging for default search engine settings—including AI products—and requires law enforcement to review any Google AI-related acquisitions, even if they don't meet formal review thresholds.  

Apple plans to launch smart glasses in 2026, halting development of camera-equipped smartwatches. Media reports that Apple intends to launch smart glasses by the end of next year, competing with Meta's Ray-Ban smart glasses. However, the company has suspended development of a smartwatch with a built-in camera to analyze the surrounding environment.  

Microsoft CTO: AI is already "over-capable"; the industry needs to bridge the gap between model capabilities and actual product delivery. "AI programming" merely changes software tools—when tools change, keep an open mind. Innovation in the AI era doesn't require building entirely new infrastructure; the true innovation lies in understanding a user problem more deeply than anyone else, then fine-tuning existing infrastructure to solve it at a world-class level. By next year, we may see AI agents executing more complex interactive solutions through "asynchronous interaction."  

Goldman Sachs deep dive: Nuclear power enters a decade of golden growth, and the uranium market faces a structural shortage! Analysis shows that nuclear power themes will outperform the market through the 2030s and likely continue into the 2040s. A Goldman Sachs report warns that global uranium markets face a severe shortage cycle due to depleted old mines and delayed new mine launches, while nuclear power demand surges in the AI era.  

**Industries/Concepts**  

1. **New Consumption**: Huafu Securities notes that Gen Z focuses more on "new consumption" centered on personal pleasure, with key categories including IP潮玩 (IP collectibles), pet products, gold jewelry, and beauty skincare.  

2. **Beer**: Guosheng Securities reports that May marks the peak beer consumption season, with the sector's logic shifting from expectations to data validation. Against extremely low Q2-Q3 2024 bases, improved weather, rising consumer confidence, and policy stimulus in 2025 are all expected to drive positive sales growth, with potential for both volume and price to exceed expectations.  

3. **Coal**: Guotai Junan believes coal will迎来 (usher in) an upward inflection point by the end of May, with June's peak summer demand ahead. The current price decline is seen as the final dip before the peak season. Directions like thermal coal, coking coal, and dividend plays are worth watching.  

4. **Catering**: By consumption tier, mass-market dining with a per capita spend below 50 RMB remains the mainstream of the catering market, accounting for 70% of store count as of 25Q1—a further increase. With intensified policies to boost domestic demand, catering terminal consumption and supply chain demand are expected to recover, and earnings reports may improve starting from Q2's low base.  

**Upcoming Key News**  

- Japan's April CPI.  

- U.S. April new home sales.  

- Speeches by Fed Governor Cook, St. Louis Fed President Muthard, and Kansas City Fed President Schmid.  

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