Zhongtai Securities: The bottom line of the US debt problem has already been seen through by investors around the world

The Zhitong Finance App learned that Zhongtai Securities released a research report saying that from the joint intervention of the US and Japan on July 31 to the US Treasury Department's announcement to expand the scale of US bond repurchases on August 19, interest rates reached a new high just one day later. The core reason behind this is that the bottom line of the US debt problem is already being seen through by investors around the world.

The main views of Zhongtai Securities are as follows:

When the undercard of US debt is seen through by the whole world. On July 31, the US and Japan jointly interfered with the yen, and about a week later, the yen regained its gains. After less than three weeks, America once again interfered in the financial market. On August 19, after 30-year US Treasury yields rose to 5.34%, a record high since 2007, the US Treasury Department announced an expansion of the scale of US bond repurchases. After the announcement, the 30-year yield declined for a while, but the next day it rebounded to around 5.24%, and the 10-year yield also returned to 4.70%. Bezent's bailout measures were intended to ease concerns about long-term debt demand, but now that the US debt problem is already very serious, the market will instead think that the credit risk of US debt is rising, and US fiscal discipline may completely disappear. Furthermore, as long as the fiscal deficit continues, after the Ministry of Finance buys back some of the bonds, it is still necessary to meet financing needs by issuing new bonds. The essence of this is to adjust the composition and term of the debt, and not reduce the debt. In the short term, when Bezent is out of skill to save the market, in order to preserve the credit of the US dollar, Walsh's statement at the Jackson Hole Central Bank's annual meeting next week may be skewed. However, in the long run, when the bottom line of the US debt problem has been seen through by investors around the world, gold will lead non-ferrous metal prices to continue to break through upward. The bank advises investors to actively pay attention to the precious metals sector, as well as opportunities in the industrial metals sector.

Gold: The price of gold has rebounded steadily, and the stock price is more flexible. The non-farm payrolls data, which fell far short of expectations, gave Federal Reserve Chairman Walsh room for a relaxed statement. After he said at the ECB Central Bank Forum that the risk of US inflation had declined, the market quickly lowered its bets on the Fed's recent interest rate hike, and the rebound in gold prices continued to verify the bank's judgment on gold prices or the recent steady recovery. Regarding gold investment, on the one hand, the bank has always emphasized the investment value on the commodity side; on the other hand, after experiencing a deep correction in the first half of the year, the current valuation level of mineral gold companies has fallen sharply to a low level compared to the beginning of the year, with high odds. In addition to the market where valuations have been repaired in the future, it is expected that they will further enjoy the price flexibility brought about by the rise in gold prices. At the same time, the process of rising gold prices itself continues to increase the winning rate of gold stock investment. Investors are advised to actively pay attention to the investment opportunities of mineral gold companies.

Copper: The US is once again “grabbing copper,” and global copper supply and demand are expected to maintain a tight pattern in the medium term. The US Department of Commerce originally planned to submit the latest copper market assessment report by June 30 to suggest whether the US will levy import tariffs on refined copper. The market anticipates that the US may decide to levy a 15% tariff on refined copper in stages starting in 2027 and then increasing it to 30% in 2028. Affected by this, the price difference between COMEX and LME copper has continued to widen since May of this year. The price of the former was once about 400 US dollars/ton, reaching a high of 500 US dollars. On May 22 alone, LME removed more than 50,000 tons of copper from warehouses and shipped to the US, making it the largest centralized pickup since 2013. Against the backdrop of the continued differentiation of copper stocks between the US and the world, the bank believes that global copper supply and demand is expected to maintain a tight pattern in the medium term, and suggests continuing to pay attention to investment opportunities for mineral copper companies.

Aluminum: The removal of the social treasury confirms the supply and demand pattern, and companies with high dividends strengthen dividend defense. After the resurgence of the US-Iran conflict, in addition to rising uncertainty about the prospects for navigation through the straits, uncertainty also increased on the supply of electrolytic aluminum in the Middle East region, which accounts for 9% of global supply. For the global electrolytic aluminum industry, the period of expansion of the overseas supply gap may be further extended, and the supply and demand pattern of the industry may remain scarce in the medium term. However, the result of the decline in overseas aluminum supply is directly reflected in the further increase in domestic aluminum exports in May, and the continuing decline of traditional demand in the social reserves of electrolytic aluminum to 1.0707 million tons during the low season in July. On the other hand, a further rise in crude oil prices means that overseas energy prices are gradually being determined at a low level. The bottom of the commodity price of electrolytic aluminum, which is the physical carrier of electricity, is also expected to gradually be determined. Major electrolytic aluminum companies that have completed “deleveraging” since the beginning of this year all currently have high dividend rates. For institutional investors who must stay on the market, the bank suggests actively deploying electrolytic aluminum sector defenses.

Risk warning: macroeconomic growth is slowing; tariffs affect demand and industrial chain stability; raw material prices fluctuate; Sino-US relations change; third party data is distorted; data is not updated in a timely manner.