US January PPI exceeded expectations across the board, inflation pressures weigh on rate cut expectations.

Important Information: 01) E Fund Select Strategy Series - E Fund (Hong Kong) Select Bond Fund (the "Sub-Fund") is subject to general market fluctuations and other inherent factors of the Sub-Fund's assets. Therefore, you bear the risk of being unable to recover the principal invested in the Sub-Fund or potentially losing a significant portion or all of your investment. 02) The Sub-Fund primarily invests in a portfolio of investment-grade debt securities denominated in offshore RMB, US dollars, euros, or Hong Kong dollars, aiming to generate a stable income stream beyond capital appreciation for the Sub-Fund, thereby achieving long-term capital growth. Potential risks include a) risks related to debt securities (including credit risk, risks related to credit ratings, credit rating downgrade risk, interest rate risk, valuation risk, volatility and liquidity risk, sovereign/government debt risk, risks of below-investment-grade or unrated debt securities, and risks associated with 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 share class risk, h) hedging RMB-denominated share 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 limits permitted by the Code. In adverse circumstances, 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 out of the Sub-Fund's capital. Investors should note that paying distributions out of capital is equivalent to returning or withdrawing part of the investor's original investment amount or any capital gains attributable to that original investment amount, and such distributions may lead to an immediate reduction in the net asset value of the relevant units. The distribution amount and net asset value of the Hedged Share Class may be adversely affected by the interest rate differential between the currency of the Hedged Share Class and the base currency of the Sub-Fund, leading to an increase in the amount of distributions paid out of capital and, consequently, greater capital erosion relative to other non-hedged share classes. 05) Unless the intermediary has explained to you, after considering your financial situation, investment experience, and objectives, that 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 in detail the particulars and risk factors contained in the relevant fund's offering documents.

Hello, dear investor friends, what important changes occurred in the market last week? Let's take a look together:

Last week's key US data were January PPI (Producer Price Index) and durable goods orders, both significantly exceeding market expectations, indicating stubborn inflationary pressures and further dampening expectations for a Fed rate cut. January PPI rose 0.5% month-on-month and 2.9% year-on-year, while core PPI rose 0.8% month-on-month and 3.6% year-on-year. The core year-on-year increase was the fastest since March 2025, primarily driven by soaring service costs, with wholesale and retail trade service margins jumping significantly. Core goods prices also rose noticeably, with only energy and food prices dragging down the overall goods component. Additionally, January durable goods orders increased 3.1% month-on-month, the largest increase since July 2024, mainly due to a surge in civilian aircraft orders (Boeing orders up 93.9%); core capital goods orders rose for the third consecutive month, demonstrating underlying resilience in the manufacturing sector, but there is a mismatch between orders and deliveries. Higher-than-expected PPI may push up core PCE, further complicating the Fed's monetary policy choices.

China's focus was on the Spring Festival travel consumption and LPR (Loan Prime Rate) quotes, with a clear recovery trend in the consumer market and monetary policy remaining stable. The total cross-regional population movement and the single-day peak before and after the 2026 Spring Festival both set new historical records, with travel characterized by "early return to work" and "segmented holidays." Outbound travel and service consumption saw increased popularity. Consumption data was impressive, with average daily sales of key retail and catering businesses in the first four days of the Spring Festival holiday increasing 8.6% year-on-year. Duty-free sales in Hainan increased 15.8% year-on-year, with significant growth in service consumption, car rentals, and other areas. Regarding monetary policy, the February 24 LPR quotes remained unchanged, with the 1-year rate at 3.0% and the 5-year+ rate at 3.5%, unchanged for the ninth consecutive month since June last year. This is mainly due to stable macroeconomic conditions and positive development of new quality productive forces. In the short term, monetary policy is in an observation period and will continue to strengthen support for key areas.

In bond market performance, global bond markets overall showed slight gains over the past week, with the global aggregate index up 0.50%, the US aggregate index up 0.54%, US investment-grade corporate bonds up 0.21%, and US high-yield corporate bonds down 0.22%. The emerging market US dollar bond aggregate index rose 0.17%, and the China US dollar credit bond index rose 0.42%. In terms of interest rates, US Treasury yields generally declined, with a larger decline in the 5-10 year range. The 2-year US Treasury yield fell 10bp from last week to 3.37%, and the 10-year US Treasury yield fell 15bp to 3.94%.

The net asset value of the E Fund (Hong Kong) Select Bond Fund A Class Accumulative USD share is 12.86*. Regarding the recent overall bond market situation, we will continue to deploy targets with high-quality credit credentials under the condition of low spreads, striving to provide more stable returns than the market.

Key economic data releases to focus on this week:

Monday: US February ISM Manufacturing Index;

Wednesday: China February PMI data, US February ISM Non-Manufacturing Index;

Friday: US January retail sales data, and February non-farm payrolls data.

*Data sourced from E Fund Hong Kong's official website, as of 2026/3/2.

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