AI sentiment is clearly rebounding! Could the rally in US stocks continue?
Contest | Win a Copper Gourd of Fu Lu Shou Xi — GTJA International Live Session Recap: Fed Policy Outlook Amid Geopolitical Tensions and Opportunities in Asian Dollar Bonds
Investment Dilemmas in a Complex Market Environment
The current global macro environment is fraught with uncertainty, leaving investors feeling particularly conflicted.
On one hand, escalating geopolitical tensions in the Middle East have caused oil prices $Brent Last Day Financial Futures (DEC6) (BZmain.US)$$Crude Oil Futures (OCT6) (CLmain.US)$ to fluctuate sharply;
on the other hand, following a change in leadership, the Federal Reserve’s policy signals have become increasingly ambiguous, making it difficult for markets to anticipate its next move.
Many investors now face a dilemma: holding cash risks erosion of purchasing power due to inflation, while buying equities invites fear of significant market volatility.
Addressing this widespread anxiety, this live session aims to thoroughly unpack current global macro shifts—particularly focusing on two key themes: Middle East geopolitical conflicts and the Federal Reserve’s new policy direction—and explore how to optimize asset allocation to manage risk and seize opportunities.
Reassessing Fed Policy Expectations and the Inflation Narrative
1. Core outlook on the trajectory of the Federal Reserve's monetary policy
While market consensus widely expects the Federal Reserve to enter a rate-cutting cycle, GaoTeng International holds a distinctly different view.
We believe that the Fed is unlikely to implement any rate cuts this year or next, and the threshold for further rate hikes remains relatively high.
This assessment is based on analysis across several key dimensions:
First, regarding inflationary pressures: although overall inflation remains above the Fed’s 2% long-term target, upward pressure has already receded from previous highs.
The impact of tariff-related factors from last year is gradually fading, showing a declining trend.
Meanwhile, despite ongoing deglobalization and the massive investment demand driven by the AI industry, these factors have not triggered runaway inflation.
Recent data show that since June, despite recurring war-related disruptions, oil prices have not returned to previous highs, thanks to the signing of relevant agreements and improved shipping routes—indicating that underlying inflationary pressures are easing.
Secondly, the labor market is not currently a primary driver of inflationary upside.
Although most officials believe the unemployment rate has remained stable, we note significant seasonal factors in the U.S. labor market, with data typically weakening in the second half of the year.
Therefore, recent strong non-farm payroll figures may not be sustainable.
More importantly,"Wage-inflation"The risk of a spiral is limited.
Research shows that compared to the Volcker era in the 1980s, unionization rates in the U.S. private sector have declined sharply—from around 20% to below 10%.
The weakening of union power means workers’ bargaining leverage in wage negotiations has significantly diminished, thereby limiting wage-driven sustained increases in core inflation.
Furthermore, in terms of policy rate expectations, the year-end median forecast for interest rates is expected to remain around 3.75%, leaving little room for further hikes and lacking the foundation for sustained tightening.
Federal Reserve officials are highly aligned on their price stability mandate, and the key to policy decisions lies in unified inflation management.
The June FOMC meeting kept the policy rate unchanged in the 3.5%–3.75% range, in line with market expectations, but struck a hawkish tone.
The dot plot revealed clear divergence among committee members: of the 18 participants, 9 believed rate hikes would be needed within the year, while the other 9 leaned toward holding steady or cutting rates.
The new Fed Chair maintained an air of mystery, revealing little about personal inclinations, but the median projection for the year-end policy rate was raised from 3.375% in March to 3.75%.
2. Wallsh's Latest Remarks and AI's Impact on Inflation
Wallsh's two recent significant speeches further confirm our view.
At a forum in early July, he acknowledged that recent inflation risks have diminished somewhat and noted that AI-driven gains in productivity are a key factor offsetting inflationary pressures.
Subsequently, at his Senate hearing, he directly rebuttedthe prevailing market view that“the AI investment boom will fuel persistent inflation,” emphasizing the need to distinguish between one-off price fluctuations and sustained, systemic inflation.
This indicates regulators hold an optimistic view toward supply-side improvements driven by technological progress, which should help contain price increases over the medium to long term.
Market Recap and Liquidity Analysis: Where Does the Resilience of Risk Assets Come From?
1. Market Rebound Logic and Trump’s TACO Effect
Reviewing market performance in 2025, global assets dropped sharply in April due to tariff concerns, but risk assets subsequently staged a strong rebound in the second half of the year.
this kind of"Exploratory Rebound"The process of gradually establishing a bottom and recovering losses amid volatility is closely tied to market characteristics observed over the past three years.
Markets have increasingly adapted to the volatility caused by Trump’s governing style and negotiation tactics.
Bloomberg data shows that over rolling three-year periods, S&P 500 returns have exhibited a normal distribution—meaning rebounds tend to be faster following sharp market declines.
This suggests that while the current investment environment carries risks, it also presents significant swing-trading opportunities.
2. Global Liquidity Easing Supports Risk Assets
The fundamental rationale underpinning our bullish outlook on bonds and risk assets lies in the continued accommodative stance of global liquidity.
Conventional wisdom typically uses interest rates and the US Dollar Index to gauge the direction of risk assets, but our data review reveals that the performance of risk assets—such as US equities and credit bonds—shows the strongest correlation with the scale of Federal Reserve bank reserves.
Since the Fed restarted its bond-buying operations last December, bank reserves have continued to rebound and remain at elevated levels.
Meanwhile, China's M1 growth and monetary expansion in other countries have jointly bolstered global liquidity.
This explains why risk asset prices have maintained remarkable resilience despite frequent geopolitical conflicts and financial market turbulence.
Abundant liquidity is currently the core anchor for market pricing.
Investment Appeal of Asian USD Bonds
Given the Fed’s current stance of maintaining high-rate expectations and the market’s overpricing of tightening policies, Asian USD bonds are demonstrating exceptional investment value.
1. Unique Advantages of Asian USD Bonds
* Low Correlation and Ballast Function
Asian USD bonds exhibit very low correlation with US stocks, Hong Kong equities, and RMB-denominated assets, and display lower volatility.
Adding this type of asset to a portfolio can effectively diversify risk and serve as a“ballast”the role of.
* Attractive absolute returns
Due to excessive market concerns over Fed tightening, Asian USD-denominated bond yields are at historic highs, offering highly attractive absolute returns—making now the optimal time to invest.
2. Introduction to Gaoteng Asia Income Fund
As a concrete allocation tool, we highlight the Gaoteng Asia Income Fund. The fund has deep expertise in Asian USD-denominated bonds and has delivered strong performance:
* Historical Performance
It has performed exceptionally well during past rate-cutting cycles, delivering nearly 9% return for the full year of 2025, close to 7% in 2024, and an impressive 16% return in 2019. This year, it ranks fourth among the 16 Bond Mutual Recognition Funds and first within the investment-grade category.
* Investment Strategy
Focuses on high-rated, low-volatility, and highly liquid assets. Credit ratings are primarily investment-grade (BBB or higher), with the lowest-rated high-yield holdings at B-level, ensuring a high degree of safety.
* Asset Allocation
In terms of sector allocation, nearly half is concentrated in the financial sector, while the rest is diversified across other sectors to capture excess returns through sector rotation. Duration is primarily focused on the medium-term range of 3–5 years.
Geographically, approximately 70% is allocated to Asia (including Japan, Australia, and Greater China regions such as Hong Kong, Macau, and Taiwan), with over 50% exposure to developed markets (Europe and the U.S.). Allocation to mainland China is relatively modest, offering good diversification benefits against investors’ existing RMB-denominated assets.
Summary and Interactive Benefits
The current market is neither a one-sided bear nor bull market, but rather characterized by coexisting structural opportunities and risks.
Our core views are summarized as follows:
1. Policy Expectation Revisions
Markets have excessively priced in Fed tightening expectations. In reality, downside risks are manageable, making Asian USD-denominated bonds highly attractive in absolute return terms and an excellent opportunity for strategic positioning.
2. Portfolio Optimization
Asian USD-denominated bonds exhibit low correlation with other major asset classes and lower volatility, making them well-suited as a stabilizer within an investment portfolio.
3. Selection of High-Quality Securities
The Gao Teng Asia Income Fund, with its rigorous risk controls, strong historical performance, and diversified allocation strategy, is an excellent choice for participating in this segment.
To thank you all for your support, we’ve launched a giveaway:
Please comment on the corresponding live-stream post on the Futubull platform, sharing the three insights from this live session that resonated with you most. The top 15 users with the most likes will each receive a copper gourd designed by Zhu Bingren.“Fu Lu Shou Xi”copper gourd. Submissions close at 12:00 PM on July 30, and the winners will be announced on Bull Circle.
$GaoTeng WeInvest Money Market Fund (HK0000478930.MF)$ $GaoTeng WeValue USD Money Market Fund (HK0000584752.MF)$ $GaoTeng WeFund-GaoTeng Asian Income Fund (HK0000447943.MF)$ $Global Multi-asset ETF Quant Strategy- Active (GTHK005.US)$ $Hang Seng Index (800000.HK)$ $Hang Seng TECH Index (800700.HK)$ $Dow Jones Industrial Average (.DJI.US)$ $Nasdaq Composite Index (.IXIC.US)$ $S&P 500 Index (.SPX.US)$ $USD (USDindex.FX)$ $Gold Futures (DEC6) (GCmain.US)$
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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