1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - After the Fed restarts rate cuts, the probability of the domestic central bank "following suit" to cut rates increases, with a higher probability of implementation after the end of October. After three consecutive months of adjustment, the current bond market has shown initial signs of stabilization. In the fourth quarter, bond market interest rates may start a new round of smooth decline. Investors are advised to defend and counterattack, and enter the market at around 1.8% of the 10-year Treasury bond [1][4]. 3. Summary by Relevant Catalogs 3.1 Bond Market Weekly Observation - From September 15 - 19, 2025, the expectation of the central bank's monetary easing strengthened, and the 10-year Treasury bond interest rate showed an "N" shape. The impact of the equity market on the bond market has gradually weakened, and investors' expectation of the central bank's loose monetary policy has strengthened [11]. 3.2 External Constraints Weaken: "Room for Maneuver" Opens - On September 18, the Fed cut the federal benchmark interest rate by 25 basis points to the 4.0% - 4.25% range, the first rate cut since late 2024. Since mid-July 2025, the narrowing of the Sino-US interest rate spread and the weakening of the US dollar have reduced the risk of capital outflows, improved the domestic liquidity environment, and opened up room for the central bank to cut rates. However, it is necessary to prevent the side effect of "rapid RMB appreciation → decline in export competitiveness" [12][16]. 3.3 Internal Constraints Remain: Low Bank Interest Margin + Rising Real Interest Rate - Currently, rate cuts still face the dual constraints of "low bank net interest margin + rising real interest rate". As of June 2025, the net interest margin of commercial banks has dropped to a historical low. A significant rate cut may lead to higher real interest rates, which will inhibit consumption and investment to some extent [20]. 3.4 Rate Cuts Are Approaching: Higher Probability After the End of October - After the Fed's rate cut, the probability of the domestic central bank cutting rates increases, but the pace, magnitude, and method will be "domestically oriented", with a higher probability of implementation after the end of October. If the GDP and credit data in the third quarter continue to weaken and the Fed cuts rates again in October, it may be a better time for the central bank to cut rates comprehensively [27][28]. 3.5 Bond Market Asset Performance No specific content analysis provided in the text, only some data chart descriptions. 3.6 High-Frequency Entity Tracking: Food Prices Differentiate, Energy Costs Rise - **Price-related**: This week, the Nanhua Agricultural Products Index declined slightly, international crude oil prices rose, vegetable and meat prices mostly declined, and fruit prices rose [45]. - **Industry-related**: This week, the Nanhua Industrial Products Index rose, glass and coking coal prices increased, and the blast furnace operating rate and petroleum asphalt operating rate showed differentiation [51]. - **Investment and Real Estate-related**: This week, investment and real estate-related data remained weak, with a decline in the land transaction area in 100 large and medium-sized cities and a slight increase in the commercial housing transaction area in 30 large and medium-sized cities. The decline of the second-hand housing listing price index slowed down, and the cumulative increase in the housing completion area increased but was still lower than the same period in previous years [59]. - **Travel and Consumption-related**: This week, travel and consumption data recovered seasonally, with an increase in the subway passenger volume in first-tier cities, a decline in movie box office revenue, a 3.5% increase in passenger car retail sales compared with the same period last month, and a slight increase in the number of domestic flights [67].

Core Viewpoint - The Federal Reserve has lowered interest rates from 4.25%-4.50% to 4.00%-4.25%, which has led to a stable performance of the RMB, reflecting a complex interplay of various factors in the market [1][3]. Group 1: RMB Performance Overview - The RMB has shown a "reverse drama" this year, starting from a high of 7.3 and rebounding significantly, with a notable appreciation in late August [3]. - The recent strength of the RMB is attributed to a "triple gain" effect, including expectations of Fed rate cuts, a declining US dollar index, and supportive internal factors [3][5]. - In July, the foreign exchange settlement surplus reached 22.8 billion USD, indicating improved market sentiment and increased demand for RMB [5]. Group 2: Future Outlook for RMB - The external environment, characterized by the Fed's rate cut cycle, is expected to benefit emerging markets, with the RMB likely to remain stable and slightly strong [7]. - Internal conditions, such as narrowing interest rate differentials between China and the US, are expected to alleviate depreciation pressure on the RMB [7]. - For the RMB to break the 7.0 mark, stronger catalysts like sustained foreign capital inflows or better-than-expected economic data are needed [7][9].

Group 1 - The People's Bank of China (PBOC) will announce the new Loan Prime Rate (LPR) on September 22, with the current 1-year LPR at 3.0% and the 5-year LPR at 3.5%, unchanged for three months [1] - A press conference on the achievements of the financial sector during the 14th Five-Year Plan will be held on the same day, featuring key financial leaders [3] - The PBOC plans to issue 600 billion yuan of central bank bills with a 6-month maturity to enhance the RMB yield curve in Hong Kong [4] Group 2 - Following the Federal Reserve's recent rate cut, there is speculation that global central banks, including the PBOC, may follow suit, potentially leading to a second wave of market rally in A-shares [5] - The PBOC has adjusted its 14-day reverse repo operations to a fixed quantity and multi-price bidding, which is seen as a move to enhance liquidity management [6] - The PBOC's liquidity management tools are being optimized to ensure stability in the financial system, especially ahead of major holidays [6] Group 3 - The external environment, including the Fed's rate cut and trade policies, may exert downward pressure on the US dollar, providing upward momentum for the RMB [7] - The PBOC is expected to flexibly manage liquidity through various instruments to stabilize the economy and support the RMB exchange rate [7] - A report from Galaxy Securities indicates that the priority for monetary policy in the fourth quarter will focus on economic growth and employment, with potential interest rate cuts anticipated [8]

Core Viewpoint - The article discusses the strengthening of the Renminbi (RMB) against the US dollar, driven by the Federal Reserve's interest rate cuts and the underlying economic fundamentals of China, which are increasingly viewed favorably by international investors [1][3][4]. Group 1: Currency Movements - The offshore RMB broke the 7.10 mark against the US dollar for the first time since November last year, reaching a high of 7.0995 [1][3]. - Following the Federal Reserve's announcement of a 25 basis point rate cut, the US dollar index fell to its lowest point since January, at 96.2199, marking a new low since February 2022 [1]. Group 2: Economic Fundamentals - The narrowing interest rate differential between China and the US has contributed to the RMB's strength, but the fundamental economic conditions of each country are crucial for understanding currency movements [3]. - China's large market size and improving total factor productivity (TFP) due to technological innovations are seen as strong support for the RMB's appreciation [3]. Group 3: International Investor Sentiment - International investment banks, such as Deutsche Bank, have expressed optimism about the RMB, predicting it could break the 7 mark by 2025 and appreciate to 6.7 by 2026 [4]. - The World Bank has downgraded global economic growth forecasts, particularly for developed economies, which contrasts with the more favorable outlook for emerging markets like China [4]. Group 4: Market Dynamics - Increased willingness of foreign trade enterprises to engage in currency exchange has led to net inflows in the foreign exchange market, improving market expectations [5]. - The RMB's exchange rate mechanism has become more transparent since the "8·11 exchange rate reform," reducing the likelihood of extreme fluctuations and suggesting that moderate adjustments against the dollar will be the norm [5].

Group 1 - The Federal Reserve's recent interest rate cut has led to a weakening of the US dollar, providing strong upward momentum for non-US currencies, including the Renminbi [1][2] - On September 17, the offshore Renminbi broke the 7.10 mark against the US dollar, reaching a high of 7.0995, the first time since November of the previous year [1][2] - The narrowing interest rate differential between China and the US is a significant factor contributing to the Renminbi's strength, although the fundamental economic conditions also play a crucial role [2][3] Group 2 - International capital flows are a key determinant of exchange rates, and the expectation of a weaker dollar is becoming more likely as the Fed continues its rate-cutting path [2] - China's economic resilience and the relative decline in productivity growth in Western countries are supporting the Renminbi's appreciation [3][4] - Deutsche Bank has expressed optimism about the Renminbi, predicting it could break the 7 mark by 2025 and appreciate to 6.7 by 2026, reflecting a positive outlook on Chinese assets [3] Group 3 - The willingness of foreign trade enterprises to engage in currency exchange is increasing, leading to a net inflow in the foreign exchange market [4] - The People's Bank of China's monetary policy is effectively stabilizing exchange rate expectations, reducing the likelihood of rapid appreciation or depreciation of the Renminbi [4] - The market's expectation of a stable Renminbi value is likely to persist, although the introduction of more exchange rate hedging tools may increase the volatility of the Renminbi in the future [4]

Core Viewpoint - The recent interest rate cut by the Federal Reserve is characterized as a "preventive rate cut," primarily driven by the ongoing weakness in the U.S. labor market since May, reflecting the Fed's challenging decision-making between deteriorating employment conditions and inflationary pressures [1] Impact on China - The adjustment space for China's monetary policy will further expand due to the Fed's rate cut [1] - The direct impact on China's stock and real estate markets is minimal, with effects more likely to manifest indirectly through domestic macro policy adjustments [1] Currency and Exchange Rate - The Fed's rate cut is expected to moderately compress the interest rate differential between China and the U.S., which is favorable for the Chinese yuan, potentially leading to passive appreciation [1] International Gold Prices - The Fed's rate cut is likely to be beneficial for international gold prices, which have already risen approximately 40% this year and have seen significant increases over the past two years [1] - Despite the current high levels of international gold prices, ongoing global geopolitical risks and future dollar trends suggest that gold prices may continue to rise, albeit with challenges in declining [1]

Group 1 - The U.S. Treasury Secretary, Bessent, expressed approval of the RMB to USD exchange rate, noting that the RMB has strengthened against the USD this year, increasing by approximately 3% [1][3] - Bessent highlighted that the RMB is at a historical low against the Euro, which poses a problem for Europe, as the RMB has depreciated about 10% against the Euro [1][3] - Recent data indicates that the RMB to Euro exchange rate has reached a historical low of over 8.4, compared to 7.5 at the beginning of 2025, which may boost China's exports to Europe and increase the EU's trade deficit with China [1][3] Group 2 - The Chinese government maintains that the RMB exchange rate has remained stable at a reasonable level, with the RMB index against a basket of currencies operating around 100 since 2020, indicating no competitive devaluation [3] - As of September 19, the central parity rate of the RMB was reported at 7.1128 against the USD and 8.3834 against the Euro [3] - Bessent defended the U.S. tariff policies, claiming that the trade deficit with China may decrease by 30% this year due to these tariffs [5]

Core Points - The People's Bank of China announced the exchange rates of the Renminbi (RMB) against various currencies on September 19, 2023, indicating the market's valuation of the RMB [1] Exchange Rates Summary - 100 USD = 711.28 RMB [1] - 100 EUR = 838.34 RMB [1] - 100 JPY = 4.8076 RMB [1] - 100 HKD = 91.457 RMB [1] - 100 GBP = 964.13 RMB [1] - 100 AUD = 470.59 RMB [1] - 100 NZD = 418.8 RMB [1] - 100 SGD = 554.75 RMB [1] - 100 CHF = 897.87 RMB [1] - 100 CAD = 515.74 RMB [1] - 100 MOP = 112.68 RMB [1] - 100 MYR = 59.029 RMB [1] - 100 RUB = 1170.15 RMB [1] - 100 ZAR = 244.0 RMB [1] - 100 KRW = 19532 RMB [1] - 100 AED = 51.629 RMB [1] - 100 SAR = 52.718 RMB [1] - 100 HUF = 4642.2 RMB [1] - 100 PLN = 50.809 RMB [1] - 100 DKK = 89.01 RMB [1] - 100 SEK = 131.4 RMB [1] - 100 NOK = 138.85 RMB [1] - 100 TRY = 581.809 RMB [1] - 100 MXN = 258.31 RMB [1] - 100 THB = 448.36 RMB [1]

Core Points - The central viewpoint of the articles is the recent depreciation of the Chinese yuan against the US dollar, with the exchange rate reported at 7.1128 yuan per dollar, a decrease of 43 basis points from the previous trading day [1]. Group 1 - The People's Bank of China authorized the publication of the central exchange rates for various currencies against the yuan, indicating a comprehensive overview of the yuan's value against multiple foreign currencies [2]. - The exchange rate for 1 euro is reported at 8.3834 yuan, while 100 Japanese yen is valued at 4.8076 yuan, showcasing the yuan's relative strength against these currencies [2]. - The report includes a wide range of exchange rates, such as 1 British pound at 9.6413 yuan and 1 Australian dollar at 4.7059 yuan, reflecting the yuan's performance in the global currency market [2].

Core Viewpoint - The easing of external constraints on China's monetary policy is expected due to the Federal Reserve's interest rate cuts, which will provide more room for policy adjustments [1][2]. Group 1: Monetary Policy Environment - The Federal Reserve's interest rate cuts have led to a decline in the US dollar index, reducing pressure on the RMB exchange rate [1]. - Analysts suggest that the attractiveness of RMB assets is increasing, leading to more foreign capital inflows and higher demand for RMB, which supports its appreciation [1][2]. - The potential for further interest rate cuts by the Federal Reserve may continue to alleviate pressure on the China-US interest rate differential and the RMB exchange rate, allowing for a more accommodative monetary policy environment in China [1][2]. Group 2: Internal Constraints on Monetary Policy - Internal factors, such as maintaining necessary policy space and ensuring reasonable net interest margins, pose greater constraints on China's monetary policy compared to external factors [2]. - The net interest margin of commercial banks has fallen to a new low of 1.42%, which may limit the space for further interest rate cuts [2][3]. - The need to avoid excessive liquidity that could lead to inefficient allocation of financial resources is emphasized, suggesting a preference for targeted monetary policy measures [2]. Group 3: Future Outlook for Monetary Policy - There is still room for further interest rate cuts and reserve requirement ratio (RRR) reductions, as the macroeconomic environment remains challenging [4][5]. - Analysts predict that the People's Bank of China may lower the RRR by 0.25 to 0.5 percentage points in the third and fourth quarters to enhance liquidity [6]. - The coordination between fiscal and monetary policies is expected to strengthen, focusing on optimizing the structure of financial support to key sectors [6].