Barclays research team published the Emerging Markets Quarterly Report, pointing out that emerging market assets have been constrained by the Federal Reserve policy this year, but with the imminent rate cut by the Federal Reserve, the situation is rapidly changing. The Federal Reserve's shift to a more accommodative stance has been sufficient to support the repricing of recent emerging market interest rates, and has been implemented in some countries such as Mexico, the Czech Republic, Israel, and India. In this process, there may be divergence between emerging market interest rates and emerging market forex, with interest rates likely outperforming forex. In other words, as most central banks ease policies, arbitrage trading returns may decrease, and risk volatility may push up the USD against emerging market currencies, especially given the current low premium reflected in the emerging market forex market for economic recession risks. Even if the Federal Reserve switches to a rate cut in September, Asian emerging market central banks may not follow suit. Some market participants believe that the Federal Reserve is the main focus of attention for Asian central banks, as these central banks all wish to relax monetary policy. Barclays remains skeptical, as overall economic activity has not yet reached levels that would make policymakers cautionary. Even at the crucial moment when the Federal Reserve is expected to switch to a rate cut in September, Asian emerging market central banks are likely to maintain a relatively cautious and conservative attitude towards easing monetary policy. Concerns about financial stability in countries such as South Korea, China Taiwan, Thailand, Singapore, and Malaysia, especially considering high housing prices and heavy household debt, may inhibit the willingness of local central banks to cut rates. Barclays is optimistic about individual high-quality Chinese corporate bonds, especially in the technology, media, and telecom industries, as well as companies and asset management companies with unique advantages. It is expected that the defensive attributes of high-quality Chinese corporate bonds will continue to be demonstrated, and profitability and fundamentals are expected to improve. However, potential negative factors are also noted, such as the potential impact on market sentiment as the US presidential election approaches. It is expected that after the recent adjustment in positions causing a decline in the USD against the CNY, there may be a certain degree of rebound, but the extent is limited and unlikely to exceed 7.10. Given that China's willingness to boost demand has not been very strong, and considering loose monetary policy and the large interest rate differential between China and the US, there is still room for the USD to rise against the CNY. The Chinese government bond yield curve is expected to steepen, and there may not be aggressive stimulus measures. With the People's Bank of China controlling short-term and long-term interest rates more strongly and the market gradually digesting the impact of the central bank's sale of borrowed bonds, the Chinese government bond yield curve is expected to steepen. It is expected that by the fourth quarter of this year, the 3-year and 10-year Chinese government bond yields will stabilize around 1.5% and 2.1% respectively, and by the third quarter of 2025, they will remain around 1.50% and 2.20% respectively. Continued optimism towards the steepening strategy of 10-year and 30-year Chinese government bonds. The basic assumption is that China's monetary and fiscal policies will provide gradual support rather than large-scale aggressive stimulus measures. After announcing a 10 basis point cut in the 7-day reverse repo operation rate (the main policy rate) in July, it is expected that the People's Bank of China will cut the rate again by 10 basis points in the fourth quarter of this year, and in the first and second quarters of next year. However, given that bank net interest margins are at historic lows, rate cuts will be cautious. In addition, the People's Bank of China is expected to cut the bank reserve requirement ratio by 50 basis points in the coming weeks (possibly in September), and then cut it by another 50 basis points in the first half of 2025. It is expected that the Ministry of Finance will continue to accelerate the issuance of special bonds for local governments, and complete the annual issuance plan by the end of October or early November, which will provide support for infrastructure investment. The basic forecast is that after a strong growth in infrastructure investment in the second half of 2024 and 2023 at 8%, it will continue to grow strongly in the second half of this year, reaching 8%. The USD to HKD exchange rate is expected to decline by the end of the year, while short-term interest rates in Hong Kong may see a slight increase. It is expected that the USD to HKD exchange rate will remain within the range of 7.75-7.85 and will decline by the end of the year due to the Federal Reserve rate cut and seasonal factors in the fourth quarter. In the short term, even if the Federal Reserve starts gradually cutting rates, the market may increase long positions on the USD against the HKD again. Furthermore, it is expected that the Federal Reserve rate cut cycle will cause the USD to HKD exchange rate to fluctuate within the range of 7.75-7.80 in 2025. It is expected that interest rates in Hong Kong will show a "bearish trend" in the short term, and then turn "bullish" after the Federal Reserve begins the rate cut cycle. While US short-term interest rates may remain stable, Hong Kong short-term interest rates are expected to see a slight increase, reflecting uneven local liquidity distribution.