Merchant Macro: The expectation of a July rate cut by the Federal Reserve has cooled down, and it is a high probability scenario that there will be two rate cuts in the year starting in September.

The data for non-farm payroll in the United States in June exceeded expectations, but was mainly supported by the increase in projects from the public sector at the state and local government levels; the unemployment rate slightly decreased, partly reflecting a reduction in labor supply under changing immigration policies. Looking at the growth rate of hourly wages and weekly hours worked, the labor market is still gradually slowing down. Following the release of the data, expectations for interest rate cuts in overseas markets have once again declined, with a decreased likelihood of rate cuts in July and a higher probability of two rate cuts within the year starting from September. The US bond yield curve slightly flattened, while the US dollar index strengthened to around 97.3 before retreating. The changing global narrative logic, the upcoming interest rate cuts in the US, the nearing end of interest rate cuts in Europe, and the potential for Japan to resume raising interest rates indicate that the trend of US dollar depreciation will continue. We reiterate the boost to non-US risk appetite and improvement in non-US liquidity with the combination of "strong US stocks + weak US dollar". It is expected that domestic equity assets will also have a breakthrough at the index level in the second half of the year.