CITIC Securities pointed out that the impact of falling crude oil prices gradually became apparent. PPI turned negative month-on-month in June, but the year-on-year reading continued to rise to +4.1% due to the low base effect, and PPI's performance was basically in line with market expectations. According to calculations, the impact of the petrochemical-related industry on PPI fell 0.3 percentage points month-on-month in June, but on the other hand, the coal, electronics, steel and other industries contributed a certain amount of upward growth momentum to form a hedge. The CPI fell to 1.0% year on year in June, lower than the market's unanimous expectations. The core CPI fell for two consecutive months, and the decline in crude oil and gold prices may be the core driving factor for the weak CPI in that month. In the core CPI segment, CPI performance of tourism, alcohol, and household appliances was weak, while CPI performance of medical services and communication tools was strong. Looking backwards, PPI may have peaked year on year in June, and subsequent PPI may enter a moderate downward channel year on year. It is a reminder that the profit growth rate of industrial enterprises in the second half of the year may have some downside risks. In terms of bond market strategy, the yield on active 10-year treasury bonds rose rapidly by 0.4 bps after the data was released, or the price of PPI continued to rise year on year, but the overall adjustment was limited. Looking ahead to the rest of the year, it is expected that until core CPI improves beyond expectations, it may be difficult for the bond market to price inflation in an incremental manner.

CITIC Securities pointed out that the impact of falling crude oil prices gradually became apparent. PPI turned negative month-on-month in June, but the year-on-year reading continued to rise to +4.1% due to the low base effect, and PPI's performance was basically in line with market expectations. According to calculations, the impact of the petrochemical-related industry on PPI fell 0.3 percentage points month-on-month in June, but on the other hand, the coal, electronics, steel and other industries contributed a certain amount of upward growth momentum to form a hedge. The CPI fell to 1.0% year on year in June, lower than the market's unanimous expectations. The core CPI fell for two consecutive months, and the decline in crude oil and gold prices may be the core driving factor for the weak CPI in that month. In the core CPI segment, CPI performance of tourism, alcohol, and household appliances was weak, while CPI performance of medical services and communication tools was strong. Looking backwards, PPI may have peaked year on year in June, and subsequent PPI may enter a moderate downward channel year on year. It is a reminder that the profit growth rate of industrial enterprises in the second half of the year may have some downside risks. In terms of bond market strategy, the yield on active 10-year treasury bonds rose rapidly by 0.4 bps after the data was released, or the price of PPI continued to rise year on year, but the overall adjustment was limited. Looking ahead to the rest of the year, it is expected that until core CPI improves beyond expectations, it may be difficult for the bond market to price inflation in an incremental manner.