Morning News

Source: Wall Street Journal  

**Market Overview**  
Strong US labor market data coupled with Powell reiterating a wait-and-see stance have dampened expectations for Fed rate cuts, leading to lower US bond prices. Investors retreated from tech stocks, with the Dow rising over 400 points, the Russell small-cap index outperforming, and the Nasdaq 100 declining.  

Tesla and Trump clashed again, with Tesla's stock dropping over 7% at one point. The latest version of the "Big Beautiful" bill did not include taxes targeting wind and solar energy, prompting a rally in solar stocks. Wall Street banks raised dividends and increased buybacks, with bank stocks extending gains after hours.  

The 10-year Treasury yield rose over 4 basis points, while the 2-year yield climbed about 6 basis points. The dollar initially fell but then rebounded, gaining over 0.6% from its intraday low before paring some losses by the close. Gold posted a second consecutive gain, rising over 1%. Oil prices fluctuated.  

During the Asian session, A-shares were mixed throughout the day, with biotech stocks surging in the afternoon. Government bonds rose, the yuan hit a new high since November last year, and commodities declined.  

**Key News**  
Vance's "one-vote breakthrough" narrowly secured Senate passage of the "Big Beautiful" bill, with a House vote still pending. Clean energy breathed a sigh of relief as the final Senate version of the bill excluded new taxes on imported components, lifting solar stocks.  

At a critical moment, Musk slammed the "Big Beautiful" bill, vowing to "do everything to ensure its supporters lose next year's midterms." Trump attacked Musk: "Without subsidies, you'd have gone back to South Africa long ago." Musk fired back: "Cut all subsidies, right now!" When asked about deporting Musk, Trump replied, "We'll have to see."  

Powell did not rule out a July rate cut, stating that without tariffs, rates would have already been cut, and tariffs are expected to impact inflation. ECB President Lagarde said the rate-cutting cycle is nearing its end and praised Powell. BOJ Governor Ueda stated more data is needed to decide the timing of the next rate hike.  

With the deadline approaching, the US scaled back negotiation goals to avoid restarting tariffs, not aiming for a "comprehensive, one-step" deal. Trump again warned of tariffs on Japan at 35% or higher, ruling out a delay. Reports suggest the US and India may reach an interim trade deal as early as this week, with the first phase of a comprehensive agreement finalized by fall. India bought more US crude to appease Trump.  

US June ISM Manufacturing PMI contracted for the fourth consecutive month, with employment shrinking further and price indices accelerating. US May JOLTS job openings significantly exceeded expectations, and voluntary quits rose. Eurozone Manufacturing PMI hit a 34-month high, with Germany continuing its recovery and France under pressure.  

**Market Close**  
**Global Stocks**:  
- S&P 500: down 0.11% at 6,198.01  
- Dow: up 0.91% at 44,494.94  
- Nasdaq: down 0.82% at 20,202.89  
- Europe STOXX 600: down 0.21% at 540.25  

**A-Shares**:  
- Shanghai Composite: up 0.39% at 3,457.75  
- Shenzhen Component: up 0.11% at 10,476.29  
- ChiNext: down 0.24% at 2,147.92  

**Bonds**:  
- US 10-year Treasury yield: up 1.36 bps at 4.2416%  
- US 2-year yield: up 5.32 bps at 3.7725%  

**Commodities**:  
- WTI August crude: up 0.52% at $65.45/barrel  
- Brent September crude: up 0.55% at $67.11/barrel  

- COMEX gold: up 1.29% at $3,350.50/ounce

The following is the English - translation of the above - mentioned text:

### Details of Top News

#### Global Highlights

Vance "Broke the Deadlock with One Vote", and the US Senate Narrowly Passed the "Great - Beauty" Bill, with the House of Representatives Vote Still Pending. The "Great - Beauty" Bill narrowly passed the vote in the House of Representatives in May by a one - vote margin. For the revised Senate version of the bill to pass the House of Representatives, Republican leaders can afford at most three votes against. Conservative Republican lawmakers said they are still pushing for further spending cuts, while moderate lawmakers are uneasy about cuts to the funding of social security programs such as Medicaid.

Clean energy can breathe a sigh of relief. The final version of the "Great - Beauty" bill in the US Senate does not include new taxes on imported related components, and photovoltaic stocks have risen. It was reported last weekend that a previous version of the Senate bill proposed a new excise tax on wind and photovoltaic projects using certain imported components. Industry associations expect that this excise tax will increase the costs of US clean - energy companies by as much as $7 billion in the next ten years. After the final version of the bill without this tax provision was passed, the photovoltaic stock Sunrun soared by 10%.

At a crucial moment, Musk severely criticized the "Great - Beauty" bill, vowing to "do his best to make the supporters lose the mid - term elections next year". Musk lashed out at the "Great - Beauty" bill again, targeting almost all the incumbent Republican lawmakers who supported the bill. He said that these lawmakers promised to reduce government spending during their campaigns but voted to support the largest debt increase in history, and he vowed to make them fail in the mid - term elections next year. Analysts pointed out that Musk's statement may impact the internal unity of the Republican Party and add uncertainty to the party's primary elections in the 2026 mid - term elections.

Trump attacked Musk: Without subsidies, you would have returned to South Africa long ago! Musk responded: Cut them all, right now! Only half a month has passed since the last reconciliation, and the drama of the "Trump - Musk" feud over the "Great - Beauty" bill has played out again, and Tesla's stock price once dropped by 7%.

Will Musk be deported? Trump: "We need to take a look". When a reporter asked Trump on Tuesday whether he would deport Musk, Trump said that they needed to see how the situation developed. Musk is frustrated by the loss of electric - vehicle subsidies, but he may lose much more than that. Musk later launched a vote on X, saying that the "Great - Beauty" bill would make it easier for the president to abuse power in many areas.

Powell did not rule out the possibility of a rate cut in July, saying that if it were not for the tariffs, the interest rates would have been cut, and the tariffs are expected to have an impact on inflation. Regarding the July FOMC meeting, Powell refused to make a prediction, saying that the future economic outlook would determine the policy direction. He said that if the Fed was not worried that the tariffs might undermine the final stage of its inflation - suppression efforts in recent years, it was very likely to continue to gradually cut interest rates this year. The "New Fed News Agency" said that Powell's recent remarks showed that he was trying to maintain a wide range of policy flexibility in the coming months, which implied that the Fed's interest - rate - cut strategy might change; in the current environment, if the summer employment data is weak and the price increase is lower than expected, it may be enough to restart the interest - rate cut.

Lagarde, the President of the European Central Bank (ECB), said that the interest - rate - cut cycle is coming to an end and also praised Powell. At the Sintra Forum in Portugal on Tuesday, Lagarde, the President of the ECB, was more cautious in her remarks than other officials. She pointed out that the inflation in the euro area reached the 2% target in June, but the task was not yet completed, and warned of the two - way risks brought by geopolitical issues and global fragmentation. Lagarde said that the interest - rate - cut cycle is approaching the end, but she will not make a pre - set commitment, and the future policy will depend on the data. Lagarde also praised Powell for his courage in the face of criticism from the White House.

Kazuo Ueda, the Governor of the Bank of Japan: More data is still needed to determine the timing of the next interest - rate hike. Kazuo Ueda, the Governor of the Bank of Japan, pointed out at the ECB Annual Forum that the central bank is closely monitoring the strength of underlying inflation, the potential impact of US tariff policies, and the food inflation that is expected to gradually decline. About one - third of the Bank of Japan watchers expect the next interest - rate hike to be in January next year, and another 30% expect it to be in October this year.

As the deadline approaches, the United States has narrowed its negotiation goals to avoid re - imposing tariffs and is not pursuing a "comprehensive and one - step - in - place" agreement. According to media reports, the United States will seek to reach a "principled agreement" on a few trade disputes before the deadline. This marks a retreat by the White House from its ambitious plan to reach 90 trade agreements during the 90 - day suspension period. Countries that agree to these narrower agreements will be exempt from more severe reciprocal tariffs, but they still need to bear the existing 10% tariffs during the continued negotiation of more difficult issues.

Trump issued another tariff warning to Japan, threatening a 35% or higher tariff, without considering postponing the "deadline", and the S&P index returned to a downward trend. Last weekend, taking Japan as an example, Trump said that the United States would directly send letters to some countries to inform them of the tariffs, and no longer continue the negotiation, with a 25% tariff on Japanese cars. On Monday, Trump hinted at raising tariffs, saying that Japan would rather do without than buy US rice. On Tuesday, Japanese officials said that they would not sacrifice agriculture in the US - Japan tariff negotiations; Trump later said that he would write to many countries to notify them of the tariffs, and Japan would pay 30%, 35%, or any tariff determined by the US side.

Report: The United States and India are expected to reach a temporary trade agreement as soon as this week and finalize the first - stage content of the comprehensive agreement before autumn. India is seeking to reach a temporary trade agreement with the United States within this week to avoid the 26% high - tariff. This agreement will become one of the first important bilateral trade achievements of the Trump administration. The two countries have pledged to finalize the first - stage content of the comprehensive agreement before autumn and increase the bilateral trade volume to $500 billion by 2030. To solve the problem of bilateral trade imbalance, India has agreed to increase the import of natural gas from the United States, and has increased the import volume of US crude oil by about 120% this year.

As the tariff deadline approaches, India buys more US crude oil to appease Trump. India has increased the import volume of US crude oil by about 120% this year, while reducing the import of crude oil from Russia, Saudi Arabia, and Iraq by more than 70%. The country is trying to reach a temporary trade agreement with the United States before the tariff deadline on July 9 to avoid the 26% reciprocal tariff.

The US ISM Manufacturing PMI in June shrank for the fourth consecutive month, employment contracted again, and the price index accelerated. Due to the intensification of the contraction in orders and employment, the US ISM Manufacturing PMI in June was 49, the expected value was 48.8, and the previous value was 48.5. The indicator for measuring the price of raw material payments showed a sign of a slight acceleration in inflation. The import and export indicators were still in a contraction state, but the decline rate slowed down. The back - order index recorded the largest decline in a year.

The US JOLTS job openings in May were much better than expected, and the number of voluntary quits increased. The JOLTS job openings in May unexpectedly reached the highest level since November last year. The ratio of job openings to the number of unemployed, which is closely watched by Fed officials, rose to 1.1, the first increase in several months. The number of layoffs decreased, and the number of hires also declined.

The euro - area manufacturing PMI reached a 34 - month high, Germany continued its recovery momentum, and France was under pressure. The euro - area manufacturing industry showed signs of stabilization in June, with the PMI rising to 49.5, the highest level since August 2022, and output has increased for four consecutive months. The German manufacturing PMI rose to a 34 - month high, and new - order growth reached a 39 - month high; the French manufacturing PMI fell to 48.1, the largest decline since February.

### Domestic Macroeconomics

Xi Jinping chaired the sixth meeting of the Central Financial and Economic Commission, emphasizing the in - depth promotion of the construction of a national unified large - market and the high - quality development of the marine economy. The meeting pointed out that the basic requirements for the in - depth promotion of the construction of a national unified large - market are the "five unifications and one opening", that is, unifying the basic market system, the market infrastructure, the scale of government behavior, the market supervision and law - enforcement, and the factor resource market, and continuously expanding domestic and foreign opening - up.

China's Caixin Manufacturing PMI in June rose to 50.4, returning to the expansion range. The supply and demand in the manufacturing industry resumed expansion in June, exports marginally improved, employment and prices continued to be sluggish, and corporate confidence slightly declined; the downward pressure on the economy may increase in the second half of the year, and attention should be paid to the implementation of the previous incremental policies and the possibility of policy reinforcement.

Epic good news! The National Healthcare Security Administration and the National Health Commission have deeply linked up, and 16 measures to support the high - quality development of innovative drugs have been introduced! The "Several Measures to Support the High - quality Development of Innovative Drugs" will build a R & D pattern guided by clinical value, establish a diversified payment system, add an innovative drug catalog for commercial health insurance, improve drug accessibility, solve the problem of homogeneous competition, and achieve the goals of "truly supporting innovation, supporting real innovation, and supporting differentiated innovation".

How to build a long - term consumption - promotion mechanism: From subsidy - driven to institutional innovation. Shenwan Hongyuan believes that consumption - promotion policies need to take into account both short - term stimulation and long - term mechanisms: on the one hand, stimulate immediate demand through tools such as precise subsidies and support for service consumption; on the other hand, it is more necessary to rely on deep - level reforms such as income distribution reform and the improvement of social security to fundamentally enhance residents' consumption ability and confidence.

### Domestic Companies

JPMorgan Chase: Xiaomi Yu7 is the Chinese version of the electric - vehicle "Labubu". JPMorgan Chase believes that the popularity of Xiaomi's electric vehicle Yu7 is driven by a demand model similar to that of the trendy toy Labubu, which is driven by scarcity. Yu7 is positioned beyond a means of transportation. Its avant - garde design, precise capture of young female consumers, and high - tech interior make it have emotional value and trendy attributes. At the same time, the "scarcity" brought about by the production capacity bottleneck has magnified the market enthusiasm, and traditional foreign - funded brands, especially Tesla, may face market - share pressure.

June electric - vehicle report: BYD's new - energy vehicle sales were 382,600 units, Xiaomi delivered 25,000 units, and Xpeng's delivery volume increased by 224% year - on - year. Xpeng's delivery volume has exceeded 30,000 units for 8 consecutive months; Leapmotor's all - series delivery in June reached a new historical high of 48,006 units, an increase of more than 138% year - on - year; NIO delivered 24,925 units, an increase of 17.5% year - on - year; SERES' new - energy vehicle sales were 46,086 units, an increase of 4.44% year - on - year.

### Overseas Macroeconomics

The US Senate rejected Trump's AI regulatory ban with an overwhelming vote of 99:1! This proposal originally planned to prohibit states from regulating artificial intelligence. Trump administration officials and Republican allies in Silicon Valley generally supported suspending AI legislation in various states, but the opposition in the Senate was extremely strong.

Morgan Stanley warned that tariffs have posed a serious threat to the profit margins of US enterprises and may be a precursor to an economic recession. Analysts warned that the US tariff revenue has reached an astonishing scale, with the annualized tariff revenue in June reaching $327 billion, accounting for 1.1% of the US GDP. If enterprises fully absorb the tariff costs, the profit margin will drop from 13.8% to 11.7%, lower than the 15 - year moving average of 12.2%. If all are passed on to consumers, it will intensify the inflation pressure.

The presidents of Russia and France had a phone call after nearly three years, discussing the Middle - East and the Russia - Ukraine issue. According to the official website of the Kremlin, Russian President Vladimir Putin had a phone call with French President Emmanuel Macron. The two heads of state had an in - depth discussion on the situation in the Middle - East under the background of the escalation of the confrontation between Iran and Israel, as well as the issue of the United States' strike on Iran's nuclear facilities. This is the first phone call between the two since September 2022.

HSBC comprehensively analyzed the gold logic: The upward momentum may be close to the limit. HSBC believes that although factors such as geopolitical risks, central - bank gold - buying demand, and the weakening of the US dollar will continue to support the gold price to operate at a historical high, with the influence of factors such as the weakening of physical demand, the increase in supply, and the weakening of the Fed's interest - rate - cut expectations, the gold price is expected to face certain pressure in the second half of 2025, and the expected trading range of the gold price within the year is $3100 - 3600 per ounce. It is worth noting that gold failed to break through the high point in April after the attack on Iran, which may imply that the market has fully priced in the geopolitical risks.

The first "Solana" staking - type ETF was listed in the United States, kicking off the "Digital Currency ETF Summer Craze". The biggest feature of this ETF is the "staking" function. SSK will use part of the funds to stake in the verification nodes of the Solana network, so as to obtain additional reward income. This means that even if the SOL price remains unchanged, investors can obtain a passive income through staking. Analysts believe that the approval of SSK will kick off the "Alt - coin ETF Summer Craze", and the staking function of the spot Ethereum ETF may soon be approved.

### Industries/Concepts

1. Computing power: Huatai Securities pointed out that the growth rate of reasoning computing power demand is faster than the decrease in the cost of unit computing power. With the implementation of more General Agents, which brings an increase in the number of interactions, task complexity, and usage frequency, and at the same time, multi - modal scenarios such as screen recognition further increase the consumption of Tokens, it is optimistic about the accelerated growth of reasoning - end computing power demand.

2. Home appliances: According to a research report by China Merchants Securities, the stimulation effect of the national subsidy on home appliances in the second quarter was remarkable. Although there was a short - term suspension of the national subsidy in some provinces in June, with the arrival of the third - batch of funds in early July, the focus of market transactions has re - entered the performance window period. It is expected that the performance of white - goods, sweeping robots, small home appliances and other varieties will increase significantly in Q2.

3. HBM: Benefiting from the rapid development of AI, the demand for HBM is strong, and its proportion in DRAM is expected to increase from 8% in 2023 to 34% in 2025. At present, the global HBM supply is monopolized by three overseas giants, and the domestic production rate is basically 0. From the perspective of the industrial chain, the urgency of domestic self - control is expected to accelerate the breakthrough of HBM, and the corresponding semiconductor equipment manufacturers and materials are worthy of attention.

4. Food and beverages: Zhongtai Securities pointed out that beverages maintained leading growth in the FMCG in the first quarter. The sales volume was booming, and the price was under pressure but better than other categories, showing the resilience of their demand. The fundamental factors support that beverages have strong defensive attributes in the current consumption environment. Since the beginning of the year, the sub - sector of soft drinks has significantly outperformed the food and beverage sector in terms of increase. From the end of the second quarter to the third quarter, the soft - drink industry will welcome the peak - season catalyst. Enterprises will increase the display of freezers, launch new products, and carry out terminal promotion activities. It is about to enter the inspection period of business performance, and the leading enterprises in the industry may demonstrate the logic of market - share increase.

### Preview of Today's Top News

- Change in the US ADP employment number in June.

- Speech by Lagarde, President of the European Central Bank.

- Change in the US EIA crude oil inventory last week.

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