‼️ 🇨🇳 China likely entered 2H 2026 on the same uneven footing that defined the first half: AI-led manufacturing and exports remain strong, but they are failing to offset a deepening investment slump and weak consumer demand. July data may also show disruption from typhoons, flooding and shipping delays.
The core risk is clear: China’s AI buildout lifts industrial output and productivity—but its capital-intensive, highly automated nature offers limited support for jobs, household income or persistent deflationary pressures.
‼️ Bond traders scaled back expectations for a Fed rate hike this year as falling oil prices boosted confidence that inflation is easing. Treasury yields dropped up to 6 bps across the curve, though the 30-year fell less amid a $25 billion auction that priced at the highest yield for that maturity since 2001.