CITIC Securities pointed out that interest rates on US bonds rose rapidly this week. We believe there are three drivers: First, the Middle East conflict has escalated, oil prices have once again risen, and US inflation expectations have been impacted. Second, Walsh reiterated zero tolerance for high inflation in the US Congress last week. Early this week, the number of jobless claims hit a new low since 1969, and expectations of market tightening are heating up. Third, this week's Alphabet earnings report shows that its free cash flow turned negative in a single quarter. Tech giants are expected to divert funds from US bonds, and long-term problems are being catalysed in the short term. The rapid rise in US bond interest rates is a concentrated catalyst for multiple negative points. Just like in May of this year and May 2025, we think US bond interest rates will break further upward — approaching the “Trump Trade” interest rate level in January 2025 requires incremental bad news. 4.8% is the key resistance level. As the US midterm elections approach, Trump still has TACO motives. As far as US bond trading is concerned, you may choose to be more cautious at the current interest rate level.

CITIC Securities pointed out that interest rates on US bonds rose rapidly this week. We believe there are three drivers: First, the Middle East conflict has escalated, oil prices have once again risen, and US inflation expectations have been impacted. Second, Walsh reiterated zero tolerance for high inflation in the US Congress last week. Early this week, the number of jobless claims hit a new low since 1969, and expectations of market tightening are heating up. Third, this week's Alphabet earnings report shows that its free cash flow turned negative in a single quarter. Tech giants are expected to divert funds from US bonds, and long-term problems are being catalysed in the short term. The rapid rise in US bond interest rates is a concentrated catalyst for multiple negative points. Just like in May of this year and May 2025, we think US bond interest rates will break further upward — approaching the “Trump Trade” interest rate level in January 2025 requires incremental bad news. 4.8% is the key resistance level. As the US midterm elections approach, Trump still has TACO motives. As far as US bond trading is concerned, you may choose to be more cautious at the current interest rate level.