The US and China have reached a framework agreement in principle! Quantum computing concept stocks surge

Market Overview

Middle East tensions overshadow interest rate cut benefits, U.S. stock gains fade, with the S&P 500 and Nasdaq halting three-day winning streaks, and the Dow Jones closing flat; Apple fell nearly 2% amid tariff concerns; Jensen Huang is optimistic about quantum technology, leading to a surge in quantum computing stocks, with Quantum Computing rising nearly 26%; after claiming a breakthrough in quantum computing, IBM rose nearly 2% to reach a historic high; Ouster surged 27% after its digital lidar received approval from the U.S. Department of Defense; Oracle, with excellent quarterly results, briefly soared 8% after hours.

Inflation exceeded expectations and slowed down, leading to a mid-session rally in U.S. Treasury prices after the release of the U.S. CPI, with the two-year Treasury yield dropping over 10 basis points from its daily high; the U.S. dollar index accelerated its decline, approaching a three-year low; the offshore yuan briefly turned to gains; gold hit a daily high, rising over 1% during the session.

With increased risks in the Middle East, Bitcoin briefly fell nearly $2,000, dropping below the 109,000 mark. Crude oil rebounded sharply to a two-month high, rising over 5% during the session, with Brent crude breaking the $70 mark for the first time in two months.

During the Asian session, A-shares collectively closed higher, with rare earth permanent magnets surging, and Ying Shi's innovative IPO rising over 270% on its first day, while the Hang Seng Index rose over 1%, and Pop Mart reached a new high.

Key News

China's Ministry of Commerce International Trade Negotiation Representative: China and the U.S. have reached a framework agreement in principle.

U.S. Federal Appeals Court extends the life of Trump's tariffs, with a key hearing scheduled for the end of July.

As the deadline for Trump's tariffs approaches, the European Union reportedly refuses to compromise and plans to postpone trade negotiations until after July.

Tariff increases have yet to materialize, with the U.S. May CPI rising 2.4% year-on-year, and core CPI increasing 0.1% month-on-month, remaining below expectations for the fourth consecutive month.

U.S. Treasury Secretary Janet Yellen at a hearing: U.S. inflation data is "very good"; failure to pass spending bills in Congress would be a "disaster," and the 899 clause preventing U.S. corporate income from flowing abroad may delay the implementation of reciprocal tariffs for sincere negotiating trade partners; in response to whether she would be willing to serve as Federal Reserve Chair: hopes to continue as Treasury Secretary until 2029.

Trump expresses "diminished confidence" in Iran nuclear negotiations, with U.S. officials stating that the U.S. will reduce the size of its mission in Iraq; Iran warns that if negotiations fail and conflict erupts, it will strike U.S. military bases in the Middle East; Iraq denies reports that the U.S. embassy in Iraq is preparing to evacuate; crude oil surged over 5% during the session.

The "Trump&Musk" feud takes a dramatic turn: Elon Musk publicly admits his mistake, stating he regrets attacking Trump, saying he went too far before, with media reports indicating that Musk privately called Trump late at night to express remorse, with Vance being a key facilitator of reconciliation.

Jensen Huang at the GTC conference: Quantum computing is reaching a turning point, with plans to establish 20 new "AI factories" in Europe.

Volcano Engine showcases Byte's AI capabilities: the new model Doubao 1.6 supports multimodal thinking, with daily token usage skyrocketing by 137 times

Market Report

US and European Stock Markets: The Dow Jones Industrial Average slightly fell by 1.1 points, nearly flat, the S&P 500 index dropped by 0.27%, and the Nasdaq fell by 0.5%. The European STOXX 600 index decreased by 0.27%.

A-shares: The Shanghai Composite Index rose by 0.52%, the Shenzhen Component Index increased by 0.83%, and the ChiNext Index climbed by 1.21%.

Bond Market: By the end of the bond market, the yield on the US ten-year benchmark Treasury bond was about 4.42%, down about 5 basis points during the day, while the two-year Treasury yield was approximately 3.95%, down nearly 7 basis points.

Commodities: WTI July crude oil futures rose by 4.88%. Brent August crude oil futures increased by 4.33%. COMEX August gold futures were roughly flat. COMEX July silver futures fell by 1.04%. COMEX July copper futures dropped by 1.74%.

News Details

Global Highlights

Ministry of Commerce International Trade Negotiation Representative: China and the US have reached a framework agreement in principle. According to People's Daily, on June 10 local time, Li Chenggang, the international trade negotiation representative and vice minister of the Ministry of Commerce, stated in London that during the first meeting of the China-US economic and trade consultation mechanism, both sides had professional, rational, in-depth, and candid communication. The two sides have reached a framework in principle to implement the consensus from the June 5 call between the two heads of state and the consensus from the Geneva talks.

• The first meeting of the China-US economic and trade consultation mechanism was held in London, UK. According to CCTV News, the Chinese side reiterated that both sides should move towards each other, act on their words, and fulfill their commitments with integrity and practical actions to jointly maintain the hard-won dialogue results, continue to keep communication open, and promote stable and long-term China-US economic and trade relations, injecting more certainty and stability into the world economy. The US side stated that the meeting achieved positive results, further stabilizing bilateral economic and trade relations, and will act in accordance with the requirements of the two heads of state’s call to jointly implement the consensus of this meeting.

US Federal Appeals Court extends Trump tariffs, key hearing set for the end of July. Unless challengers quickly seek intervention from the Supreme Court, these tariff measures will remain in effect for at least the next month until the legal battle runs its course in the Washington appeals court. Whichever side loses in the Federal Circuit Court may further seek a ruling from the Supreme Court. Notably, the suspension period for Trump tariffs will expire in a monthUnless a trade agreement is reached or the suspension period is further extended, the tariff rates imposed by the United States on many countries will significantly increase starting from July 9.

Trump's tariff deadline is approaching, and the EU reportedly refuses to compromise, planning to postpone trade negotiations until after July. According to reports, the EU has clearly stated that it refuses to rush into compromises at the negotiating table, believing that the best-case scenario would only yield a principled agreement, with specific details needing to be negotiated further after July. The EU is prepared to implement two rounds of countermeasures covering over $100 billion worth of U.S. goods, with the countermeasures set to take effect no later than July 14 if negotiations break down.

Tariff increases have not yet materialized, U.S. May CPI rose 2.4% year-on-year, core CPI increased 0.1% month-on-month, falling below expectations for the fourth consecutive month. The U.S. May CPI data fell short of expectations across the board, with energy leading the overall CPI slowdown, and prices for automobiles and clothing declining, while categories directly affected by tariffs, such as toys and home appliances, saw price increases. Traders are increasing their bets on the Federal Reserve cutting interest rates, with a basic expectation of two rate cuts this year, and a 75% chance of a rate cut before September.

U.S. Treasury Secretary Mnuchin's hearing: What is the outlook on inflation, trade agreements, spending bills, debt ceiling, and succession of the Federal Reserve Chair??

• Mnuchin attributed the slowdown in U.S. inflation to Trump's policies, stating that the inflation data is "very good."
• He mentioned that the big beautiful plan regarding tax cuts and spending could bring manufacturing back to the U.S., with the industry receiving "unprecedented" investment, and that Clause 899 in the plan prevents the loss of hundreds of billions of dollars in U.S. corporate income overseas; he warned that if Congress does not pass the bill, it would be a "disaster," leading to the largest tax increase in history, or triggering a "financial crisis the likes of which have not been seen since 2008." Regarding whether the big beautiful plan would increase the national debt level, he stated that it remains to be seen.
• The agreements offered by trade partners are "too good to be true," and for sincere negotiating trade partners, it is likely that the implementation of reciprocal tariffs will be postponed.
• When asked if he would be willing to be the Federal Reserve Chair, Mnuchin said he hopes to continue as Treasury Secretary until 2029.
• He stated that financial stability has never been an issue, the U.S. bond market is operating smoothly, and everything is normal; Moody's is a "lagging indicator," and Dimon's warning about U.S. bonds seems to refer to market structure, not government finance.
• He expects the day the debt ceiling is reached to be in mid to late summer, believing that his "333" target is still achievable.

Trump's confidence in Iran nuclear negotiations "diminishes," U.S. to reduce troop size in Iraq, Brent crude oil rises over 5%. Trump stated that Iran seems to be stalling. He emphasized that regardless of whether an agreement is reached, Iran will not possess nuclear weapons. Iran's Defense Minister Amir Hatami warned that if negotiations fail, conflict between the U.S. and Iran could erupt, and Iran will target U.S. military bases in the Middle EastAccording to CCTV News, the commander of the Islamic Revolutionary Guard Corps of Iran stated that they are prepared with upgraded missiles for any combat.

• Iraq denies that the U.S. embassy in Iraq is preparing to evacuate. According to CCTV News, earlier on Wednesday the 11th, Iraqi security officials and U.S. sources stated that due to "escalating regional security risks," the U.S. embassy in Iraq is preparing for evacuation.

"Trump & Musk" feud takes a dramatic turn: Media reports Musk privately called Trump late at night to express remorse before publicly apologizing; Vance is the key mediator. Trump stated that Musk's change of heart was commendable, feeling that Musk was deeply remorseful for what he had said, and he would not blame him, just a bit disappointed with his criticism of the Republican spending bill. When asked if he could reconcile with Musk, Trump said, "I think I can."

• Media reports that U.S. Vice President Vance and White House Chief of Staff Wiles urged Musk to end the dispute during a call last Friday; Musk privately discussed "ceasefire" options with Vance and Wiles on Friday, and his call with Trump on Monday prompted Musk to post an apology on Wednesday.
• Musk admits fault: Regrets attacking Trump, says he went too far. On Wednesday, Musk publicly posted on X that he regretted some of his posts about President Trump from last week, stating that the content was too extreme. This was his strongest signal of remorse to date. Following Musk's statement, Tesla's U.S. stock surged in after-hours trading, rising nearly 2% at one point.
• Morgan Stanley interprets the "Trump & Musk" feud: Musk's careful design, the market underestimates his capabilities, and many trading opportunities will arise. Morgan Stanley believes that the "Trump & Musk feud" was not a spontaneous event but a carefully planned strategy by Musk aimed at achieving specific goals and garnering maximum public attention. He brought the issues of the U.S. budget deficit and debt to the public's attention because he believes that no matter how successful companies like Tesla and SpaceX are on an individual level, they are ultimately closely related to the overall financial strength of the country. Morgan Stanley warns that if the "Trump & Musk" disagreements continue to escalate, Tesla's stock price will face more severe fluctuations, but it will also create numerous trading opportunities.

Musk: Robotaxi to begin trial operation on June 22. Musk revealed that the scale of this trial operation is very small, involving only 10 to 20 Robotaxis, specifically the Model Y, equipped with the company's new "unsupervised" FSD technology; initially, it will operate only in specific areas, while company employees will remotely monitor the fleet's operational statusJensen Huang's GTC Conference Speech: Quantum Computing is Reaching a Turning Point, Plans to Build 20 "AI Factories" in Europe. Jensen Huang announced at the GTC conference held on the 11th that plans to build 20 "AI factories" in Europe, with AI computing power in Europe expected to grow tenfold in two years, equipped with 10,000 GPUs. Quantum computing is reaching a critical turning point, and in the coming years, it will be powerful enough to "solve some interesting global problems."

Volcano Engine Demonstrates ByteDance's AI Strength: New Model Doubao 1.6 Supports Multimodal Thinking, Daily Token Call Volume Soars 137 Times! Volcano Engine, a subsidiary of ByteDance, released the Doubao large model series 1.6, achieving multimodal thinking, scoring 144 points in the college entrance examination mathematics, and supporting GUI operations. Its pioneering unified pricing model directly reduces the comprehensive cost of commonly used ranges for enterprises by 63%. By the end of May 2025, the daily token usage of the Doubao large model exceeded 16.4 trillion, a 137-fold increase compared to when it was first released in May last year.

Domestic Companies

Can a 60-Day Payment Term End the Car Industry's Involution? With the payment term shortened, has the time for suppliers to receive payments really been reduced? Is there more to explore around the 60-day mark? Car companies still need to take more practical actions to prove that they are consistent in word and deed.

Joseph Tsai: After DeepSeek's Breakthrough, Alibaba Engineers Work Through the Spring Festival to Catch Up with the AI Wave. Joseph Tsai, Chairman of Alibaba's Board, stated that China's vibrant consumer internet environment, coupled with the fierce competitive culture among local engineers, is continuously driving innovation in AI in China. Alibaba realized it had fallen behind in the AI field only after the release of the R1 model by DeepSeek, prompting engineers to cancel their holidays and continue working during the Spring Festival, leading to the subsequent launch of the Qwen series models. One of the reasons Alibaba chose to open-source the Qwen series models is to promote the widespread application of AI, which will benefit the company's cloud computing business.

Insiders Say Pop Mart Expanded Production Capacity Earlier This Year, But Demand Far Exceeds Supply Chain Response Speed. According to The Paper, as the popularity of IP continues to rise, Pop Mart urgently sought workers to resume operations at the beginning of the Spring Festival, expanding production capacity to meet the surging consumer demand. For brands, when market demand far exceeds the supply chain's response speed, it can be a very painful situation, "a sweet trouble, even the sewing machines are smoking but can't keep up with the demand."

Overseas Macro

The 10-year U.S. Treasury auction held up, demand remains robust, alleviating market concerns! During a period of surging global long-term bond supply and increasingly risky bond auctions, this 10-year U.S. Treasury auction performed relatively well. Analysts say that in the U.S., animal spirits have returned, and the market is clearly buying everything in a frenzy. After the auction results were released, the yield on the 10-year U.S. Treasury fell to an intraday low, marking the lowest level in the past week.

Wall Street mogul Tudor Jones: Trump will choose a "very dovish" Federal Reserve chair, Bessenet is the top choice. Billionaire investor Paul Tudor Jones believes that Trump is likely to appoint a "very dovish" Federal Reserve chair to align with his economic growth policies, with U.S. Treasury Secretary Bessenet being the most likely successor.

"Bond King" Gundlach warns: U.S. Treasuries are no longer a safe-haven asset, "the moment of reckoning is approaching". Gundlach stated on Wednesday that the U.S. debt burden and interest expenses have become "unsustainable," meaning that long-term U.S. Treasuries are no longer viewed as truly risk-free investments. He compared the current market environment to the period before the bursting of the internet bubble in 1999 and before the global financial crisis in 2006-2007. He suggested that investors should consider increasing their allocation to non-U.S. dollar assets and revealed that his managed firm is beginning to include foreign currencies in its funds.

Gold replaces the euro as the world's second-largest reserve asset. On Wednesday, the European Central Bank released a report stating that in 2024, global central bank gold reserves will account for 20%, surpassing the euro's 16%, making it the world's second-largest reserve asset, only behind the dollar's 46%. Moreover, global central bank gold purchases have exceeded 1,000 tons for three consecutive years, double the average level of the 2010s, with the pace of gold buying reaching a historical high. Major buyers of gold last year included China, India, Turkey, and Poland.

Overseas Companies

OpenAI's open-source model release postponed to late summer, to counter DeepSeek R2? OpenAI's open-source model, originally scheduled for release in June, has been postponed to late summer, with Altman stating that the team has made "unexpected breakthroughs" that require more time for optimization. The model aims to surpass open-source inference models like DeepSeek R1, possessing complex reasoning capabilities similar to GPT-4o. Netizens speculate that if OpenAI rushes to release something now, it could be awkward if DeepSeek R2 comes out and outperforms itIBM's stock price hits an all-time high, a true breakthrough in "quantum computing"! IBM claims to have found a "feasible path" to build the world's first large-scale "fault-tolerant" quantum computer by 2030, with operational capabilities expected to reach 20,000 times that of existing quantum computers. The company plans to launch the IBM Quantum Loon for testing architecture later this year.

Nintendo Switch 2 sells 3.5 million units in four days, setting a historical record, analysts call out a target of 20 million! Currently, the Switch 2 is out of stock on the online stores of major U.S. retailers such as Walmart, GameStop, Target, and Best Buy. Nintendo has set a sales target of 15 million units for the Switch 2 before the end of the fiscal year in March 2026, but analysts generally believe this expectation is too conservative.

Today's News Preview

U.S. May PPI.

First-time unemployment claims in the U.S. last week.

Federal Reserve releases the "U.S. Quarterly Financial Accounts Report."

Adobe earnings report.

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