Group 1: Manufacturing Sector - The manufacturing PMI for October 2024 is 50.1%, an increase of 0.3 percentage points from the previous month, indicating a recovery above the neutral line[1] - The new orders index for manufacturing reached the neutral line at 50%, showing marginal improvement in demand[9] - The production index recorded 52%, up 0.8 percentage points, indicating an acceleration in manufacturing activities[10] Group 2: Services Sector - The non-manufacturing PMI for October 2024 is 50.2%, an increase of 0.2 percentage points, signaling a recovery in the services sector[1] - The services new orders index is at 47.8%, below the neutral line, indicating insufficient demand[15] - The business activity expectation index for services is at 56.2%, suggesting a positive outlook for future activities[15] Group 3: Construction Sector - The construction PMI is recorded at 50.4%, indicating expansion but with a slight decrease of 0.3 percentage points from the previous month[19] - The new orders index for construction is at 43.5%, indicating pressure on demand[19] - The business activity expectation index for construction is at 55.2%, reflecting a positive outlook for future activities[19] Group 4: Economic Outlook and Risks - The overall economic indicators show a recovery trend, with manufacturing, services, and construction PMI all above the neutral line[19] - Risks include potential deviations from expected fundamental recovery, unexpected macroeconomic policies, and geopolitical risks[20]

Group 1: Federal Reserve's Current Actions - The Federal Reserve continues to reduce its balance sheet following the interest rate cut in September, with monthly Treasury bond reductions set at $25 billion[1] - The total assets of the Federal Reserve have decreased by over $1.9 trillion since the start of the current tightening cycle in June 2022[9] - The Fed's balance sheet normalization is nearing completion, with expectations to end the current round of balance sheet reduction by Q2 2025[3] Group 2: Historical Context and Framework Changes - The transition from a limited reserve framework to an ample reserve framework occurred post-2008 financial crisis, leading to significant changes in monetary policy tools[18] - Quantitative Easing (QE) led to a 70% increase in the Fed's asset scale, rising by approximately $4.8 trillion in just two years[9] - The Fed's balance sheet expansion during the pandemic resulted in a peak asset size that was 3.7 times larger than pre-crisis levels, exceeding 25% of GDP[21] Group 3: Risks and Future Considerations - Current liquidity indicators show tightening conditions, with potential risks of increased short-term interest rate volatility due to high Treasury General Account (TGA) levels and reduced reverse repurchase agreements (RRP)[3] - The Fed's approach to balance sheet reduction is cautious, aiming to avoid a repeat of the 2019 liquidity crisis, which was triggered by rapid balance sheet reduction[2] - The ideal size of the Fed's balance sheet is still under evaluation, with a focus on maintaining sufficient reserves to meet market liquidity needs[39]

GDP Performance - In Q3, the actual GDP growth rate was 4.6%, a slight decline from 5.3% in Q2 and 5.0% in Q1[9] - The nominal GDP growth rate was 4.0%, down by 0.1 percentage points from the previous quarter[9] - The GDP deflator index was -0.5%, indicating a narrowing decline compared to previous quarters[9] Industrial Production - The industrial capacity utilization rate increased to 75.1% in Q3, up from 74.9% in Q2[13] - In September, the industrial added value growth rate rebounded to 5.4%, reversing the slowdown trend observed since Q1[14] - The growth in the electricity, heat, gas, and water production and supply industry was a major driver, with a year-on-year growth rate of 10.1%[14] Investment Trends - Fixed asset investment growth in September was 3.4%, returning to the economic range seen in Q2[19] - Broad infrastructure investment saw a cumulative growth rate of 9.3%, significantly up by 1.4 percentage points from the previous month[19] - Real estate investment growth improved to -9.4%, marking the first time it fell below 10% since Q1[20] Consumer Spending - Retail sales growth in September was 3.2%, an increase of 1.1 percentage points from the previous month[29] - Excluding automobile sales, retail sales growth reached 3.6%, up by 0.3 percentage points[29] - The "trade-in" policy significantly boosted consumer spending, with household appliance sales growing by 20.5% in September[29]

Revenue Insights - From January to September, general public budget revenue decreased by 2.2% year-on-year, primarily due to last year's tax relief policies[1] - Tax revenue saw a year-on-year decline of 5.3%, marking a continuous negative growth trend[2] - Non-tax revenue increased by 13.5% year-on-year, showing an expanded growth compared to previous values[2] Expenditure Trends - General public budget expenditure grew by 2% year-on-year, with a completion rate of 70.7%[2] - Central government expenditure increased by 8.4%, while local government expenditure only rose by 1%[2] - The ratio of general public budget expenditure to revenue reached 123.7%, indicating a relatively high level compared to the past five years[2] Government Fund Performance - Land transfer revenue fell by 24.6% year-on-year, reflecting ongoing weakness in the real estate market[3] - Government fund income decreased by 20.2% year-on-year, continuing a trend of negative growth[3] - The completion rate for new special bonds issued by local governments reached 92.5%, significantly higher than previous values[3] Policy Outlook - Multiple favorable policies have been introduced, with expectations for their effects to gradually materialize[3] - The central bank has implemented structural monetary policies, including interest rate cuts and easing mortgage rates[3] - The government aims to achieve its annual growth targets through enhanced monetary and fiscal policy adjustments[3]

Export Performance - In September, exports grew by 2.4% year-on-year, significantly below the market expectation of 5.9% and down from 8.7% in August[1] - The decline in exports is attributed to extreme weather events, a high base from the previous year, and a continued downturn in global manufacturing demand, with the global PMI at 48.8[1][6] - Exports to emerging economies outperformed those to developed economies, with ASEAN exports decreasing by 3.5 percentage points, while exports to the EU dropped from 13.4% to 1.3%, a decline of 12.1 percentage points[9][10] Product Analysis - Mechanical and electrical products remain the largest contributors to export growth, with a growth rate of 3.8%, contributing 1.8 percentage points to overall export growth[12] - High-tech product exports turned negative for the first time since Q2, with a year-on-year decline of 0.7%, dragging down overall export growth by 0.3 percentage points[12] - Labor-intensive consumer goods, such as footwear and ceramics, experienced negative growth, collectively reducing export growth by 1.4 percentage points[12] Import Trends - Imports grew by only 0.3% year-on-year in September, below the expected 1.2%, reflecting weak domestic demand and declining commodity prices[17][19] - The import growth of agricultural products like grains and soybeans was robust, with growth rates of 18.9% and 40.0%, respectively, driven by lower international prices[20] - High-tech product imports maintained strong growth, with integrated circuit imports increasing by 11.2%[20] Future Outlook - Export growth is expected to remain low, with external demand signals indicating a continued weakening trend, while domestic policies may provide some support if effectively implemented[23][24] - The balance of opposing forces suggests that exports may achieve small single-digit growth in the near term[23]

Economic Overview - Japan's economy has undergone significant changes since 1946, experiencing phases of prosperity, decline, and recovery, categorized into six stages[6] - The period from 1946 to 1973 saw Japan's GDP growth averaging around 10% annually, with a capital accumulation rate peaking at 39%[12][14] - The "Lost Two Decades" from 1990 to 2011 resulted in stagnant economic growth, with the Nikkei 225 index declining by 11.04% from 1990 to 1997[43][75] Policy and Economic Strategies - The "Abenomics" policy from 2012 to 2019 included aggressive monetary easing, fiscal stimulus, and structural reforms, leading to a recovery in the stock market with a growth rate of 12.46%[82] - Japan's government debt reached approximately 227% of GDP by 2023, reflecting extensive fiscal measures to stimulate the economy[88] Market Trends and Asset Performance - From 1974 to 2023, the annualized return for Japanese stocks (Nikkei 225) was 4.19%, while U.S. stocks (S&P 500) led with 8.09%[95] - In the period from 2020 to 2023, Japanese stocks achieved a cumulative return of 9.06%, benefiting from a recovery in the economy and favorable monetary policies[93] External Influences - The COVID-19 pandemic prompted a significant influx of foreign direct investment into Japan, with net inflows of $626 billion in 2020, $352 billion in 2021, and $493 billion in 2022[89] - Japan's economic recovery post-pandemic has been supported by stable PMI readings, indicating a resilient manufacturing and service sector[88] Risks and Future Outlook - Potential risks include discrepancies in economic data, underperformance of the Japanese economy, and unexpected macroeconomic policy changes[98] - The Bank of Japan's recent shift to a tightening monetary policy may impact market dynamics, necessitating close monitoring of economic indicators and corporate performance[97]

证券研究报告 行业研究｜电子 2024 年 10 月 23 日 射频前端行业深度：增长动能形成合力，国产替 代条件充足 证书:S1320523080001 [Table_Author] 刘浩 分析师 王竞萱 研究助理 Email:liuhao3@lczq.com Email:wangjingxuan1@lczq.com | --- | --- | --- | --- | --- | --- | --- | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ...

Investment Rating - The report upgrades TPG RE Finance Trust (TRTX) to Overweight from Neutral, indicating a positive outlook due to a de-risked portfolio and significant discount to book value [3][11]. Core Insights - The report highlights a positive outlook for Residential Mortgage Real Estate Investment Trusts (MREITs) as they are expected to benefit from falling interest rates and potential spread tightening, while caution remains for Commercial MREITs due to elevated credit risks [12][13]. - Residential MREITs are positioned to see immediate benefits from lower rates, with a positive duration gap that could enhance book value, although prepayment risks are increasing [2][12]. - Commercial MREITs are expected to experience a slower recovery, facing challenges with troubled loans and non-accruals, which may keep valuations under pressure [2][13]. Summary by Sections Rating Changes - TRTX has significantly de-risked its portfolio, achieving a 100% performing status, and is trading at a discount to book value, leading to an upgrade to Overweight [3][11]. Sector Summary - Residential MREITs are viewed positively due to their long-duration assets and potential for income from dividend yields, while Commercial MREITs face a cautious outlook with risks outweighing potential value [12][13]. Coverage Summary - AGNC maintains an Overweight rating as it is expected to recover book value with a focus on Agency MBS, while NLY also maintains Overweight due to favorable positioning for lower rates [14][15]. - TWO is rated Neutral due to lingering uncertainty affecting its price-to-book value multiple, while ABR is rated Underweight due to a premium to book value amidst a deteriorating credit environment [18][19]. Company Previews – Residential MREITs - AGNC reported a tangible book value per share (TBVPS) of $9.48, exceeding consensus estimates, and faces elevated prepayment risk due to its high-coupon MBS concentration [41][42]. - NLY also reported a TBVPS of $21.00, benefiting from spread tightening, and is expected to maintain a mid-teens dividend yield supported by levered returns on Agency MBS [43][44].

Inflation Data - The U.S. CPI for September increased by 2.4% year-on-year, slightly above the expected 2.3% and down from the previous 2.5%[1] - Core CPI rose by 3.3% year-on-year, exceeding the expected 3.2% and matching the previous value[1] - The CPI increased by 0.2% month-on-month, in line with the previous month and above the expected 0.1%[1] Employment Data - The U.S. non-farm payrolls added 254,000 jobs in September, significantly higher than the expected 150,000 and the previous month's 159,000[1] - The unemployment rate fell by 0.1% to 4.1%, better than the expected 4.2%[1] - The labor force participation rate remained stable at 62.7%[1] Market Implications - The strong employment data has led the market to rule out the possibility of a 50 basis points rate cut by the Federal Reserve this year, with expectations shifting to two 25 basis points cuts in November and December[2] - The CPI data further reinforced the market's expectation of a gradual rate cut path by the Federal Reserve[2] Risks - There are risks associated with unexpected changes in the U.S. economy and Federal Reserve monetary policy that could impact these forecasts[2]

Deutsche Bank Research Distributed on: 11/10/2024 20:36:08 GMT 7T2se3r0Ot6kwoPa Fed Watcher: Officials support gradual easing path after close call in September Amy Yang Economist (+1) 212 250 9959 | amy.yang@db.com Matthew Luzzetti Chief US Economist (+1) 212 250 6161 | matthew.luzzetti@db.com Brett Ryan Senior Economist (+1) 212 250 6294 | brett.ryan@db.com Justin Weidner Economist (+1) 212 469 1679 | justin-s.weidner@db.com Avik Chattopadhyay Research Associate avik-a.chattopadhyay@db.com October 11, 202 ...