Is the US recovery momentum slowing down? Will there be an interest rate cut in January?

Important Information: 01) E Fund Select Strategy Series - E Fund (HK) Select Bond Fund (the "Sub-Fund") is subject to general market fluctuations and other inherent factors of the Sub-Fund's assets. Therefore, you must bear the risk of not being able to recover the principal invested in the Sub-Fund or possibly losing most or all of your investment. 02) The Sub-Fund primarily invests in a portfolio of investment-grade debt securities denominated in offshore RMB, USD, EUR, or HKD, aiming to generate a stable income stream for the Sub-Fund beyond capital appreciation, thereby achieving long-term capital growth. Potential risks include a) risks related to debt securities (including credit risk, credit rating risk, credit rating downgrade risk, interest rate risk, valuation risk, volatility and liquidity risk, sovereign/government debt risk, risks associated with below-investment-grade or unrated debt securities, and risks related to investing in debt instruments with loss-absorbing features), b) concentration risk, c) emerging market risk, d) foreign exchange risk, e) risks related to sale and repurchase agreements, f) risks related to reverse repurchase agreements, g) RMB currency risk and RMB-denominated class risk, h) hedging RMB-denominated class risk, i) convertible bond risk, j) risks related to equity securities, k) Eurozone and European country risk, l) "dim sum" bond risk. 03) The Sub-Fund may invest in derivatives for hedging or investment purposes within the scope permitted by the Code, and under adverse conditions, the use of financial derivatives may become ineffective and/or cause the Sub-Fund to suffer significant losses. 04) The Sub-Fund may pay distributions from the capital of the Sub-Fund. Investors should note that paying distributions from capital is equivalent to returning or withdrawing part of the investor's original investment or any capital gains attributable to that original investment, and such distributions may result in an immediate reduction in the net asset value of the relevant units. The distribution amount and net asset value of the hedging unit class may be adversely affected by interest rate differences between the class currency of the hedging unit class and the base currency of the Sub-Fund, leading to an increase in the amount of distributions paid from capital and, consequently, greater capital erosion relative to other non-hedging unit classes. 05) Unless the intermediary has explained to you at the time of selling the fund that, after considering your financial situation, investment experience, and objectives, this fund is suitable for you, you should not invest in the Sub-Fund. 06) Investors should not make investment decisions based solely on the information provided in this document and should read the details and risk factors set out in the relevant fund's offering documents.

Hello, dear investor friends, wishing you all a Happy New Year! May your investment journey in the new year be smooth sailing, your holdings rise steadily, and your returns shine brightly!

Global central banks were active in December, with varying policy directions. The Fed cut rates by 25 bps to 3.50%-3.75% as expected, announced monthly purchases of $40 billion in Treasury bills, and the dot plot suggests another 25 bps cut in 2026; the market currently believes there is an 80.1% probability that the Fed will keep rates unchanged in January 2026. Additionally, Trump postponed the appointment of the new Fed chair to early this year, demanding a "super-dovish" new chair to inject more liquidity into the market. The ECB kept rates unchanged for the fourth consecutive time, while the BoE cut rates by 25 bps in a 5:4 vote, and the BoJ raised rates by 25 bps as expected. In China, the December LPR remained unchanged for the seventh consecutive month, and the central bank explicitly stated it would significantly increase the scale and proportion of various medium- to long-term funds actually invested in A-shares.

Divergence in US-China PMI data highlights different economic trends. In the US, the final December manufacturing PMI was 51.8, unchanged from the preliminary reading and expectations but down from November's 52.2, marking the weakest expansion in five months. Slower production growth and shrinking new orders reflect weakening demand, with tariffs pushing up corporate costs as a key factor. Overall, US manufacturing remains resilient, but the foundation for recovery is not yet solid, requiring cautious observation going forward. China, meanwhile, showed positive signals, with the December PMI returning to expansion territory after eight months, recording 50.1%, up 0.9 percentage points from the previous month, mainly due to recovering export and infrastructure demand, pre-holiday stockpiling, and policy support.

In bond markets, global bond markets saw a pullback overall last week, with the global composite index down 0.21% and the US Treasury index down 0.17%. On interest rates, US Treasury yields fell at the short end and rose at the long end, steepening the yield curve, with the 2-year US Treasury yield down 1 bp to 3.47% and the 10-year yield up 6 bps to 4.19%.

The net asset value of E Fund (HK) Select Bond Fund A-class cumulative USD shares was 12.73*. The bond market has been volatile recently, and we will continue to deploy high-quality credit assets under low spreads, striving to provide more stable returns than the market.

Key economic data releases to watch this week:

Monday: US December ISM Manufacturing Index;

Wednesday: US December ISM Non-Manufacturing Index;

Friday: China December CPI and PPI data;

Friday: US December Non-Farm Payrolls.

* Data sourced from E Fund Hong Kong's official website as of 2026/1/2.

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