Core Viewpoint - In October, China's export growth rate recorded a decline of -1.1% year-on-year, a decrease of 9.4 percentage points from the previous month, indicating a slowdown in export momentum due to a high base from the previous year and a weakening global economy [2][3]. Export Performance - The decline in exports is attributed to a high base effect from the previous year and ongoing global economic slowdown, compounded by the U.S. imposing additional tariffs [2][3]. - Exports to neighboring regions and the U.S. remain resilient, while significant declines are observed in exports to the EU, Latin America, and Africa [8]. Product Categories - The automotive sector benefited from a low base, showing a significant increase in exports, while electronics and labor-intensive products experienced declines [10]. - In terms of quantity and price, the contribution of quantity to export growth has decreased, while price contributions have increased for representative goods [5]. Import Trends - China's import growth rate fell to 1% in October, a decrease of 6.4 percentage points from the previous month, reflecting a simultaneous slowdown in production and domestic demand [12]. - Only agricultural products saw an increase in imports, while other categories like industrial raw materials and electronics experienced declines [15]. Trade Balance - China's trade surplus narrowed slightly to $90.07 billion in October, but net exports continue to support the economy [18]. - Looking ahead, a rebound in exports is expected in November due to a lower base effect, with potential benefits from easing U.S.-China trade tensions and a recovering European economy [18].

Global Asset Price Performance - US Treasury yields increased, with the 10-year yield rising by 9 basis points. Major global stock markets saw gains, with the S&P 500, Dow Jones, and Nasdaq increasing by 0.7%, 0.8%, and 2.2% respectively. In the commodity market, WTI and Brent crude oil prices fell by 2% and 1.5%, while gold prices dropped by 2.7%. The US dollar index strengthened by 0.8% [2][3]. Major Central Bank Monetary Policies - The Federal Reserve decided to lower the benchmark interest rate by 25 basis points during the October meeting, with plans to end balance sheet reduction by December. There were internal disagreements, with two members opposing the rate cut. Fed Chair Powell indicated that further rate cuts are not guaranteed, citing concerns over missing key economic data due to the government shutdown and worries about inflation stabilization. The European Central Bank maintained its interest rates, stating that inflation remains close to the 2% target [4][5][6]. US Economic Dynamics - The US government shutdown continues, with the Senate rejecting a temporary funding bill, leading to estimated economic losses of $7 billion to $14 billion. There are hopes among some Republicans for former President Trump to intervene. Meanwhile, the US and China have extended a truce in their trade war, with the US canceling a 10% tariff on Chinese goods and suspending other tariffs for a year. Additionally, a trade agreement was reached between the US and South Korea [9][10]. Economic Dynamics in Other Regions - The Eurozone's GDP grew by 0.4% in Q3, but overall performance remains weak due to sluggish consumption and industrial capacity issues. The unemployment rate in the Eurozone is at 6.3%, with youth unemployment rising. The US and Japan announced a $550 billion investment plan focusing on energy, AI, and critical minerals. Tokyo's core CPI rose to 2.8%, exceeding the Bank of Japan's 2% target due to rising utility prices. Israel has resumed airstrikes on Gaza in response to attacks from Hamas [16][17][18].

Group 1 - The core outcome of the recent US-China trade negotiations includes a 10% reduction in tariffs on Chinese goods related to fentanyl, with corresponding adjustments on US agricultural exports like soybeans and energy products [3] - The US will suspend the 24% reciprocal tariffs on Chinese goods and the 50% export control rules announced on September 29 for one year, with China also adjusting its counter-tariffs and export controls accordingly [3] - Both parties agreed to suspend the 301 investigations into maritime, logistics, and shipbuilding industries for one year [3] Group 2 - The results of the negotiations align with market expectations and previous predictions, indicating a trade-off between rare earth controls and soybean purchases in exchange for fentanyl tariff reductions and other US restrictions [5] - Following the negotiations, the likelihood of escalating tariff conflicts is low, and there is potential for further reductions in fentanyl tariffs in future discussions [6] - Despite the recent retreat of the US in trade confrontations, ongoing competition between the two nations may lead to continued conflicts, particularly in sectors like electronics, electric vehicles, and pharmaceuticals [7][8]

Group 1 - The Federal Reserve decided to lower the interest rate by 25 basis points to a target range of 3.75%-4% and will stop balance sheet reduction on December 1, gradually replacing MBS with short-term government bonds [2] - There is a division among Federal Reserve officials regarding the interest rate cut, with some advocating for a 50 basis points cut while others oppose any reduction [2] - The labor market is showing signs of weakness, with the unemployment rate rising to 4.3% in August, indicating a shift towards an oversupply of labor [3][6] Group 2 - Inflation lacks sustained upward momentum, with the core CPI falling by 0.1 percentage points to 3% in September, suggesting that tariff costs are taking time to be passed on to consumers [3][5] - The Federal Reserve's assessment of employment and inflation is based on available data due to the lack of recent economic data caused by the government shutdown [5] - Economic growth is described as expanding at a moderate pace, although consumer spending has weakened, particularly in retail [8] Group 3 - The outlook for the U.S. economy remains cautious, with the Beige Book indicating a decline in consumer spending and a preference for discounts among lower-income groups [8] - The market's expectation for a rate cut in December has decreased significantly, reflecting uncertainty in the labor market and inflation dynamics [9] - The Federal Reserve's decision-making may be delayed due to the absence of economic data, which complicates the assessment of labor market risks [9]

Global Asset Price Performance - Gold prices have decreased, while major global stock markets have shown an upward trend this week. The S&P 500, Dow Jones, and Nasdaq indices increased by 1.9%, 2.2%, and 2.3% respectively [2][3] - In the bond market, yields in major overseas markets mostly rose, with the 10-year U.S. Treasury yield remaining flat compared to last week [2] - Commodity prices have seen an increase, with WTI and Brent crude oil prices rising by 8.4% and 8.1% respectively, while London gold prices fell by 3.2% [2][3] - The U.S. dollar index strengthened by 0.4% [2] Major Central Bank Monetary Policies - September inflation data has reinforced expectations for interest rate cuts, with the U.S. core CPI showing a year-on-year decline [5] - The Federal Reserve is focusing on digital assets and AI payment integration, with a new "streamlined main account" allowing non-bank institutions direct access to the Fed's payment channels [5] - The European Central Bank's President Lagarde highlighted the need for an annual investment of approximately €150 billion to enhance energy security and sustainability in the EU [5] U.S. Economic Dynamics - The U.S. government remains shut down as the Senate has repeatedly rejected temporary funding bills [9] - The core CPI for September has decreased by 0.1 percentage points to 3%, indicating a cooling in inflation [9] - Existing home sales have rebounded by 1.5% month-on-month in September, driven by lower mortgage rates and a slowdown in home price increases [9] Other Regional Economic Dynamics - France's credit rating has been downgraded from "AA-" to "A+" due to high public finance uncertainty [13] - Sanctions against Russia have intensified, with the U.S. and EU implementing new measures targeting Russian oil exports and cryptocurrency platforms [13] - Japan's new Prime Minister aims to maintain monetary easing and implement large-scale economic stimulus plans [14] Key Focus for Next Week - Upcoming data releases include U.S. housing price indices and Eurozone GDP figures, along with central bank meetings from the Federal Reserve and the European Central Bank [21][22]

Core CPI and Inflation Trends - The core CPI year-on-year growth rate fell by 0.1 percentage points to 3% in September, while the overall CPI increased to 3% year-on-year, with a slight month-on-month decrease of 0.3% [2][4][14] - Energy prices saw a rise, contributing to the overall CPI increase, while core services continued to cool down [4][14] Energy Sector Insights - The year-on-year growth rate of energy CPI rose to 2.8%, up 2.6 percentage points from the previous month, with Brent crude oil averaging $68.2 per barrel in September [5] - Oil prices have been under pressure since October, averaging $64.9 per barrel, influenced by geopolitical developments and economic growth concerns [5] Commodity Inflation Analysis - Core commodity year-on-year growth remained stable at 1.5%, with a slight month-on-month decline [7] - The used car market showed signs of slowing sales, indicating a potential lack of sustained upward pressure on prices [7] Service Sector Performance - Core service year-on-year growth decreased to 3.5%, with housing and transportation services contributing to the decline [10] - Owner's equivalent rent growth fell to 3.8%, suggesting that housing inflation may continue to cool in the coming months [10] Long-term Inflation Expectations - Consumer inflation expectations for one year slightly decreased to 4.6%, while five-year expectations rose to 3.9%, indicating ongoing concerns about future inflation risks [12] Monetary Policy Outlook - Following the inflation data release, expectations for two more interest rate cuts this year were reinforced, as the overall inflation performance appears moderate and lacks significant upward momentum [14]

Core Viewpoints - The Federal Reserve's balance sheet reduction is ongoing but has slowed down, leading to liquidity in the financial system approaching a critical threshold [2][6] - Recent signs of tension in the repurchase market and increased volatility in funding rates raise concerns about potential severe liquidity shocks [6][10] Group 1: Liquidity at a Critical Point - U.S. liquidity is diminishing as the Federal Reserve continues its balance sheet reduction, with the overnight reverse repurchase (ON RRP) balance dropping to $5.48 billion as of October 15, down from $2.5 trillion at the end of 2022 [6][10] - The secured overnight financing rate (SOFR) experienced a significant spike on September 15, indicating tightening liquidity conditions [6][10] - The reduction in liquidity is attributed to the rebuilding of the Treasury General Account (TGA), which absorbed approximately $140 billion in liquidity during the week of September 17 [10][11] Group 2: Will a "Liquidity Crunch" Reoccur? - The likelihood of a liquidity crunch is low, as bank reserves are expected to decrease but remain above critical levels [3][22] - The next significant influx of tax revenue into the TGA is anticipated in April, which may coincide with a slowdown in Treasury issuance [3][22] - Despite the depletion of excess liquidity, SOFR may remain elevated, but conditions similar to the 2019 liquidity shock are not expected to recur [22] Group 3: When Will Balance Sheet Reduction Stop? - The balance sheet reduction process is likely to continue unless unexpected events occur, with the Federal Reserve expected to halt reductions when reserves are slightly above adequate levels [4][24] - Estimates suggest that the appropriate level for bank reserves is around $2.7 trillion, which may be reached by mid-next year if the current pace of reduction continues [4][24] - Even if a liquidity crisis occurs, the Federal Reserve has tools to provide temporary liquidity and may consider slight balance sheet expansion to support the market [26]

Global Asset Price Performance - Bond market yields generally declined, with the 10-year U.S. Treasury yield down by 3 basis points [2] - In the stock market, major global indices saw mixed results, with the S&P 500, Dow Jones, and Nasdaq increasing by 1.7%, 1.6%, and 2.1% respectively [2] - Commodity prices showed a decline in oil prices, with WTI and Brent crude down by 7.3% and 6.4% respectively, while gold prices rose by 5.8% [2] - The U.S. dollar index weakened by 0.3% [2] Major Central Bank Monetary Policies - The Federal Reserve is considering halting its balance sheet reduction, with Chairman Powell indicating that reserves are currently sufficient and nearing the level required to stop the reduction [4] - The European Central Bank's President Lagarde stated that the monetary policy and economy are in good condition, but further rate cuts cannot be ruled out due to changing circumstances [4] U.S. Economic Dynamics - The U.S. government remains shut down, with the Senate rejecting a temporary funding bill, leading to potential layoffs of over 10,000 federal employees [9] - The NAHB housing market index rose to 37, the highest since April, driven by declining mortgage rates, while small business optimism fell to 98.8, a three-month low [9] - The Federal Reserve's Beige Book indicated stable economic activity, with some regions expressing concerns about the risks posed by the government shutdown [10] - Regional banks are facing increased risks, as Zions Bancorp and Western Alliance Bancorp reported provisions for bad loans, raising concerns about the credit system [10] - The U.S. Treasury Secretary signaled a de-escalation in the U.S.-China trade tensions, suggesting that additional tariffs are not a predetermined option [10] Other Regional Economic Dynamics - The IMF has adjusted its global growth forecasts for 2025 and 2026 to 3.2% and 3.1% respectively, while noting that U.S. inflation is expected to remain above target levels [17] - Eurozone industrial production showed a month-on-month decline of 1.2% in August, with major economies like Germany, Italy, and France experiencing decreases [17] - Japan's industrial output fell by 1.5% in August, marking the second consecutive month of decline, influenced by U.S. trade policy uncertainties and weak demand [17]

Core Viewpoint - China's export growth rate in September recorded an increase of 8.3% year-on-year, driven by a low base from the previous year, despite a decline in the two-year average growth rate and a month-on-month growth rate below the median of the past five years [2][3] Export Analysis - The increase in export growth is primarily attributed to the low base effect from last year and improved cooperation with emerging markets such as Latin America and Africa, which has supported exports to these regions [3][7] - Exports to Latin America and Africa saw significant increases, with growth rates of 15.1% and 56.6% respectively, while exports to the US decreased by 27% [7] - The contribution of quantity to export growth has slightly weakened, while price factors have shifted from being a drag to a positive contributor [5][10] Import Analysis - China's import growth rate in September was 7.4%, a significant increase of 6.1 percentage points from August, driven by rising demand for production materials and energy [12] - Imports from the EU increased by 9.5%, benefiting from deepening trade relations between China and Europe, while imports from the US decreased by 16.1% [12][15] - All categories of imports showed varying degrees of increase, with notable growth in industrial raw materials and energy products [15] Trade Balance - The trade surplus in September narrowed to $90.45 billion, but net exports continue to support the economy [17] - Future trade dynamics may be influenced by the expiration of the US-China tariff agreement, with potential concessions from both sides regarding tariffs on rare earths and soybeans [17]

Global Asset Price Performance - Gold prices continued to rise, while global stock markets saw mixed results with the Nikkei 225 leading gains. The S&P 500, Dow Jones, and Nasdaq indices fell by 2.4%, 2.7%, and 2.5% respectively [2] - In the bond market, yields on government bonds in most countries declined, with the 10-year U.S. Treasury yield down by 8 basis points [2][3] - Commodity prices saw a decline in crude oil, with WTI and Brent crude down by 3.1% and 2.8% respectively, while London gold prices increased by 3.4% [2][3] - The U.S. dollar index strengthened by 1.1% [2] Major Central Bank Monetary Policies - The Federal Reserve's September meeting minutes revealed internal divisions regarding further rate cuts, with more than half of the officials expecting at least two more cuts this year, while others opposed further easing [4] - The European Central Bank considered another rate cut in September but decided against it due to rising inflation risks [4] U.S. Economic Dynamics - The U.S. government shutdown has entered its second week, affecting federal operations and delaying the release of the Consumer Price Index (CPI) [8] - Trade tensions with China have escalated, with the U.S. planning to impose additional tariffs on Chinese goods, leading to significant sell-offs in the stock market [9] - Consumer confidence has weakened, with the Michigan Consumer Sentiment Index slightly dropping to 55 from 55.1, indicating concerns over employment and prices [9] Other Regional Economic Dynamics - Political instability in France has increased, with the September composite PMI dropping to 48.1%, while the Eurozone's overall situation remains stable with a composite PMI of 51.2% [17] - In Japan, the new leadership under Kishi Suga is expected to implement measures to address inflation and stimulate the economy, positively impacting market sentiment [17]