Sticky

• The 30-year Treasury bond futures market has declined throughout the year as investors demand higher yields to hold long-duration government debt. • Persistent inflation and elevated oil prices, driven by a six-month conflict between the U.S. and Iran, are putting upward pressure on bond yields. • Federal Reserve Chair Kevin Warsh faces internal division between "hawks" advocating for rate hikes and those urging patience due to a softening labor market.

• The U.S. Personal Consumption Expenditure (PCE) price index for May met expectations, with headline inflation at 4.1% and core inflation at 3.4%. • Consumer spending rose by 0.7%, exceeding the 0.6% forecast, while personal income accelerated sharply by 0.7%, significantly beating the 0.4% consensus estimate. • This resilience in consumer demand and income growth suggests that households can sustain spending despite elevated borrowing costs.

• World stocks and the MSCI Asia ex-Japan index reached record highs as AI-driven investment expanded from tech giants into small-cap sectors. • Alphabet's US$80 billion capital raise underscores the massive spending requirements for AI infrastructure despite a backdrop of sticky global inflation. • Market momentum was bolstered by a significant 4.0% single-session surge in South Korea on Monday, with current rotation shifting toward Hong Kong and China's "A" shares.