Core Viewpoint - The market's focus is shifting towards fiscal stimulus policies, inflation trends post "anti-involution" actions, and support for the real estate market [1] Group 1: Market Conditions - The onshore stock market and steel-related commodity prices are performing steadily [1] - Recent stabilization in China-U.S. relations and attractive asset valuations suggest more upward space for long-term interest rates [1] Group 2: Liquidity Outlook - It is expected that liquidity will remain ample until the end of the year, with the average seven-day repo rate and seven-day reverse repo rate (OMO) maintaining levels similar to recent months [1] - The net supply of government bonds is manageable for November-December, and the exchange rate is stable, indicating no strong reasons for the central bank to tighten liquidity in the coming months [1] - There has been a recent increase in market leverage, which may prompt the central bank to moderately tighten liquidity if levels remain high [1] Group 3: Monetary Policy Expectations - Expectations for monetary easing policies, such as interest rate cuts, reserve requirement ratio reductions, or larger liquidity injections through net purchases of government bonds, are anticipated to continue [1]

Group 1 - The global economy shows significant resilience despite rising tariffs, geopolitical tensions, and fiscal pressures, driven by AI transformation, flexible trade adjustments, and moderate monetary and fiscal policies [9] - China aims for resilient, stable, and inclusive economic growth from 2026 to 2030, focusing on self-reliance in technology, particularly in semiconductors and AI, while facing challenges such as demand fluctuations and a declining real estate market [12] - Japan's economic growth is expected to slow due to tariff impacts, but it can avoid recession, with core CPI inflation projected to drop below 2% by 2026 [15] Group 2 - The Asian economy (excluding Japan) presents mixed growth prospects, with a strong performance in the tech sector but challenges in non-tech sectors due to high tariffs on labor-intensive industries [19] - The Chinese internet sector's focus will remain on AI strategies and competition in the instant retail space, with expectations of reduced competitive intensity in the fourth quarter [22][23] - China is increasingly developing a self-sufficient AI supply chain, with significant investments in AI infrastructure and a focus on enhancing operational efficiency through large language models [26] Group 3 - Market attention is shifting towards fiscal stimulus policies, inflation trends, and real estate market support, with stable performance in the onshore stock market and steel-related commodities [30] - The A-share market's future growth will be driven by policy support, liquidity, and industrial upgrades, despite high valuations and the need for confirmed improvements in fundamentals [35]

Group 1 - The global economy shows significant resilience despite rising tariffs, geopolitical tensions, and fiscal pressures, driven by AI transformation, flexible trade adjustments, and moderate monetary and fiscal policies [7] - China aims for resilient, stable, and inclusive economic growth from 2026 to 2030, focusing on self-reliance in technology, particularly in semiconductors and AI [10] - Japan's economic growth is expected to slow due to tariffs, but it can avoid recession, with core CPI inflation projected to drop below 2% by 2026 [13] Group 2 - The outlook for Asian economies (excluding Japan) is mixed, with strong performance in the tech sector but challenges in non-tech sectors due to high tariffs on labor-intensive industries [17] - The Chinese internet sector will focus on AI strategies and competition in instant retail, with expectations of reduced competitive intensity in the fourth quarter [20][21] - There is a growing trend in China to build a self-sufficient AI supply chain, with increased investment in AI infrastructure and diversified supply sources [24] Group 3 - Market attention is shifting towards fiscal stimulus policies, inflation trends, and support for the real estate market, with expectations of rising long-term interest rates [28] - Policy support, liquidity, and industrial upgrades are identified as core drivers for the future rise of A-shares, despite high valuations [31]

Group 1: Macro Analysis - The financial data for September shows stable performance, with expectations for credit demand to recover as policy financial tools are implemented and fiscal spending accelerates [2] - The significant year-on-year increase in household deposits indicates a slowdown in the "migration" of deposits, potentially linked to the decline in the stock market's "profit effect" [2] - The growth rates of M1 and M2 are showing a contrasting trend, reflecting the current liquidity conditions [2] Group 2: Company Research - Semiconductor Equipment - Shengmei Shanghai (688082.SH) has completed a private placement and continues to see high growth in orders for the first three quarters of 2025, with net profit forecasts of 1.476 billion, 1.829 billion, and 2.285 billion yuan for 2025, 2026, and 2027 respectively, corresponding to PE ratios of 59x, 47x, and 38x [3] - Huafeng Measurement and Control (688200.SH) reported steady revenue growth in H1 2025, with significant increases in overseas sales, and net profit forecasts of 459 million, 605 million, and 763 million yuan for 2025, 2026, and 2027 respectively, with PE ratios of 56x, 43x, and 34x [4] Group 3: Company Research - Beverage Industry - Mixue Group (2097.HK) is projected to achieve net profits of 5.690 billion, 6.694 billion, and 7.699 billion yuan for 2025, 2026, and 2027 respectively, with corresponding EPS of 14.99, 17.63, and 20.28 yuan, leading to PE ratios of 27x, 23x, and 20x [5] - The company benefits from industrial capabilities and a cost structure that is improving due to economies of scale, reinforcing its competitive advantage in the sub-10 yuan price segment [5] - The establishment of a robust supply chain and the operational streamlining of its sub-brand Lucky Coffee are expected to continue attracting consumers through a "low price + explosive products" strategy [5]

Report Industry Investment Rating No information provided in the report. Core Viewpoints - The bond market has both "long - term concerns" and "immediate worries" this week. The short - selling inertia persists, but the buying of bonds by large banks and central bank operations have played a stabilizing role, and interest rates have recovered after consecutive increases. However, more positive and definite signals are needed to reverse the short - selling inertia [1][7]. - The calendar effect of the bond market is not obvious, and holidays do not change the main trend of the market. The main factors influencing bond market trends around the National Day are the fundamentals and fiscal policies [18][20]. - In the bond market adjustment, the decline of secondary perpetual bonds, policy - financial bonds, and ultra - long - term bonds favored by public funds is particularly obvious. It is recommended to pay attention to the re - evaluation risks of the interest rate tops of ultra - long - term bonds and 5Y secondary perpetual bonds [3][33]. Summary by Directory 1. This Week's Bond Market Review - The bond market has "long - term concerns" and "immediate worries". The short - selling inertia remains, and the market is worried about the formal implementation of the fund fee solicitation draft and the introduction of unexpected fiscal stimulus policies, as well as the current cross - quarter liquidity support and fund liability - side redemption pressure. The expectation of large banks' entry and the central bank's restart of bond - buying can drive interest rates down, but the extent and sustainability are not firm [1][7]. - From Monday to Friday, the bond market showed different trends. Overall, compared with September 19, by September 26, the 1Y, 5Y, 10Y, and 30Y ChinaBond Treasury bond yields decreased by 0.7BP, increased by 0.5BP, decreased by 0.2BP, and increased by 1.7BP respectively [7][9][11]. 2. The Bond Market Calendar Effect - The equity market usually has a strong calendar effect around the National Day. Before the holiday, investors are cautious and tend to leave the market, and after the holiday, the market usually rebounds. In the past 9 years since 2015, the Wind All - A Index fell in 6 years in the five trading days before the National Day, with a decline of 0.7 - 3.2 percentage points; it only rose in 2 years, with an increase of 1.4 - 2.5 percentage points. After the holiday, the equity market usually rebounds, except in the two years when it rose before the holiday [18]. - The bond market's liquidity usually fluctuates greatly before the National Day and shows a significant seasonal decline after the holiday. However, the calendar effect of Treasury bond interest rates is not obvious. Since 2019, interest rates around the National Day have mostly risen, mainly affected by fundamentals and fiscal policies, which can be divided into three situations [20]. 3. Which Bond Types Are Under Greater Pressure Under Fund Selling Pressure? - In the recent bond market adjustment, the decline of secondary perpetual bonds, policy - financial bonds, and ultra - long - term bonds favored by public funds is particularly obvious. Compared with last Friday, the interest rates of 3 - 5Y bank secondary perpetual bonds generally increased by more than 10BP, while other credit varieties of the same term only increased by about 3 - 7BP. The term spread between 30Y and 10Y Treasury bonds continued to widen by 2BP to 34BP, and the over - decline of China Development Bank bonds compared with Treasury bonds spread from 10Y to 3 - 7Y [3][29]. - This "structural over - decline" reflects the redemption pressure on the liability side of bond funds under the double pressure of weak performance and possible adjustment of redemption fees. From the 23rd to the 25th, the net selling of funds continued to increase, reaching a peak of 68.3 billion yuan on the 25th. The selling was concentrated in 7 - 10Y policy - financial bonds, old Treasury bonds over 10Y, and 7 - 10Y other bonds, with average daily net selling of 8.4 billion yuan, 5.1 billion yuan, and 4.0 billion yuan respectively [3][31]. - Looking ahead, it is recommended to pay attention to the re - evaluation risks of the interest rate tops of ultra - long - term bonds and 5Y secondary perpetual bonds. Ultra - long - term bonds face the risk of supply - demand mismatch, and the buying power of 5Y secondary perpetual bonds is gradually weakening, and the adjustment risk may spread from long - term to short - term and from secondary perpetual bonds to general credit bonds [4][33][35].

Group 1 - The Federal Reserve's decision-making environment has been complicated by personnel changes, particularly the court ruling allowing Governor Cook to remain in her position despite President Trump's attempts to remove her [1][4] - Cook, the first African American woman on the Federal Reserve Board, was previously a supporter of maintaining the current interest rates and resisting pressure to lower them [1] - Trump's allegations against Cook regarding property fraud were dismissed by a Washington judge, who found no evidence of misconduct [1][4] Group 2 - The Senate has confirmed Milan, Trump's nominee for the Federal Reserve Board, to fill a vacancy left by another board member's resignation, allowing him to participate in the upcoming Federal Open Market Committee (FOMC) meeting [4] - Milan has a Harvard PhD in economics and has criticized the Fed's large-scale fiscal stimulus policies, indicating potential divergence in monetary policy perspectives within the board [4] - The FOMC meeting is expected to see debates on interest rate cuts, with some members favoring a 50 basis point cut while others support a 25 basis point reduction [5] Group 3 - There are concerns among economists that if the Federal Reserve becomes too influenced by the White House, it may set interest rates below what is necessary for economic fundamentals, potentially leading to inflation and higher long-term borrowing costs [5]

Core Viewpoint - There is a growing perception among economists that Japan's economy may be experiencing a "supply shortage" due to production capacity not keeping up with orders, contrasting with the government's assessment of demand deficiency [1][2]. Group 1: Supply and Demand Gap - The supply and demand gap is a crucial indicator for assessing economic conditions and price trends, with negative values indicating economic stagnation and positive values suggesting overheating [1]. - The Bank of Japan and the Cabinet Office have reported negative supply and demand gaps in recent years, leading to repeated fiscal stimulus measures aimed at boosting demand [1]. - The Cabinet Office has not declared an end to deflation despite a 3% increase in prices, primarily because the supply and demand gap remains negative [1]. Group 2: Discrepancies in Estimates - Private sector estimates, such as those from Societe Generale and Mizuho Research, indicate that Japan's supply and demand gap has been positive since late 2021 and mid-2022, respectively [2]. - The discrepancy between official and private estimates is significant, with a difference of 14 trillion yen (approximately 88 billion USD) reported for the first quarter of 2025 [2]. - Economists attribute the positive supply and demand gap to severe supply capacity shortages rather than economic overheating, particularly highlighting labor shortages [2]. Group 3: Labor Market and Productivity - The potential growth rate, which reflects supply capacity, is influenced by labor, capital investment, and technological innovation, with labor time decreasing due to reforms [3]. - Labor time in Japan is expected to remain below 2019 levels until 2024, primarily due to policies limiting overtime and promoting paid leave [3]. - The Bank of Japan acknowledges the negative impact of labor shortages on supply capacity, indicating a more severe labor market tightness than what macroeconomic supply and demand gaps suggest [3]. Group 4: Investment and Economic Growth - Insufficient investment in machinery has also hindered economic growth, with Japan's capital investment contribution being only one-eighth of that of the United States since 2020 [4]. - Redirecting retained earnings towards investments in growth areas such as artificial intelligence is deemed essential for economic progress [4].

Group 1: Euro's Initial Decline and Challenges - The euro faced significant depreciation, with the exchange rate against the dollar dropping below 1.0177, marking a 20-year low due to a "triple pressure" scenario [2] - The eurozone economy, particularly Germany, is experiencing structural weaknesses, with the manufacturing PMI remaining below the growth threshold for 12 consecutive months, indicating severe economic challenges [4] - Political instability in Germany, including significant divisions over fiscal policy, has raised concerns about the eurozone's fiscal discipline [5] Group 2: Dollar's Strength and Capital Flows - The Federal Reserve's high interest rates (4.25%-4.5%) have increased the dollar's attractiveness, leading to a surge in capital inflows into the U.S. market, with $1.2 trillion entering U.S. stocks and bonds in Q4 2024, 35% of which came from the eurozone [3] - German and French institutional investors have reduced their holdings in local bonds in favor of U.S. Treasuries, further exerting downward pressure on the euro [3] Group 3: Euro's Recovery and Driving Factors - In March 2025, the euro began a strong rebound, characterized by a "V" shaped recovery, driven by changes in monetary policy expectations, fiscal stimulus measures, and a crisis of confidence in the dollar [6] - The European Central Bank's interest rate cuts and the narrowing of the interest rate differential between the U.S. and Europe have led to a reallocation of global capital towards eurozone bonds, supporting the euro's recovery [8] Group 4: Structural Issues and Long-term Challenges - Despite the euro's rebound, structural issues such as industrial hollowing and an aging population continue to pose long-term challenges for the eurozone economy [20][19] - The eurozone's energy transition and fiscal coordination difficulties hinder effective economic policy, impacting the euro's stability [21] Group 5: Geopolitical and Market Sentiment Influences - Geopolitical events and market sentiment significantly affect the euro's exchange rate, with trade tariffs and central bank policy shifts amplifying volatility [16][17] - The eurozone faces external competition from the U.S. and China, which poses additional challenges to its economic position in the global market [22]

Core Viewpoint - Japanese super-long-term government bonds rebounded amid pre-election volatility, reversing earlier sell-off concerns related to potential increased government spending due to the upcoming Senate elections [1] Group 1: Market Reaction - On Wednesday, prices of Japanese super-long-term government bonds increased, with the 30-year bond yield dropping by 10 basis points to 3.06% and the 40-year yield also decreasing by 10 basis points to 3.38% [1] - The 30-year yield had previously surged to its highest level since 1999 on Tuesday, indicating significant market fluctuations [1] Group 2: Investor Sentiment - Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management, noted that investors likely engaged in buying to counteract the severe sell-off observed the previous day [1] - Michael Brown, a senior research strategist at Pepperstone, commented on the ongoing political tension as elections approach, suggesting that the market has largely released its sell-off sentiment and may remain cautious until election results are announced [1]

Group 1 - German investor confidence has unexpectedly rebounded, driven by an anticipated surge in public spending that offsets concerns over U.S. tariffs [1][4] - The ZEW economic sentiment index rose from 25.2 in May to 47.5 in June, significantly surpassing the median forecast of 35 [1][5] - The current situation index also showed improvement, indicating a stronger economic outlook [1] Group 2 - ZEW Chairman Achim Wambach stated that the fiscal stimulus policies announced by the new government are expected to boost the economy, alongside recent interest rate cuts by the European Central Bank [5] - Analysts predict that Germany will return to growth in 2025 after two consecutive years of contraction, with a GDP growth forecast of 0.2%, which is more optimistic than many recent forecasts of zero growth [5][9] - Deutsche Bank economist Mark Schatenberg noted that while the data exceeded expectations, potential risks from escalating military conflicts in the Middle East have not yet been reflected in the index [9] Group 3 - The German central bank's president, Joachim Nagel, indicated that revised output data for the first quarter could lead to positive growth in 2025, although the central bank still anticipates economic stagnation [9] - If structural issues are decisively addressed, Germany could become a "success story," with growth forecasts of 0.7% and 1.2% for 2026 and 2027, respectively, primarily due to increased defense and infrastructure spending [9] - Some institutions have raised their growth forecasts, with the Ifo Institute increasing its projection by 0.7 percentage points to 1.5%, and the Kiel Institute forecasting a growth of 1.6% [9]