<p>Minsheng Strategy pointed out that the headwinds that have been suppressing the market for the past two months are weakening, domestic demand is falling to a new platform, and interest rate cuts will promote the recovery of global manufacturing activities. Domestic economic data indicate that demand is recovering, export resilience is strengthening, government bond issuance has reached a new high since 2017, and fiscal contraction is beginning to reverse. Overseas, inflation resilience is evident, the probability of a "soft landing" for the US economy is high, and interest rate cuts are conducive to the recovery of physical demand</p>

- Domestic: Transition from weak demand to recovery. Recent economic data in August align with the expected "weak demand" trend in the capital market. However, signs of future demand recovery are accumulating, driven by sustained export resilience and increased government bond issuances, hinting at a reversal in fiscal tightening. The combined effect of exports and fiscal policy may signal a phase of recovery in total domestic demand.
- Overseas: Transition from recession trades to prelude of second inflation. Despite lingering soft job data, massive fiscal support and imminent preventive rate cuts in the US suggest a high probability of a "soft landing." Global commodity stabilization post-weak data hints at a shift towards second inflation expectations. The market anticipates a rebound in physical demand under preventive rate cuts and expansive fiscal policies, with a likelihood of a return to second inflation scenarios.
- Preparation for the next scenario: Historical insights and milestones. Analyzing historical PMI trends post-Fed rate cuts reveals two scenarios: low PMI cuts lead to quick rebounds, while high PMI cuts show longer recovery periods. As the market shifts from recession trades to inflation expectations, focusing on upstream assets like energy, metals, and shipping is recommended. China's manufacturing strength and select capital assets are poised for resilience post-global recession expectations, with relative asset advantages in banking, railways, gas, and ports.

When will the rebound happen?