Mini Program: Daily Investment Bank / Institutional Insights Summary
Overseas
Fitch: U.S. private credit default rates rose to a record high in July
Fitch Ratings reported that the default rate among the 1,300 U.S. private credit borrowers it tracks rose to a record high in July. Fitch began monitoring this data in August 2024, and the 12-month rolling default rate for this group increased to 6.1% in July, up from 6% in June. For the 300 issuers for which Fitch provides private credit ratings to insurers, the default rate declined to 8.6% in July from 9.4% in June. Among the aforementioned 1,300 private credit borrowers, Fitch recorded three private credit default events in July, involving one new defaulting borrower and two borrowers defaulting again. Over the 12 months ending July 2026, 83 borrowers defaulted, triggering a total of 105 default events.
2. Goldman Sachs: The Fed's decision to hold steady in July was absolutely correct; it should remain open until September.
Goldman Sachs analyst Robert Kaplan said the Federal Reserve’s decision not to raise rates in July was “absolutely” correct, urging policymakers to maintain flexibility until September, citing the complex factors influencing inflation and warning that rigid forward guidance could be counterproductive. Kaplan stated, “If I see meaningful improvement, I may be willing to remain on hold, but I want to make full use of every moment before September to form a judgment, avoiding rigidity or preconceptions.” He identified current influencing forces as including inflationary pressures from AI infrastructure construction, tariffs, labor constraints, and surging oil prices; meanwhile, AI applications are exerting a countervailing effect, accelerating the downward trend in inflation. Kaplan suggested that Powell should use his speech at this month’s Jackson Hole symposium to briefly explain the rationale behind the Fed’s July hold, rather than delivering a purely “philosophical” address. Kaplan expressed greater concern about long-term U.S. Treasury yields than about the federal funds rate itself, noting that the global rebound in long-term bond yields reflects structural supply-demand imbalances driven by persistent fiscal deficits, not Federal Reserve policy.
3. Bank of Montreal: The Japanese yen remains strong against the currencies of its major trading partners.
Abbas Keshwani, Head of Asian Macro Strategy at RBC Capital Markets, stated in an email that the yen’s performance relative to other currencies has not been weak. “Thanks to recent intervention, the yen has not been the worst-performing currency over the past month,” he said. “The yen remains strong against the currencies of Japan’s major trading partners.” Keshwani added, “Another way to assess the yen’s relative performance is to look at the EUR/JPY cross rate, which is currently well below the vicinity of 187 seen during the authorities’ first two rounds of intervention.”
4. Nomura Securities: The June rate hike is just the beginning; the European Central Bank may follow suit in September.
According to foreign media reports, 83% of economists expect the European Central Bank to raise the deposit facility rate by 25 basis points to 2.50% in September; 80% anticipate the deposit facility rate will remain at 2.50% by the end of the year; and 63% expect the rate to stay at or above 2.50% until at least the third quarter of 2027. Of the 69 economists surveyed, 57 (approximately 83%) predict a rate hike next month, up from 72% before the July meeting and 65% in June. This indicates growing consensus among markets that the ECB will raise rates again in September following its June increase. Nomura noted: “The longer and higher oil prices remain at current levels, the greater the risk of second-round effects. The ECB cannot act until it sees these effects, but it can act preemptively—and that is precisely what the ECB has been doing. The risk is that if the ECB raises rates only once, it may appear as a mere tweak, and it is well known that monetary policy cannot be conducted this way. If they hike once, they are likely to hike again. Given that the June hike was an obvious choice for the ECB, we believe the likelihood of another hike is high.”
5. UOB: Expects the Fed to hold rates steady until the end of 2026, with two cuts in 2027
UOB analyst Alvin Liew outlined market expectations for the federal funds rate following the release of the July U.S. CPI data. Market pricing for a September rate hike has declined, and UOB’s baseline scenario anticipates an extended pause through the entirety of 2026. The bank expects two 25-basis-point cuts in 2027, gradually lowering the federal funds rate to approximately 3.25% by the end of 2027: “We continue to maintain our baseline scenario that the Fed will remain on hold for the remainder of 2026, then resume easing in 2027, potentially cutting by 25 basis points at the end of the second quarter and again at the end of the fourth quarter. Under this scenario, the federal funds target rate is expected to remain unchanged through the end of 2026, then gradually decline to 3.25% by the end of 2027—still our estimate for the terminal federal funds rate. While risks to our FOMC outlook have become more balanced following the June and July CPI reports, geopolitical and energy-related uncertainties still impart a slight upward bias to risks, and we remain vigilant against the non-negligible risk of further policy tightening.”
6. Standard Chartered Bank: Stronger-than-expected UK GDP Fails to Alter Interest Rate Outlook
The euro edged higher against the pound, supported by expectations of a more hawkish stance from the European Central Bank. Data from the UK Office for National Statistics showed that UK economic growth reached 0.3% in June, above the market expectation of zero growth. Economic expansion for the second quarter was 0.4%, in line with forecasts but below the 0.6% growth recorded in the first quarter. Year-over-year, GDP grew by 1.2%, surpassing the expected 1.1% and the prior reading of 0.9%. Standard Chartered analysts noted that the UK’s second-quarter GDP growth exceeded the Bank of England’s July forecast of “0.3% quarter-on-quarter,” but is unlikely to be a primary driver of policy decisions. They argued that “inflation data (which has so far performed well) and labor market data (which remains weak) are more important considerations for policymakers.” Given that policy settings are already viewed as restrictive, Standard Chartered maintains its view that “the Bank of England is still expected to hold rates steady this year.” Traders are now turning their attention to next week’s UK CPI data for new clues on the Bank’s policy outlook. At its most recent meeting, most Bank of England policymakers indicated that financial conditions have tightened since the outbreak of the Middle East conflict, providing “sufficient buffer” against inflation risks from rising energy prices.
7. Bank of England: The bursting of the AI bubble could trigger simultaneous withdrawals from U.S. stocks and bonds, impacting the UK.
Analysis by the Bank of England suggests that if the AI stock bubble bursts, the shock could spread to the UK, affecting equity prices, UK government bond yields, and corporate credit markets. In a blog post, the Bank of England stated that if major U.S. tech companies report earnings below expectations, investors may interpret this as a downgrade in the U.S. future productivity outlook and consequently withdraw from U.S. assets rather than seeking them as safe havens. This could lead to a weaker dollar and undermine a factor that has historically provided a buffer for economies like the UK during periods of financial market stress. Daniel Ostry and colleagues from the Bank of England’s Global Analysis Division wrote: “If expectations that AI will boost productivity fail to materialize, investors may simultaneously exit both U.S. bond and equity markets.” They noted that “this would stand in stark contrast to typical stress scenarios such as the 2008 global financial crisis,” when investors sought safe-haven assets, driving the dollar higher—a development that supported the UK by enhancing the competitiveness of UK exports and increasing the pound value of dollar-denominated holdings.
Domestic
1. CITIC Securities: The central bank may further increase financial support for the real economy in the next phase.
China Securities Research Report: The PBOC's Q2 2026 Monetary Policy Report characterizes the domestic economy as "stably operating and moving toward innovation and quality," while highlighting concerns regarding geopolitical risks and AI development on the international front. On monetary policy, it calls for "comprehensive use and timely adjustment of monetary policy tools," signaling a slightly more accommodative stance. Regarding liquidity, it emphasizes guiding short-term funding rates to fluctuate around the policy rate, and on cost-reduction measures, it mentions promoting diversification of loan pricing benchmarks. Overall, we believe the PBOC is likely to further enhance financial support for the real economy in the coming phase.
2. Huatai Securities: AI Power Supply May Exhibit Four Trends Under Computing Power Upgrades
According to a research report from Huatai Securities, under the trend of AI hyper-node cabinets shifting from “scale-out” to “scale-up,” power density in AIDCs is experiencing nonlinear growth. As the next-generation cabinets—NVIDIA’s Kyber and ByteDance’s AI Rack 3.0—push power ratings beyond 500 kW, busbar volume and thermal management bottlenecks under high current may drive the 800V DC solution from a preferred option to a necessity. Industrialization of 800V systems is expected to advance in parallel both domestically and internationally. The growing demand for high-density, low-loss, and highly controllable power delivery to chips is likely to give rise to four major trends in AI power distribution: higher voltage, multi-layer backup power, modular integration, and upgraded front-end design. Power supply manufacturers capable of providing HVDC/HV IBC solutions are poised to benefit; companies with expertise in electromechanical skid-mounted modules and SST technology are also likely to gain advantages; given the strong interoperability between automotive-grade 400V/800V systems and AIDCs, relevant automotive-grade and power semiconductor companies will also benefit.
3. Wuhan Securities: Maintains the view that the Fed will not raise rates this year
Suzhou Securities research report indicates that the remaining inflation data for the third quarter of 2026 is expected to continue its cooling trend, leaving room for further retreat in rate hike expectations; U.S. inflation is projected to return below 2% in the second quarter of 2027. Currently, traders are pricing in a continued moderate decline in the year-over-year U.S. CPI growth rate from August to October, with a trough of 2.94% expected in October. Looking longer term, under the baseline assumption of stable oil prices, the average year-over-year U.S. CPI from August this year to February next year is expected to oscillate around 3.2%, primarily driven by a higher oil price base. However, from March to May next year, the year-over-year U.S. CPI growth rate is expected to decline significantly due to high base effects following the end of the oil price pulse, falling to 2.56%, 2.03%, and 1.71% respectively. Therefore, as long as oil prices do not face significant upward risks, the Federal Reserve will have no need to raise rates starting in the second quarter of 2027. In terms of strategy, as of the latest data, traders are pricing in 1.04 and 1.65 rate hikes for December this year and June next year, respectively—down from 1.48 and 2.20 at the end of July, but still with room for further compression. Suzhou Securities maintains its view that the Fed will not raise rates this year; the current implied annual rate hike expectation of 26 bps is expected to be fully unwound, corresponding to weakening 2-year Treasury yields and the U.S. dollar index, and rising gold prices.
4. CITIC Construction Investment: The deadlock in the Strait of Hormuz continues, keeping geopolitical risk premiums elevated.
A research report from CITIC Construction Investment indicates that the deadlock in the Strait of Hormuz is unlikely to be fundamentally resolved in the short term. The U.S. plan for a rapid military victory has failed, and its policy toward Iran is shifting from intense military pressure to a protracted struggle of simultaneous pressure and negotiation. Iran is unlikely to easily abandon the Strait of Hormuz as a key countermeasure against the U.S. In the short term, prolonged disruption of the strait benefits oil and gas extraction and energy sectors, while negatively impacting aviation and shipping companies with high energy consumption. The medium-term trend will depend on the progress of U.S.-Iran negotiations and the actual restoration of navigation through the strait, with geopolitical uncertainty continuing to dominate oil price volatility.
5. CITIC Securities: With the rapid development of domestic surgical robots and general-purpose humanoid robots, the industry is expected to achieve systematic cost reductions.
CITIC Securities' research report states that robotic surgery offers significant benefits and represents a new trend in medical advancement; however, high surgical costs have long kept adoption rates low. CITIC Securities believes that with the rapid development of domestic surgical robots and general-purpose humanoid robots, the industry is poised for systematic cost reduction and a substantial increase in adoption. Humanoid robots may drive industry progress in two ways: 1. Promoting localization and scaling of the upstream supply chain, enabling significant cost reductions downstream; 2. Top-tier journals such as Nature and Science have published research indicating that humanoid robots may directly manipulate surgical instruments, and when combined with embodied intelligence and AI for the physical world, they could spark a new revolution in surgery. CITIC Securities believes domestic robotic companies are well-positioned to stand out in global competition and may give rise to trillion-yuan-scale leaders, recommending attention to robot companies that can reduce costs and drive innovation. Additionally, CITIC Securities has noted frequent mergers and acquisitions by leading medical device companies in this field, which may present additional investment opportunities.
6. CITIC Securities: The viscose filament industry is expected to enter a phase of tight supply and demand, with a higher price floor.
China Securities Research Report indicates that sustained export demand and near-full capacity utilization of existing supply suggest the viscose filament industry is poised to enter a phase of tight supply-demand dynamics and rising price fundamentals. Growth in traditional apparel consumption in India has driven a surge in Chinese viscose filament exports, with export volumes rising 18.2% year-over-year to 114,000 tons in 2025 and further increasing by 30.9% year-over-year in the first half of 2026. Meanwhile, domestic industry utilization rates reached 89.8% in 2025, and semi-continuous spinning capacity may face pressures from policy-driven phase-outs, environmental upgrades, and relocation requirements. China Securities expects a supply-demand gap to emerge in the industry from 2026 to 2028, with product prices exhibiting upward pricing flexibility. Leading companies are strongly recommended.
7. CITIC Securities: The central bank may further increase financial support for the real economy in the next phase.
China Securities Research Report states that the PBOC's Q2 2026 Monetary Policy Report characterizes the domestic economy as "stably operating and moving toward innovation and quality," while highlighting concerns regarding geopolitical risks and AI development on the international front. On monetary policy, it calls for "comprehensive use and timely adjustment of monetary policy tools," signaling a slightly more accommodative stance; regarding liquidity, it emphasizes guiding short-term funding rates to fluctuate around the policy rate, and on cost-reduction, it mentions promoting diversification of loan pricing benchmarks. Overall, China Securities believes that the PBOC is likely to further enhance financial support for the real economy in the coming phase.