Group 1: Macroeconomic Overview - The national general public budget revenue increased by 0.8% year-on-year from January to October 2025, with a marginal recovery in October at 3.2% compared to 2.6% in September, driven by tax revenue improvements and the effects of anti-involution policies [3] - The national general public budget expenditure grew by 2% year-on-year from January to October 2025, but saw a significant decline in October with a -9.8% growth rate, down from 3.1% in September, indicating a need for continued fiscal support to stabilize the economy [4] - Government fund budget revenue decreased by 2.8% year-on-year from January to October 2025, with a sharp decline of -18.4% in October, attributed to the accelerated adjustment in the real estate market [4] Group 2: Fiscal Policy and Measures - To ensure the continuation of proactive policies in the fourth quarter, incremental policies are being implemented, including the deployment of 500 billion yuan in new policy financial tools in October 2025 [5] - The central government allocated 500 billion yuan from local government debt limits in October 2025, including an additional 200 billion yuan in special bond quotas to support investment construction in certain provinces [5] Group 3: Investment Insights - The analysis indicates a divergence between macroeconomic variables and asset prices, with government leverage increasing while household and corporate leverage remains stable or declines, leading to rising interest rates independent of the recovery in household and corporate sectors [10] - The report suggests that the solid income and interest rate differentials have been largely neutralized, making it crucial to seek alpha in future investments, emphasizing the importance of risk preference and careful asset selection [11]

Core Viewpoint - The article discusses the significant changes in the global monetary and fiscal systems post-2008, particularly after 2020, and their implications for domestic economic and fixed-income asset forecasts [1][2]. Group 1: Fiscal and Monetary Changes - The new fiscal framework post-2020 includes large-scale government borrowing to create demand, with debt monetization and refinancing maintaining existing deficits and interest [1]. - Monetary policy has shifted to support fiscal sustainability rather than solely focusing on inflation targets [1]. - The rapid fiscal expansion has led to a preference for equity markets with higher profit elasticity, while nominal variables like CPI have risen quickly, causing interest rates to increase and fluctuate significantly [1][2]. Group 2: Divergence in Economic Indicators - There is a "triple divergence" observed where government leverage increases while household and corporate leverage remains stable or declines, leading to rising interest rates independent of household and corporate recovery [2]. - Despite fiscal efforts and rising government leverage, economic conditions have not improved significantly, yet stock markets continue to rise while bond markets show volatility [2]. - The performance of new economy sectors, particularly technology, diverges from traditional industries, indicating a split in asset performance [2]. Group 3: Investment Strategies - Given the "local divergence," the pursuit of alpha becomes crucial as fixed-income and easily accessible returns have been largely neutralized [3]. - A focus on risk appetite is essential, with attention to tail risks in certain assets, and a strategy of selecting assets based on price and elasticity differentiation [3]. - The convertible bond market shows a strong supply-demand mismatch, necessitating a focus on technology and elastic sectors for a balanced approach [3]. - The REITs market faces ongoing challenges, requiring careful selection of favorable sectors, while bank margins depend on the reduction of funding costs [3].