Economic Overview - The domestic economy continues to show a pattern of external strength and internal weakness, with exports remaining resilient while domestic demand indicators are weak[1] - November exports increased by 6.7% year-on-year, while cumulative exports rose by 5.4%[11] - November imports saw a decline of 3.9% year-on-year, indicating ongoing weakness in domestic demand[13] Financial Indicators - The M1 money supply growth rate improved from -6.1% in October to -3.7% in November, marking two consecutive months of recovery[20] - The total social financing (TSF) in November was 23,357 billion CNY, with government bonds being the primary contributor[24] Real Estate Market - New home sales have shown a notable recovery in first and third-tier cities, with first-tier city sales surpassing 2021 levels[45] - The second-hand housing market is experiencing a decline in sentiment, with listing prices dropping across all city tiers[45] Bond Market - The bond market remains strong, with the 10-year government bond yield falling below 1.8% and the 30-year yield approaching 2.0%[50] - The sentiment in the bond market is bullish, driven by expectations of a moderately loose monetary policy[50] Interest Rate Expectations - Market expectations for a 25 basis point rate cut by the Federal Reserve in December have risen to over 90%[52] - Despite a slight increase in the U.S. CPI, the core inflation remains stable, supporting the case for a rate cut[52]

Group 1: Domestic Market Insights - New home sales in first and second-tier cities have declined, but this is considered a seasonal drop consistent with trends from 2021[8] - Third-tier cities continue to see new home sales at five-year lows, yet overall sales are still on the rise[8] - As of November 25, listing prices and volumes in first, second, and third-tier cities have all decreased, indicating a market shift towards price adjustments for volume[8] Group 2: Bond Market Trends - The bond market is experiencing strong upward momentum as year-end allocation demand increases, with market sentiment remaining bullish despite recent regulatory changes[13] - Recent bond yield changes show significant declines across various maturities, with the 10-year yield dropping to 1.95%[14] - The market is closely watching upcoming central political bureau meetings, with potential policy outcomes influencing bond market performance[13] Group 3: U.S. Economic Indicators - The U.S. unemployment rate rose from 4.1% to 4.2%, with labor force participation decreasing by 0.1 percentage points to 62.5%[26] - November's non-farm payrolls added 227,000 jobs, exceeding expectations, while previous months' figures were revised upwards by a total of 56,000 jobs[15] - The probability of a Federal Reserve rate cut in December has increased from 68% to 85% due to rising unemployment and weaker job market expectations[28] Group 4: Currency and Global Market Dynamics - The U.S. dollar has shown strong performance, bolstered by the depreciation of other currencies, particularly the Canadian dollar[30] - Market expectations indicate a potential decline in the U.S. federal funds rate to around 3.5% by the end of next year[34]

Economic Data - The manufacturing PMI has risen for three consecutive months, reaching 50.3% in November, an increase of 0.2 percentage points from October[9] - Despite the positive trend, over 60% of companies still report insufficient demand, indicating overall demand remains weak[9] - Non-manufacturing PMI decreased by 0.2 percentage points to 50%, reflecting seasonal adjustments, with construction activity showing a slight decline[11] Real Estate Market - First-tier cities continue to show strong new housing transaction volumes, while second-tier cities are rapidly approaching 2021 levels[14] - As of November 18, listing prices in first-tier cities have rebounded, while second-tier cities saw a slight decline in prices[14] - Overall, the real estate market has performed well since the new policies were implemented, with signs of improvement in second and third-tier cities[14] Bond Market - The 5-year and 10-year government bond yields have reached historical lows, driven by a broad downward trend in interest rates[19] - The central bank is expected to continue using liquidity tools to manage rates, with a target for the 10-year yield set at 2%[19] Currency and Inflation - The overall personal consumption expenditures (PCE) price index rose by 0.2% in October, with a year-on-year increase of 2.3%[23] - The dollar and U.S. Treasury yields have experienced a rapid decline, influenced by traders taking profits and seasonal factors[24] - The yen is expected to appreciate gradually, contributing to downward pressure on the dollar[26]

Economic Overview - Domestic economy shows slight improvement with retail sales growth rising to 4.76% year-on-year in October, up 1.53 percentage points from the previous month[11] - Industrial value-added growth remains stable at 5.3% year-on-year in October, with cumulative growth steady at 5.8%[11] - Fixed asset investment maintains a cumulative year-on-year growth rate of 3.4%, with real estate continuing to decline while manufacturing and infrastructure investment show recovery[18] Real Estate Market - First-tier cities' transaction area stabilizes at a five-year average level, while second-tier cities remain above historical lows[23] - The National Housing Prosperity Index has risen for six consecutive months, indicating signs of stabilization in the real estate market[18] - Second-hand housing prices in first, second, and third-tier cities continue to decline, with inventory levels also decreasing, suggesting a shift towards price-based sales[23] Bond Market - The bond market experiences a narrowing of the yield spread between long and short-term bonds, with a forecasted trading range for the 10-year bond between 2.05% and 2.25%[29] - Upcoming supply shocks from bond replacements may lead to temporary increases in interest rates, but overall demand for bonds is expected to remain stable[29] U.S. Economic Indicators - U.S. October CPI rose by 2.6% year-on-year, with core CPI increasing by 3.3%, aligning with market expectations[32] - The probability of a rate cut in December has increased from approximately 60% to 80%, reflecting heightened inflation expectations[32] - The potential for increased market volatility is anticipated due to the new administration's policies, which may impact inflation and interest rate strategies[36]

Group 1: Domestic Policy and Debt Management - By 2028, local governments need to reduce hidden debts from CNY 14.3 trillion to CNY 2.3 trillion, with a significant portion being converted to explicit debt[1] - The new local government debt limit is set at CNY 6 trillion, allocated over three years, with CNY 2 trillion each year from 2024 to 2026[4] - The essence of debt conversion is to change high-interest implicit debt into low-interest explicit debt, without eliminating the debt itself[5] Group 2: Real Estate Market Trends - Transaction volumes in first, second, and third-tier cities have all declined, with third-tier cities nearing seasonal lows for 2023[9] - The listing prices of second-hand homes in first-tier cities have dropped again, while second and third-tier cities continue to see price declines[9] Group 3: Government Bonds and Market Liquidity - The National People's Congress plans to increase bond issuance this year, with an expected increase of CNY 1.4 trillion compared to last year's fourth quarter[12] - The upcoming maturity of CNY 1.45 trillion in MLF in November and December may create liquidity pressure, but monetary policy is expected to support the market[14] Group 4: U.S. Economic Outlook Post-Election - Following the U.S. election, there is potential for long positions in U.S. Treasuries as both the dollar and Treasury yields are at relatively high levels[17] - The Federal Reserve's confidence in returning inflation to the 2% target has weakened, while confidence in the labor market has strengthened[20]

Group 1: US Economic Outlook - The US economy is expected to remain in a downward phase, with consumption and government spending as the main support forces[1] - The third quarter GDP growth rate was 2.8%, with personal consumption contributing 2.46% and government spending contributing 0.85%[19] - The upcoming election results are anticipated to impact economic policies, with Trump likely to promote tax cuts that could stimulate growth[25] Group 2: Domestic Economic Indicators - Domestic economic recovery is indicated, particularly in first-tier cities, but overall internal demand remains weak[2] - The Manufacturing PMI rose from 49.8% in September to 50.1% in October, indicating a slight recovery, though demand constraints persist[8] - Fiscal space for government spending is projected to be around 2.26 trillion yuan at the beginning of 2024, derived from various debt sources[17] Group 3: Market Trends and Asset Outlook - Stock market trends suggest an upward direction, but short-term corrections may occur due to policy expectations[32] - The bond market is expected to remain strong, with a potential for fluctuations due to changing monetary policies[33] - The RMB may experience upward pressure if the US dollar strengthens, but overall, it is likely to remain in a wide fluctuation range between 6.95 and 7.3[35] Group 4: Risks and Considerations - Risks include potential economic downturns if domestic high-frequency data weakens unexpectedly or if the US economy performs better than anticipated[3] - The uncertainty surrounding the election results could lead to volatility in financial markets, particularly affecting commodities and currencies[28]

Group 1: Policy Expectations - The upcoming National People's Congress Standing Committee meeting is scheduled from November 4 to 8, 2024, with market expectations of a fiscal policy announcement potentially reaching a scale of 10 trillion RMB over three years[4] - Current fiscal space estimates suggest a potential increase in ordinary government bond issuance by 0.15 to 0.55 trillion RMB if the deficit ratio is raised to 3.2%-3.5%[5] - The total fiscal space for this year is projected to be around 10 trillion RMB, with significant contributions from various measures including special bonds and adjustments to local government debt limits[6] Group 2: Market Trends - The bond market is currently experiencing a cautious sentiment due to a data vacuum, with the October economic data expected to draw attention in November[11] - Despite the overall bullish trend in the bond market, short-term fluctuations are anticipated due to upcoming tax periods and increased local government bond issuance[11] - The sentiment in the stock market remains positive, contributing to the "stock-bond seesaw" effect observed in current market dynamics[11] Group 3: U.S. Election Impact - Trump has gained a lead in polls, particularly in swing states, indicating a potential shift in the political landscape that could affect market conditions[16] - The probability of Trump winning is increasing, which may influence the U.S. dollar and treasury yields to rise further[17] - Despite the current high levels of the U.S. dollar and treasury yields, a reversal is not anticipated in the near term due to strong economic data and market sentiment[17] Group 4: Currency Outlook - The RMB faces depreciation pressure amid a strong dollar and rising U.S. treasury yields, despite domestic support measures[17] - Major banks are actively providing support for the RMB in the spot market, reflecting ongoing efforts to stabilize the currency[17]

Group 1: Domestic Bond Market Insights - Current policy expectations are rising, and government bond supply is expected to peak, leading to potential risks of a market correction despite a long-term bullish outlook for bonds[1] - The 10-year government bond yield is projected to be around 2.0%, while the 30-year yield is expected to be around 2.1%[1] - There is a phenomenon of under-allocation in institutions, indicating a potential for increased demand in the bond market despite short-term volatility[1] Group 2: Currency and Federal Reserve Analysis - The recent 50 basis point (bp) rate cut by the Federal Reserve did not lead to a significant decline in the US dollar index, but it did trigger a surge in currency settlement from exporters[1] - The RMB may continue to appreciate, although the overall extent of appreciation is not expected to be substantial[1] - The Federal Reserve's focus remains on employment and economic stability, with ongoing debates about the timing and extent of future rate cuts[1] Group 3: Economic Projections - The Federal Reserve's projections indicate a stable unemployment rate and GDP growth, with core inflation expected to decline in the coming months[1] - The long-term neutral interest rate is projected to rise, with recent estimates increasing from 2.5% to 2.9%[1] - The market anticipates a potential for further rate cuts, with discussions around a 50bp reduction remaining contentious[1]

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| --- | --- | --- | |-------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------| | | | | | 期货研究报告 | 降息 25bp 依然是基准情形 | | | 金融研究 | [Table_ReportDate] 报告日期： | 2024 年 9 月 9 日 | | [Table_Repor ...