Core Viewpoint - The global financial market is approaching a critical policy window as the Federal Reserve is expected to announce a 25 basis point rate cut, marking the third consecutive cut due to a weak U.S. labor market [1][3]. Federal Reserve Rate Decisions - The Federal Reserve has already implemented two rate cuts in 2025, totaling 50 basis points, bringing the federal funds rate target range to 3.75%—4.00% [1][3]. - Market expectations for a third rate cut are high, with a nearly 90% probability predicted by the CME FedWatch Tool [3][4]. - The concept of "hawkish rate cuts" suggests that while the Fed will lower rates, it will signal a higher threshold for future cuts to prevent excessive market optimism [4]. Economic Indicators - Recent data shows a surprising decrease of 32,000 in U.S. private sector employment for November, the largest drop since March 2023, indicating structural weakness in the labor market [4]. - Inflation pressures are easing, with the core PCE price index rising by 2.8% year-on-year in September, suggesting manageable production-side inflation [4]. Implications for China - The Fed's rate cuts are expected to alleviate monetary policy pressures on major global economies, providing China with more room for monetary policy adjustments [6][7]. - The narrowing of the China-U.S. interest rate differential could support a stronger RMB, allowing for potential policy rate reductions in China to lower financing costs for the real economy [7][8]. Market Reactions - The anticipated Fed rate cuts are likely to influence global equity, currency, and bond markets, with the dollar index expected to weaken, benefiting non-U.S. currencies [9][11]. - The Chinese stock market has shown mixed performance, with the Shanghai Composite Index closing at 3900.50 points, reflecting a slight decline [10]. - Bond markets are experiencing varied impacts, with domestic bond yields influenced by both Fed policies and internal supply pressures [11].

Report Industry Investment Rating No relevant content provided. Core Viewpoints - The 10-year US Treasury yield is expected to continue to rise slightly this week due to factors such as the risk of a "hawkish rate cut" by the Fed, market concerns about inflation control under a potential radical rate cut scenario, and the ongoing fermentation of the Bank of Japan's December rate hike expectation [7][8]. Summary by Directory 1. Last Week's US Treasury Yield Trend Review - In the week of December 1, 2025, the 10-year US Treasury yield increased significantly. On Monday, the Bank of Japan's clear rate hike signal and a large number of corporate bond issuances led to a 7bp increase to 4.09%. On Tuesday, it remained unchanged at 4.09%. On Wednesday, the unexpected decrease in US private sector employment in November pushed it down 3bp to 4.06%. On Thursday, factors like low initial jobless claims and a record high in US government debt led to a 6bp increase to 4.11%. On Friday, a rebound in the December Michigan consumer confidence index caused a 3bp increase to 4.14%, a 12bp increase compared to November 28 [1]. 2. Short-Term Trend Outlook - This week, the 10-year US Treasury yield may continue to rise slightly. The market has fully priced in a 25bp rate cut by the Fed in the December meeting, but the risk of a "hawkish rate cut" is high. Concerns about inflation control under a potential radical rate cut by "shadow chairman" Hassett and the Bank of Japan's rate hike expectation will also push up the yield [7][8]. 3. 10Y - 2Y Yield Spread - As of December 5, compared with November 28, all maturities of US Treasury yields except the 1-year yield increased. The 10Y - 2Y US Treasury term spread widened 3bp to 58bp [9]. 4. Sino-US Yield Spread - As of December 5, compared with November 28, the inversion of the Sino-US 10-year Treasury yield spread widened 11bp to 229bp. In the short term, the 10-year US Treasury yield will continue to rise slightly, while the 10-year Chinese Treasury yield is expected to fluctuate within a narrow range, so the deep inversion will continue [12].

Summary of Key Points from Conference Call Records Industry Overview - The records focus on the foreign exchange market dynamics, particularly the outlook for the Chinese Yuan (RMB) against the US Dollar (USD) through 2026, highlighting the implications of monetary policy differences between the US and China [1][2]. Core Insights and Arguments - **Interest Rate Expectations**: The market anticipates a significant divergence in interest rate cuts between the US and China, with expectations of over 75 basis points in the US and around 25 basis points in China, which could favor RMB appreciation [1][2]. - **Unsettled Foreign Exchange Amounts**: Current assessments suggest that the actual unsettled foreign exchange amounts are closer to $150-200 billion, rather than the previously estimated $800-1,200 billion, due to the inversion of interest rates leading to increased overseas direct investments [1][3][4]. - **Weak Dollar Cycle**: The USD is entering a new weak cycle expected to last 3-5 years, influenced by factors such as de-dollarization trends, reduced US Treasury holdings, and fiscal deficits, which may provide long-term appreciation opportunities for the RMB [1][5]. - **China's Current Account Surplus**: A robust current account surplus, combined with the repatriation of overseas investment profits, supports the RMB's mid-term fundamentals, with seasonal settlement becoming increasingly important for RMB appreciation [1][6]. - **Federal Reserve's Dovish Stance**: The Federal Reserve's internal divisions suggest a continued dovish approach, with personnel changes potentially accelerating rate cuts, further pressuring the USD and enhancing RMB appreciation [1][7]. Additional Important Insights - **RMB Stability Amidst Weak USD**: Despite the weak USD, the RMB has not experienced significant volatility due to a shift in settlement structures from USD dominance to a diversified currency basket, reducing sensitivity to USD fluctuations [1][8]. - **Long-term RMB Policy**: China's RMB policy currently aims for stability, with a long-term trend towards appreciation to alleviate economic growth pressures, particularly in light of the 2035 GDP doubling goal [1][9][10]. - **Factors Influencing RMB Exchange Rate**: Future RMB exchange rates will be influenced by political uncertainties, changes in US-China interest rate differentials, and economic expectations, with a stable global economy supporting RMB appreciation [1][11]. - **2026 RMB Exchange Rate Outlook**: The expectation for 2026 includes a potential 7% appreciation of the RMB against the USD, with various hedging tools available for enterprises to manage foreign exchange risks [1][12][14]. Hedging Strategies - **Choosing Hedging Tools**: Enterprises are advised to consider different contract types and rolling methods for hedging, with forward contracts generally being more expensive than futures. Strategies to optimize costs include using deep discount contracts and adjusting hedging ratios based on market conditions [1][14][16]. Arbitrage Opportunities - **HKD and USD Arbitrage**: Under the Hong Kong dollar's peg to the USD, there are opportunities for arbitrage, particularly when interest rate differentials widen, and during periods of market intervention by the Hong Kong Monetary Authority [1][15]. This summary encapsulates the key points from the conference call records, providing a comprehensive overview of the foreign exchange market dynamics and the outlook for the RMB.

RMB: The debate for 2026 | GS EM Marketstrats ⼈⺠币：2026 年⾛势之争 | ⾼盛新兴市场策略 Given recent RMB appreciation to 7.05 area, there is rising debate on RMB outlook in 2026, and market is split: 1) Some think CNH appreciation will accelerate, on further US-China rate differential narrowing, China's large CA surplus + cheap REER, as well as eased trade uncertainty. 2) Some think RMB will continue this year's appreciation speed, which is not much faster than carry. 3) Others think CNH can serve as funder given weak dome ...

文/《清华金融评论》 王茅 近期人民币汇率涨势明显，离岸人民币（CNH） 11月25日 报 7 .0 829 元 （单日涨 0. 3%），11月2 7日盘中最高升至7. 0653 ， 逼近 202 4年10月9 日高点。人民币近期 走强主要受内外因素共同推动，短期有望延续偏强 态势，对资本市场尤其是 A股和港股形成显著利好。 人民币近期 走强 主要 原因 外部环境改善 。 美元持续走弱， 2025年美元指数已累计下跌超7%，美联储降息预期升温 ， 12月降息概率升至 8 0%以上，削弱美元吸引力 。 中美利差 收窄， 美联储降息频率高于中国央行，中美 10年期国债收益率利差缩小，提升人民币资产性价比。 内部支撑强化 。 我国 经济韧性凸显， 我国 出口超预期增长 ， 如四季度结汇需求激增 ， 政策工具箱丰富， 这 夯实 了人民币 汇率基础 。 政策主动引 导， 我国 央行通过中间价持续释放升值信号，并收紧离岸流动性抑制做空， 这 稳定 了 市场预期。 此外， 外资增配人民币资产 。 国际投行集体 （ 如高盛、瑞银等 ） 唱多 A股，科技股吸引力增强，跨境资金回流中国资本市场加速，也提振了人民币汇 率。 人民币 ...

Core Insights - In October, global financial markets experienced increased volatility due to multiple uncertainties, while China's interbank foreign exchange market maintained stable trading volumes with a daily average trading volume of $205.18 billion, a slight year-on-year decrease of 0.30% but a month-on-month increase of 6.72% [1][2] Group 1: Currency Exchange Trends - The RMB exchange rate rose to a yearly high in October before experiencing fluctuations, with the exchange rate against the USD reaching a low of 7.1433 and later stabilizing around 7.11 to 7.12 [2] - By the end of October, the onshore RMB exchange rate closed at 7.1135, appreciating 0.07% compared to September, while the CFETS RMB index against a basket of currencies reported a 0.87% appreciation [2] Group 2: Foreign Exchange Market Activity - The average daily trading volume in the interbank foreign exchange market was $205.18 billion in October, with a year-on-year decrease of 0.30% but a month-on-month increase of 6.72%, marking two consecutive months of growth [2] - The average daily trading volume for RMB in the foreign exchange market was $152.54 billion, showing a year-on-year decline of 5.72% but a month-on-month increase of 6.30% [2] Group 3: Options and Volatility - RMB foreign exchange options trading remained stable in October, with an average daily transaction of $5.23 billion, reflecting a month-on-month decrease of 9.07% [3] - The implied volatility for RMB/USD options remained low, indicating stable market expectations for short-term RMB exchange rate movements [3] Group 4: Domestic and Offshore Exchange Rate Differences - The domestic foreign exchange differential gradually converged and turned positive by the end of October, with the average daily differential being -29 basis points, an increase of 25 basis points from September [4] - As of October 28, the offshore RMB (CNH) appreciated by 0.15% to 7.1164, with market participants shifting from net buying to net selling of foreign exchange by the end of the month [4] Group 5: Market Sentiment and Behavior - The market's herd effect index in October was 61.89, a decrease of 1.01 points from September, indicating a weaker herd effect compared to the historical average [5] Group 6: Swap Points and Interest Rate Dynamics - Long-term swap points reached a three-year high in October, driven by strong market buying pressure, with the one-year swap point closing at -1287 basis points, an increase of 35 basis points from September [6][7] - The one-year swap point's increase was primarily influenced by market supply and demand factors, despite a slight decrease in interest rate factors [7]

Core Viewpoint - The bond market in 2026 is expected to navigate a landscape characterized by low interest rates and high volatility, with various factors influencing the market dynamics, including economic recovery, monetary policy adjustments, and fiscal measures [1][21]. Interest Rate Bonds - The bond market is anticipated to maintain a "low interest rate + high volatility" pattern, with limited downward space for interest rates but persistent fluctuations [2][3]. - The ten-year government bond yield is projected to fluctuate between 1.6% and 2.1%, with a focus on obtaining stable coupon income and increasing exposure to equity assets to enhance overall returns [2]. - Predictions indicate that the ten-year government bond yield may drop to around 1.6% in the first quarter but could rebound to approximately 1.9% later in the year due to economic recovery and inflation expectations [3]. - A bullish steepening of the yield curve is expected, with the ten-year government bond yield potentially declining to a range of 1.2% to 1.5% [4]. - The N-shaped interest rate trend is forecasted, with significant adjustments expected in the first quarter and the second half of the year, while the second quarter may present favorable trading opportunities [5]. Credit Bonds - The credit bond market is expected to exhibit low spreads, with a shift from simple "downward" strategies to more refined approaches focusing on regions, industries, and individual credits [6][8]. - If the wide credit process progresses smoothly, credit risks may ease, leading to a reduction in bond defaults [8]. - The focus should be on mid to long-term credit bonds, particularly those with potential for spread compression, while avoiding low-quality private real estate bonds and high-risk regional bonds [9][11]. Monetary Policy - The monetary policy is expected to remain moderately accommodative, with potential rate cuts and innovative tools to support liquidity and the yield curve [12][13]. - The window for rate cuts is anticipated to open between late 2025 and early 2026, with limited pressure on banks' net interest margins due to changing deposit structures [14]. - Structural monetary policy tools are expected to play a significant role, with a focus on targeted support rather than broad-based expansion [16]. External Environment - The narrowing of the China-U.S. interest rate differential is a key external factor, with expectations that the spread between ten-year U.S. and Chinese bonds will continue to narrow [18]. - The U.S. bond market is projected to experience a flattening yield curve, with ten-year U.S. Treasury yields expected to exceed 2.2% due to persistent inflation and employment recovery [19]. - Attention should be paid to the "local divergence" between China and overseas experiences, particularly regarding the impact of government leverage and inflation on interest rates [20].

Core Viewpoint - The article suggests that the Chinese yuan may enter a medium to long-term appreciation cycle starting in 2026, with potential targets of 6.7 to 6.8 against the US dollar, contingent on a weak dollar, trade surpluses, and capital inflows [1][12] Group 1: Currency Trends - The yuan has experienced a depreciation phase from 2022 to 2024, with a significant drop in offshore rates, reaching a low of 7.42 in April 2025, but began to rebound thereafter [1] - By November 5, 2025, the yuan ended a three-year downtrend, rebounding by approximately 2-3% within the year [1] - The correlation between the yuan and a basket of currencies has weakened, indicating a shift in trade settlements towards the yuan and other non-dollar currencies [2] Group 2: Private Sector Changes - By mid-2025, the private sector's net foreign asset position turned positive, with overseas net assets reaching approximately $181.9 billion [3] - The trend of "hiding foreign exchange in the public" and low interest rates have driven Chinese enterprises and individuals to invest abroad [3] Group 3: Trade and Capital Flows - China's export share is projected to recover to 14.62% in 2024, with a significant trade surplus contributing to a current account surplus by 2025 [5] - As of September 2025, there was a backlog of approximately $465 billion in pending foreign exchange settlements from exports, which could influence exchange rate fluctuations upon repatriation [5] Group 4: Investment Trends - Cross-border securities investment shifted from net outflows to net inflows in the first three quarters of 2025, with foreign investment in A-shares increasing by approximately 622.9 billion yuan [6] - The attractiveness of holding yuan-denominated assets has improved due to changes in swap points and interest rate differentials [6][7] Group 5: Policy and Regulatory Environment - The People's Bank of China prioritizes exchange rate stability, adjusting the midpoint rate to manage external shocks and maintain market expectations [9] - Regulatory measures have been implemented to respond to fluctuations in US-China trade dynamics and to stabilize the yuan [9] Group 6: Future Outlook - The article predicts that if the US dollar remains structurally weak in 2026, alongside a current account surplus and net inflows from securities investments, the yuan could potentially break below 7.0 and reach the 6.70-6.80 range by the end of the year [12] - A similar appreciation pattern to that observed from September 2019 to March 2022 could see the yuan gradually move towards the 6.40-6.50 range from its April 2025 low [12]

Core Insights - The global bond market is experiencing significant fluctuations, with the U.S.-China interest rate differential drawing attention, and a professional tool for millisecond-level alerts is becoming central to investor decision-making [1][2] - U.S. Treasury yields have reversed their downward trend, with the 10-year benchmark yield dropping to 4.30%, driven by ongoing bets on potential Federal Reserve rate cuts [1][2] - China's domestic bond market is showing similar trends, with government bonds opening high and futures closing up across the board [1][2] Group 1: Market Dynamics - In 2025, bond investors face unprecedented challenges and opportunities due to increased market volatility, subtle fluctuations in government bond yields, and sudden changes in corporate bond credit spreads [2] - The U.S. Treasury market has reversed a three-day decline, influenced by investor expectations of a possible rate cut by the Federal Reserve as early as September [2] - On August 20, China's interest rate bonds opened high, with the 10-year government bond actively declining, while futures for 30-year and 10-year contracts rose by 0.23% and 0.03%, respectively [2] Group 2: Information Tools - The speed and quality of information acquisition are critical in the rapidly changing bond market, making the ability to obtain timely information a core competitive advantage for investors [3] - A comprehensive evaluation of mainstream bond news apps is based on five dimensions: data coverage, news timeliness, analytical professionalism, tool practicality, and user experience [3] Group 3: Leading Tools - Five leading bond news applications have been identified, each with unique features and advantages, including Wind, iFinD, Choice, and Zhitong Finance [4] - Wind is recognized as the standard for institutional markets, offering extensive global bond data but at a high annual fee exceeding 20,000 yuan [4] - iFinD excels in intelligent bond strategy recommendations tailored to user risk preferences, while Choice provides free basic bond market data and an active community [4] Group 4: Sina Finance APP Advantages - The Sina Finance APP leads bond information applications with a comprehensive score of 91.6, showcasing four core competitive advantages [5] - It monitors over 40 markets seamlessly, covering various bond types and providing detailed data such as government bond futures and regional risk scores for municipal bonds [6] - The app's "bond anomaly monitoring" system can push alerts within three seconds of unusual trading price differences, leveraging a dedicated financial media team for timely insights [7] Group 5: AI Integration - The "Xina AI Assistant" in the Sina Finance APP marks a new era of intelligent financial news interpretation, capable of summarizing lengthy reports and identifying risk and opportunity points [11] - The system can automatically generate trading strategies based on Federal Reserve decisions, allowing users to execute trades directly [11] - This "information-analysis-trading" loop empowers ordinary investors with institutional-level decision-making capabilities [12] Group 6: Custom Solutions - Investors are encouraged to select tools based on their specific needs, with various combinations of applications recommended for different user types [13][14][15][16] - The comprehensive evaluation indicates that the Sina Finance APP, with its millisecond-level market coverage and AI-driven strategy generation, effectively enables investors to navigate bond market volatility with confidence [16]

Exchange Rate Outlook - The report predicts that the RMB may enter a medium to long-term appreciation cycle, with expectations for the USD/CNY exchange rate to break below 7.0 in 2026, potentially reaching 6.70-6.80 by the end of that year[1] - The RMB has ended a three-year depreciation cycle, with a significant appreciation expected to begin from April 2025, when the USD/CNY was at 7.42[6] Trade and Current Account - The current account surplus is expected to stabilize, driven by a recovery in merchandise trade, with a monthly surplus reaching $63.9 billion in September 2025, the highest since 2020[18] - The merchandise trade surplus has been expanding, with a single-month surplus of $72.4 billion recorded in September 2025[18] Investment Dynamics - Foreign investment in RMB-denominated assets is increasing, with a net inflow of $10.57 billion in securities investments by September 2025, reversing previous outflows[34] - Foreign investors have increased their holdings in A-shares by 622.9 billion CNY, indicating a strong interest in the Chinese equity market[42] Risk Factors - Potential risks include uncertainties in U.S. fiscal and tariff policies, unclear paths for Federal Reserve interest rate cuts, and political risks in non-U.S. regions that could lead to currency depreciation[1] - The report highlights the importance of monitoring the evolving dynamics of the U.S.-China interest rate differential, which significantly influences foreign investment behavior in Chinese bonds[51]