Breakfast | The China-U.S. London talks continue! Apple WWDC declines against the market trend

Market Overview

The China-U.S. London talks have begun, chip stocks support the S&P and Nasdaq for two consecutive rises, with the chip index closing up nearly 2%, Qualcomm rising over 4%, and NVIDIA at one point rising over 2%; Tesla rose over 4%, continuing to lead the tech giants, while Apple's stock price fell over 1% against the trend as no significant AI progress was announced at WWDC. Chinese concept stocks outperformed the market, with the Chinese concept index rising over 2%, Baidu and XPeng rising over 3%, and JD.com rising over 2%.

The U.S. dollar index fell back; the offshore yuan rose over 100 points at one point, breaking through 7.18.

U.S. consumer inflation expectations for May have declined overall, leading to a rebound in U.S. Treasury prices and a drop in yields, with the ten-year Treasury yield turning down after reaching a one-week high.

Crude oil has seen three consecutive days of gains, with WTI crude rising over 1% to a two-month high. Gold rebounded, with futures gold dropping 1% during the day before closing up, and silver rising over 2% during the day, continuing to hit a three-year high.

In the Asian session, the Shanghai Composite Index closed up, approaching 3400 points, with pharmaceutical stocks surging, and Hong Kong stocks moving towards a technical bull market, with Moutai rising over 5% and Chinese rare earths rising by as much as 60%.

Key News

The first meeting of the China-U.S. economic and trade consultation mechanism began on June 9 in London, continuing on the 10th. According to the Global Times, the focus is on implementing the consensus from the leaders' call, concentrating on tariffs, technology, and rare earths; Xinhua's commentary states that the new regulations on rare earth export controls aim to "regulate exports" and are not a temporary so-called "tactical countermeasure."

Trump is reportedly considering adjusting export measures, with the chip index rising nearly 3% and the Chinese concept index rising over 2% during the day.

To address urgent public concerns, the General Office of the CPC Central Committee and the State Council issued a document: reasonably increase the minimum wage standard and completely eliminate the household registration restrictions for participating in social insurance at the place of employment.

China's May CPI fell 0.1% year-on-year, with a month-on-month decline; the PPI year-on-year decline expanded to 3.3%; China's May exports in U.S. dollars increased by 4.8% year-on-year, while imports fell by 3.4%. In May, China's rare earth export volume increased by nearly 23% month-on-month, and soybean imports increased by 129% month-on-month, reaching a historical high, while coal and oil imports decreased.

Turmoil escalates in Los Angeles, with California suing the Trump administration for deploying troops to Los Angeles; Trump: supports the arrest of Governor Newsom, "doesn't want a civil war."

Apple WWDC: AI-enhanced Siri still needs time, basic models opened to developers, liquid glass interface design makes its debut, simplifying operating system naming by year, with multiple devices OS 26 on the way, and iOS updating its design for the first time since 2013.

Jensen Huang appeared at London Tech Week: the UK's AI environment is in a "Goldilocks" state, but lacks computing infrastructure.

Iran stated that if attacked by Israel, it will strike Israeli secret nuclear facilities.

Market Closing Report

U.S. and European stock markets: The Dow Jones Industrial Average closed nearly flat, the S&P 500 rose 0.09%, and the Nasdaq rose 0.31%. The European STOXX 600 index fell 0.07% A-shares: The Shanghai Composite Index rose by 0.43%, the Shenzhen Component Index rose by 0.65%, and the ChiNext Index rose by 1.07%.

Bond Market: By the end of the bond market, the yield on the benchmark 10-year U.S. Treasury bond was about 4.47%, and the yield on the 2-year U.S. Treasury bond was about 4.00%, both down nearly 4 basis points during the day.

Commodities: WTI July crude oil futures rose by 1.1%. Brent August crude oil futures rose by 0.86%. COMEX August gold futures rose by 0.25%. COMEX July silver futures rose by 1.82%. London aluminum and tin closed up by 1.1%, copper rose by 1%, and zinc fell by 0.6%.

News Details

Global Highlights

The first meeting of the China-U.S. economic and trade consultation mechanism begins in London, UK. According to Xinhua News Agency, on June 9 local time, He Lifeng, a member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, began the first meeting of the China-U.S. economic and trade consultation mechanism with the U.S. side in London, UK.

• Continuing discussions! The first meeting of the China-U.S. economic and trade consultation mechanism will continue on June 10. CCTV's Yu Yuan Tan Tian learned that the first meeting of the China-U.S. economic and trade consultation mechanism will continue on June 10 local time.
• Implementing the consensus from the leaders' call, focusing on tariffs, technology, and rare earths, the China-U.S. economic and trade consultations are held in London on Monday. According to Global Times, after the Geneva talks, the U.S. side continued to impose restrictions on Chinese chips, while China implemented export controls on rare earths, forming a "rare earths vs. chips" game pattern. The U.S. side increased the participation of Secretary of Commerce Gina Raimondo in the new round of consultations, which may indicate that technology export controls "may no longer be a non-negotiable area."

Xinhua Commentary: The new regulations on rare earth export controls aim to "regulate exports," not a temporary so-called "tactical countermeasure". Xinhua News Agency stated that China's goal is to "regulate exports" rather than "prohibit exports," to "promote convenient and compliant trade," rather than cut off normal business exchanges. The Ministry of Commerce of China has repeatedly made clear statements: for applications that meet the regulations, China will approve them according to law. In response to concerns and suggestions raised by the EU and others, Chinese Commerce Minister Wang Wentao clearly stated during talks with the EU side that he is willing to establish a "green channel" for eligible applications to expedite approval and has instructed the working level to maintain timely communication on this matter Trump reportedly may adjust export measures, chip index rises nearly 3% during trading, Chinese concept index rises over 2%.

Addressing the urgent needs of the public! The Central Office and the State Council: Reasonably increase the minimum wage standard and completely lift the household registration restrictions on participating in social insurance at the place of employment. The Central Office and the State Council issued the "Opinions on Further Ensuring and Improving People's Livelihoods and Focusing on Solving the Urgent Needs of the Public." It mentioned steadily and orderly increasing the proportion of urban employed persons participating in basic pension insurance and medical insurance. Social insurance subsidies will be provided to eligible college graduates and individuals facing employment difficulties. Support and guide localities with conditions to directly distribute maternity insurance benefits to insured persons according to procedures.

China's May CPI fell 0.1% year-on-year, month-on-month turned from increase to decrease, PPI year-on-year decline expanded to 3.3%. The month-on-month decline in CPI was mainly influenced by falling energy prices. However, the prices of gold jewelry, household textiles, and durable consumer goods for entertainment rose by 40.1%, 1.9%, and 1.8% year-on-year, respectively, with the increase expanding. The year-on-year decline in PPI expanded to 3.3%, with marginal price improvements in some sectors.

China's May exports grew 4.8% year-on-year in USD terms, imports fell 3.4%. China's May rare earth exports increased nearly 23% month-on-month, soybean imports increased 129% month-on-month to a record high, while coal and oil imports decreased.

• In the first five months, China's exports to ASEAN, the EU, Africa, and the five Central Asian countries grew by 16.9%, 13.7%, 35.3%, and 8.8%, respectively; the total trade value between China and the United States was 1.72 trillion yuan, down 8.1%, accounting for 9.6%. Among them, exports to the United States were 1.27 trillion yuan, down 8.7%; imports from the United States were 447.51 billion yuan, down 6.3%.
• In terms of quantity, as the world's largest rare earth producer, China's rare earth exports in May increased significantly by 22.57% month-on-month, reaching 58.646 million tons, hitting a yearly high. The year-on-year growth rate of soybean imports in May was the most rapid, reaching 36.16%, while the year-on-year increase in integrated circuit imports in May was 9.95%, with the growth rate expanding compared to April. Conversely, the year-on-year declines in imports of refined oil, steel, and coal and lignite were significant, falling by 30.23%, 24.49%, and 17.75%, respectively.
• Minsheng Securities pointed out that the foreign trade data in May showed three signs of slowdown. First, the "rush for imports" demand in the United States has led to a decline in import momentum since May, with China's exports to the U.S. dragging down and the tariff "downgrade" effect not fully reflected; Second, the slowdown in U.S. terminal demand has weakened the support for ASEAN and Latin America "transshipment"; third, imports have turned negative year-on-year again, corresponding to the need to consolidate the recovery of domestic demand. Based on this, it is judged that the impact of tariff "downgrading" on boosting China-U.S. trade has not yet been fully reflected in the May data, but may be further feedback in the June data.
• Guo Lei from GF Securities pointed out that the slowdown in exports is mainly due to the drag from exports to the U.S., with the year-on-year decline in exports to the U.S. widening in May, and the impact of tariffs and trade environment uncertainty becoming apparent. Although there were characteristics of "grabbing exports" in early to mid-May, the situation weakened again in late May, speculated to be due to overseas importers replenishing short-term inventories after tariff easing, with unclear expectations leading to a quick pulse release.

Los Angeles unrest escalates! California sues the Trump administration to deploy troops to Los Angeles, Trump: Supports the arrest of Governor Newsom, "Doesn't want a civil war". The unrest in Los Angeles triggered by federal immigration raids has entered its fourth day. Xinhua News Agency reported that the California state government has requested the court to rule that Trump's order issued on the 7th is illegal and requested to revoke the order. U.S. officials revealed that the military will temporarily deploy about 700 Marines to Los Angeles until the National Guard arrives. Trump stated that the situation in Southern California is currently moving in the right direction.

• The American Civil War begins! Los Angeles is in chaos! Trump orders the deployment of the National Guard, police fire on protesters. On the 7th, Trump bypassed the governor to directly deploy 2,000 National Guard troops, marking the first time since 1965 that the state guard has been mobilized without a governor's request. The White House threatened to arrest opposing governors and mayors.

Apple WWDC: AI-enhanced Siri still needs time, opens basic models to developers, liquid glass interface design makes its debut.

• Apple's basic model framework allows third-party developers to directly integrate built-in LLMs into apps, developed based on Apple Intelligence. This framework is currently available for developer testing and will open a public beta in July. Apple simplifies operating system naming by year; liquid glass will be used in the ecosystem of devices such as iPhone and Watch.
• iOS updates design for the first time since 2013, with a redesign of the camera, photos, phone, and FaceTime App in iOS 26; CarPlay Ultra will be used in some models, and the messaging App adds group chat voting and cash discovery functions; Genmoji feature allows for the creation of new emojis; iPhone calls and videos can be translated in real-time; Apple Music can translate lyrics; ChatGPT enhances the image park function; new features are added to the Maps and Wallet Apps; Apple Pay can redeem points and track orders within the Wallet App; New game app.
• Apple also introduced watchOS 26, macOS Tahoe, visionOS 26, and iPadOS 26. The public beta of the new generation OS will be released next month.

Jensen Huang appeared at London Tech Week: The UK AI environment is in a "Goldilocks" state, but lacks computing power infrastructure. Jensen Huang praised the UK for having excellent conditions for AI prosperity but warned that it lacks AI infrastructure. Huang is currently touring Europe and revealed that "countless AI factories are being planned" in the region. He plans to speak at VivaTech in Paris and visit and meet with leaders from the UK, Germany, France, and Belgium, hinting that an infrastructure race will begin in Europe.

Iran claims it will strike Israeli secret nuclear facilities if attacked.

Domestic Macro

Li Qiang: Smooth supply and demand connection channels to better promote the integration of technological innovation and industrial innovation. Li Qiang presided over the 14th special study session of the State Council. After listening to explanations and exchanges, Li pointed out that the transformation of scientific and technological achievements connects the innovation chain and the industrial chain, which is the "last mile" of technological innovation. It is conducive to spawning new products, new industries, and new momentum, forming new productive forces. There is a need to further coordinate various innovation resources, deepen institutional and mechanism reforms, and smooth supply and demand connection channels to achieve greater effectiveness in the transformation of scientific and technological achievements and better promote the integration of technological innovation and industrial innovation.

Why have private enterprises suddenly become active in land acquisition recently? Local governments have "prescribed the right medicine," timely adjusting supply and canceling multiple restrictions, and this year have released many hidden treasure plots. The plot ratio has been comprehensively lowered, and low density has become mainstream; small plot sizes and low total prices provide more possibilities for private enterprises with tight cash flow to acquire land for development. The renewed land acquisition is partly due to the observation of a warming real estate market, entering a phase of recovery; the year-on-year decline in second-hand housing continues to narrow, with some truly bottoming out and rebounding.

Hong Kong interest rates are "abnormally" low, sounding the alarm for dollar assets. Over the past month, the Hong Kong dollar overnight interest rate has continued to hover around zero, forming a significant inversion with the US rate of 4%, and the arbitrage mechanism seems to have "failed." Veteran financial journalist Hardin pointed out that this phenomenon reflects a decline in Asian investors' appetite for US assets, a recovery in the Hong Kong capital market, and the limitations of banks and hedge funds' risk tolerance. On a deeper level, this may be a global market response to the uncertainty of Trump's trade policies

Domestic Companies

Starbucks China lowers prices for the first time, targeting the "non-coffee" market, with average prices for large cups dropping by 5 yuan. Starbucks announced price adjustments for dozens of tea products, including Frappuccino, iced tea, and tea lattes, with an average price reduction of 5 yuan for large drinks, with the lowest price set at 23 yuan. This marks Starbucks' first direct price cut. Previously, Starbucks mainly relied on coupons to lower prices.

Overseas Macro

Global corporate executives gather in Washington this week to lobby Congress to repeal the "Big Beautiful" Act's Section 899 "capital tax"! This tax threat has caused nearly 200 foreign companies operating in the U.S., including Shell, Toyota, SAP, and LVMH, to feel uneasy. These foreign companies provide 8.4 million jobs in the U.S., and the implementation of Section 899 could directly threaten this massive employment base.

Federal Reserve survey: Consumer inflation expectations fell across the board in May, the first decline since 2024. The one-year inflation expectation saw the largest drop, falling from 3.6% in April to 3.2%, with three-year and five-year inflation expectations also declining. The core reason is the temporary easing of the China-U.S. trade situation. The survey also indicated a slight improvement in the American public's views on employment, personal finances, and stock market prospects.

U.S. Senate plans to revise the "Big Beautiful" Act to save spending, which may trigger divisions within the Republican Party. Media reports indicate that the Senate Finance Committee is planning to save spending by modifying Medicaid and possibly including Medicare programs. This version may differ in several key aspects from the original bill that nearly passed in the House in May. Analysts believe that once the revised draft is released, it is likely to spark a new round of tug-of-war between fiscal conservatives and moderates.

"Will the wolf really come? "New Federal Reserve News Agency": Is the U.S. economy really heading towards a "difficult summer"? Nick Timiraos published an article stating that although the U.S. economy successfully avoided recession in 2023 and 2024, it is now entering another unsettling summer. The fragile balance in the labor market, changes in consumer spending, and shocks in financial markets—these three factors could break apart in unexpected ways, depending on what Trump does next.

After missing the April rebound, hedge funds are panic-buying U.S. stocks! Hedge funds have entered a "panic buying" mode, net buying U.S. stocks for the fifth consecutive week, with long positions outpacing short positions by about 3 to 1 In this game of capital reallocation, industrial stocks have become the biggest beneficiaries, with net purchases in the sector reaching a new high in over seven months, while hedge funds have net bought U.S. healthcare stocks for the sixth consecutive week.

For the first time in 40 years, the yields on U.S. "stocks, bonds, and cash" are almost the same. Currently, the gap between the highest and lowest yields among major asset classes in the U.S. is the smallest in the past 40 years— the S&P 500's yield is 4.7%, nearly on par with the 4.4% yield of 10-year U.S. Treasuries. This is mainly due to the Federal Reserve's significant interest rate hikes, which have pushed up Treasury yields, while the high valuations and profit margins of the S&P 500 have depressed stock returns.

The U.S. is no longer an "exception," but is Europe unprepared? The world's largest sovereign fund warns: European stocks lack competitiveness, and its allocation has been cut from 26% to 15%! The political uncertainty of the Trump administration has shaken the U.S. market's "safe haven" status, prompting international capital to seek new directions, but Europe may not be ready yet. The world's largest sovereign fund, the Norwegian Oil Fund, which holds $1.9 trillion, warns that the European capital market lacks competitiveness due to structural issues, and its allocation to European stocks has significantly decreased from 26% to 15% over the past decade.

Report: The Japanese government is considering repurchasing previously issued ultra-long-term Japanese government bonds. Reports indicate that Japan is considering repurchasing some of the ultra-long-term government bonds issued in a low-interest-rate environment. This move will align with the anticipated reduction in the issuance plan for ultra-long-term bonds, collectively addressing the sharp rise in yields for 20-year, 30-year, and 40-year government bonds.

Big thunder but little rain, Morgan Stanley: No substantial increase in OPEC production yet. Morgan Stanley, through data analysis of refinery throughput, maritime exports, pipeline flows, and inventory changes, states that the actual production increase from OPEC+ is hard to detect. The increase in production quotas is still "just on paper," and Saudi oil wells remain quiet. However, expectations for future production increases still exist, with the bank forecasting a supply increase of 420,000 barrels per day from June to September, half of which will come from Saudi Arabia. Morgan Stanley expects oil prices to drop to $57.50 per barrel in the second half of the year.

Overseas Companies

With subsidies disappearing and political concerns rising, Americans are "not buying" electric vehicles anymore. The proportion of American adults who say they are "very likely" or "likely" to buy a pure electric vehicle as their next car has plummeted from 25% in 2022 to 16% this year, marking the lowest record since AAA's annual survey began in 2019. 62% of respondents are concerned about high battery repair costs, and 59% are deterred by the high purchase price The Last Piece of AGI: What is Reinforcement Learning? What is its Moat? Analysis indicates that reinforcement learning is the core driving force behind the leap in large model reasoning capabilities, and this technology may become the last key paradigm before AGI. Its resource-intensive characteristics pose computational challenges. Furthermore, high-quality data is the moat of reinforcement learning, where data quality is more important than quantity, accelerating the iterative technology cycle of AI designing AI.

Today's News Preview

He Lifeng will visit the UK from June 8 to 13 and hold the first meeting of the China-U.S. Economic and Trade Consultation Mechanism.

The State Council Information Office will hold a press conference on policies related to further safeguarding and improving people's livelihoods.

The EIA will release its monthly Short-Term Energy Outlook report.

GameStop will announce its financial report.