Domestic long-cycle PPI upswing relies on improvement in domestic demand; rate hike expectations cool, metal prices rebound; Trump may optimize tariff policy --- 0707 Macro Dehydration

Domestic PPI ended 41 months of negative growth in March, with gains from April to May exceeding expectations to reach the year's high, driven primarily by the energy and chemical industry chain. In this round, insufficient cost pass-through from midstream to downstream resulted in a situation where prices rose but profits did not. The momentum of PPI in the second half of the year may tend to converge, and a long-term upward cycle depends on the improvement of domestic demand, while external shocks are unlikely to form a long-term trend.

Industrial metals first declined and then rose, with copper having a strong bottom support, aluminum in a tight supply-demand balance with subsequent volatile strengthening. Precious metals experienced sharp volatility, first a deep correction and then a strong rebound, with the medium- to long-term allocation logic unchanged. Energy metals generally weakened but showed signs of stabilization, with lithium carbonate rebounding strongly and cobalt oscillating at low levels.

The U.S. effective applied tariff rate dropped to 6.7%, the lowest since March 2025, while China still faces the highest effective tariff rate of 22.5%. The Office of the U.S. Trade Representative launched two Section 301 investigations into forced labor and overcapacity. In the short term, the Section 301 investigations may serve as a substitute plan for the expiration of Section 122, with relatively limited impact.