Economic Data and Labor Market - The January non-farm payrolls figure showed a headline number of 130,000, which is the strongest growth in over a year and more than double the Dow Jones prediction of 55,000 [2] - Job creation for the previous year was revised down to just over 15,000 per month, with the last six months resulting in a net loss of 1,000 jobs [2] - The unemployment rate decreased to 4.3%, contrary to expectations of holding at 4.4%, which may shift focus back to inflation concerns [3] Federal Reserve Outlook - Expectations for a rate cut at the next Federal Reserve meeting have decreased, with the CME's Fed Watch tool indicating a 1 in 20 chance of a rate reduction, down from a 1 in 5 chance [3] - Forecasts suggest no rate cuts until mid-year, with potential cuts of 50 basis points as inflation decreases [4] - There is a belief that the data will support the Fed chair in persuading the committee to implement additional cuts later in the year [6][7] Fiscal Concerns - The Congressional Budget Office has indicated that the deficit is projected to worsen through 2036, raising concerns about fiscal policy [10] - The focus on fiscal issues is significant as central banks have reduced their bond holdings, leading to scrutiny of fiscal management [11] - The Fed's balance sheet dynamics are discussed, with implications for how it may manage its portfolio in relation to economic growth [12][13]

Group 1 - The core viewpoint of the articles indicates a shift in market expectations towards potential interest rate cuts by the Federal Reserve, driven by weak labor market data and changes in monetary policy outlook [1][3] - The labor market data showed a significant drop in job openings, with December's JOLTS vacancies falling to 6.54 million from 6.93 million in November, marking the lowest level since 2020 [1] - The yield curve has steepened following the nomination of a new Federal Reserve chair, with expectations of a dovish monetary policy stance influencing short-term rates while long-term rates are affected by liquidity concerns [3] Group 2 - Gold prices increased by 1.6% over the week, recovering from previous declines, but the market is expected to take time to rebuild confidence and structure [2] - The upcoming Federal Reserve chair's proposal to shorten the average maturity of the Fed's balance sheet may delay the issuance of long-term bonds, providing limited support for gold prices [2] - Chinese demand for precious metals is a key driver, but may weaken temporarily due to the upcoming Lunar New Year, potentially reducing volatility in the global precious metals market [2] Group 3 - The U.S. Treasury yields across various maturities declined, with the 30-year UST down 2 basis points to 4.85%, and the 10-year UST down 3 basis points to 4.2% [3] - The usage of overnight reverse repurchase agreements (ONRRP) fell to $3.11 billion, a decrease of $7.31 billion from the previous week [3] - The net short positions in 2-year and 10-year UST futures increased, indicating a bearish sentiment among non-commercial investors [3] Group 4 - The U.S. dollar index rose by 0.5% to 97.6, moving in tandem with gold prices, which suggests an increasing correlation between the two [7] - The total holdings of the dollar index decreased, with non-commercial long positions down by 1,335 contracts to 17,000 contracts, while short positions decreased by 4,888 contracts to 17,000 contracts [10] - Offshore dollar liquidity costs have risen, as indicated by the decline in the 3-month Basis Swaps for both the yen and euro [13] Group 5 - The copper-to-gold ratio fell to 2.63, indicating a marginal decline in global demand momentum as copper prices dropped while gold prices rose [16] - The gold-silver ratio increased due to the rise in gold prices and the decline in silver prices, reflecting market dynamics [19] - Gold premiums increased after a price correction, indicating strong domestic buying support [28] Group 6 - COMEX gold inventory decreased by 331,000 ounces to 35.294 million ounces, while silver inventory fell by 1.523 million ounces to 39.0466 million ounces [34] - SPDR gold ETF holdings decreased by 7.44 tons to 1,079.7 tons, remaining near the lower median of the past decade [39] - COMEX gold total positions fell by 78,769 contracts to 489,000 contracts, with a notable increase in short positions, indicating a growing bearish sentiment [39]

Core Viewpoint - The statement from Federal Reserve Governor Milan emphasizes the rationale behind utilizing the Federal Reserve's balance sheet during challenging economic times [1] Group 1 - The Federal Reserve's balance sheet can be a useful tool in times of economic difficulty [1] - The approach suggests a proactive stance in managing economic challenges through available financial resources [1]

Group 1 - The core viewpoint of the article emphasizes that utilizing the Federal Reserve's balance sheet during challenging times is considered reasonable [1] Group 2 - The statement reflects a broader perspective on monetary policy and its role in stabilizing the economy during periods of difficulty [1] - The commentary suggests that the Federal Reserve's actions are aimed at providing necessary support to the financial system [1] - This approach may influence market expectations regarding future monetary policy decisions [1]

Report Industry Investment Rating No information provided Core View - Precious metals rebounded after a significant shock, mainly influenced by the nomination of the Fed chair and fund stampede. The nomination of Kevin Warsh, a traditional hawk, cooled the expectation of interest rate cuts and led to a rebound in the US dollar index. A large number of funds took profits. In the long run, the supporting factors for the upward movement of gold have not reversed. After the market is fully adjusted and new positive factors accumulate, gold is expected to return to a steady upward channel. Due to the higher volatility of silver and the relatively low gold - silver ratio, investors are advised to wait and see [3] Summary by Related Catalogs Futures Market - **Prices and Changes**: The closing prices of Shanghai Gold 2606 and 2604 decreased by 1.48% and 1.41% respectively, and those of Shanghai Silver 2606 and 2604 decreased by 7.93% and 7.19% respectively compared with the previous day [2] - **Positions and Volumes**: The positions of Shanghai Gold 2606 and 2604 are 84,618 and 163,840 respectively, and the trading volumes are 126,031 and 494,742 respectively. The positions of Shanghai Silver 2606 and 2604 are 128,060 and 227,163 respectively, and the trading volumes are 597,736 and 1,291,544 respectively [2] - **Spot Premium and Discount**: The spot premium and discount of Shanghai Gold 2606 is - 1.23, and that of Shanghai Gold 2604 is 1.37. The spot premium and discount of Shanghai Silver 2606 is 253, and that of Shanghai Silver 2604 is - 602 [2] Spot Market - **Prices and Changes**: The closing price of Shanghai Gold T + D decreased by 1.30%, and the closing price of London Gold increased by 3.98%. The closing price of Shanghai Silver T + D decreased by 8.49%, and the closing price of London Silver increased by 9.70% [2] - **Price Ratios**: The current value of Shanghai Gold 2606 - Shanghai Gold 2604 is 2.60, and the current value of Shanghai Silver 2606 - Shanghai Silver 2604 is - 855.00. The current value of the gold - silver ratio (spot) is 59.98, the ratio of Shanghai Gold to London Gold is 0.98, and the ratio of Shanghai Silver to London Silver is 1.05 [2] Inventory - **Changes**: The inventory of Shanghai Futures Exchange gold remained unchanged at 104,052 kilograms, and the inventory of silver decreased by 62,559 kilograms to 349,900 kilograms. The COMEX gold inventory decreased by 121,403 ounces to 35,370,105 ounces, and the COMEX silver inventory decreased by 3,498,075 ounces to 394,511,408 ounces [2] Related Derivatives - **Positions and Changes**: The position of SPDR Gold ETF decreased by 2 tons to 1,076 tons, and the position of SLV Silver ETF decreased by 56 tons to 16,191 tons. The net position of CFTC speculators in gold decreased by 39,792 to 165,604, and the net position in silver increased by 2,174 to 25,877 [2] Macro Information - **Political News**: The scandal of Peter Mandelson's appointment as the British Ambassador to Washington has put pressure on Prime Minister Starmer. His chief of staff Morgan McSweeney resigned, and there are speculations about Starmer's possible resignation. In the Japanese House of Representatives election, the ruling coalition of the Liberal Democratic Party and the Japan Innovation Party won a majority of seats [3] - **Market Trends**: The yen continued its recent decline in the Asian trading session on Monday. The market is concerned about the design and communication of fiscal policies. The US Treasury Secretary believes that gold is in a typical speculative selling market and does not expect the Fed to take rapid action on the balance - sheet issue [3]

Core Viewpoint - The U.S. Treasury Secretary, Janet Yellen, anticipates that the Federal Reserve will not take any swift actions regarding its balance sheet [1] Group 1 - The statement reflects the current stance of the U.S. Treasury on monetary policy and its implications for the financial markets [1]

Core Viewpoint - The article discusses the end of the QE era, highlighting the transition from quantitative easing (QE) to quantitative tightening (QT) and the implications for monetary policy and the Federal Reserve's balance sheet management [2][3]. Summary by Sections 1. Transition from QE to QT - The Federal Reserve has undergone four rounds of QE and two rounds of QT from 2008 to 2026, with total assets expected to remain above $6 trillion by the end of 2025 [2]. - In December 2025, the FOMC meeting indicated a restart of reserve management purchases (RMO) to maintain sufficient reserves, emphasizing the fundamental differences between RMP and QE [2]. 2. Framework of the Balance Sheet - The Fed's policy framework shifted from a "scarce reserves" model to a "ample reserves" model post-2008 financial crisis, where policy rates serve as the primary indicator of monetary policy stance rather than the balance sheet [2]. - Under the "ample reserves" framework, policy rates and the balance sheet operate under separate decision-making systems [2]. 3. Conditions for Future QE - The article posits that a return to QE or yield curve control (YCC) may be necessary if the Fed lowers interest rates, suggesting that 2026 could mark the final phase of the current liquidity easing cycle [3]. - It argues that the Fed's balance sheet is not strictly a one-way street of expansion, indicating that the QE era may be over until the next crisis arises [3]. 4. Observations from Local "Two Sessions" - The average GDP growth target for twenty provinces and cities is set at 5.1% for 2026, with various adjustments noted compared to 2025 targets [19]. - The article provides a detailed table of GDP growth targets, CPI targets, and other economic indicators for different provinces, reflecting a trend of slight downward adjustments in growth expectations [19].

Core Viewpoint - The U.S. Treasury yields have slightly decreased across the board during the Asian session as the market digests expectations surrounding the nomination of Kevin Warsh as Federal Reserve Chairman [1] Group 1: Market Reactions - U.S. Treasury yields are experiencing a slight decline, with the 2-year yield down by 0.6 basis points to 3.551%, the 10-year yield down by 1 basis point to 4.267%, and the 30-year yield down by 0.6 basis points to 4.909% [1] - The market is reacting to the nomination of Kevin Warsh, which has strengthened expectations that the Federal Reserve may not utilize its balance sheet as aggressively in the future [1] Group 2: Treasury Auction and Future Plans - The U.S. Treasury has decided to maintain the auction size while continuing to assess the potential for increasing the auction sizes of medium-term, long-term, and floating-rate notes, which aligns with market expectations [1]

Report Summary - **Report Date**: February 3, 2026 [2] - **Report Type**: Shanghai Zinc Industry Daily Report - **Researcher**: Chen Sijia [3] - **Futures Practicing Certificate Number**: F03118799 - **Futures Investment Consulting Practicing Certificate Number**: Z0022803 Industry Investment Rating No investment rating information is provided in the report. Core Viewpoints - The report anticipates that Shanghai zinc will undergo wide - range adjustments, with attention focused on the 2.43 - 2.55 range [3]. - Upstream zinc ore imports are at a high level, but domestic zinc mines reduce production at the end of the year. The competition among domestic smelters to purchase domestic ores has intensified, and both domestic and foreign processing fees have significantly declined. Domestic smelter profits have shrunk, and production is expected to continue to be restricted [3]. - Recently, the LME zinc price has corrected, the Shanghai - LME ratio has rebounded, and there is a possibility that the export window will close again. - On the demand side, the downstream market is gradually entering the off - season. The real estate sector is a drag, and the infrastructure and home appliance sectors are also weakening, while the automotive and other sectors have some bright spots due to policy support. Downstream procurement has become less active, and domestic social inventories are stable with a slight increase, while LME zinc inventories are stable and the spot premium remains low [3]. - Technically, with a decrease in positions and price adjustments, both long and short positions are trading cautiously. Summary by Directory 1. Futures Market - The closing price of the Shanghai zinc main contract is 24,960 yuan/ton, with a change of 445 yuan/ton. The price difference between the 03 - 04 contracts of Shanghai zinc is - 50 yuan/ton, a decrease of 35 yuan/ton [3]. - The LME three - month zinc quotation is 3,318.5 US dollars/ton, a decrease of 51.5 US dollars/ton. The total open interest of Shanghai zinc is 203,753 lots, a decrease of 11,573 lots [3]. - The net position of the top 20 in Shanghai zinc is 9,412 lots, a decrease of 7,195 lots. The warehouse receipts of Shanghai zinc are 0 tons, with no change. The inventory of the Shanghai Futures Exchange is 65,154 tons, a decrease of 7,997 tons, and the LME inventory is 109,100 tons, a decrease of 900 tons [3]. 2. Spot Market - The spot price of 0 zinc on the Shanghai Non - ferrous Metals Network is 25,050 yuan/ton, an increase of 80 yuan/ton. The spot price of 1 zinc in the Yangtze River Non - ferrous Metals Market is 25,050 yuan/ton, an increase of 990 yuan/ton [3]. - The basis of the ZN main contract is 90 yuan/ton, a decrease of 365 yuan/ton. The LME zinc premium (0 - 3) is - 5.35 US dollars/ton, an increase of 3.06 US dollars/ton [3]. - The ex - factory price of 50% zinc concentrate in Kunming is 21,770 yuan/ton, a decrease of 600 yuan/ton. The price of 85% - 86% crushed zinc in Shanghai is 16,900 yuan/ton, with no change [3]. 3. Upstream Situation - The WBMS zinc supply - demand balance is - 35,700 tons, a decrease of 14,700 tons. The ILZSG zinc supply - demand balance is - 7,700 tons, a decrease of 4,900 tons [3]. - The global zinc mine production value from the ILZSG is 1.0627 million tons, a decrease of 11,900 tons. The domestic refined zinc production is 675,000 tons, an increase of 21,000 tons [3]. - The zinc ore import volume is 462,600 tons, a decrease of 53,900 tons. 4. Industry Situation - The refined zinc import volume is 8,760.85 tons, a decrease of 9,469.07 tons. The refined zinc export volume is 27,266.66 tons, a decrease of 15,548.89 tons [3]. - The zinc social inventory is 1.113 million tons, an increase of 41,000 tons. 5. Downstream Situation - The monthly production of galvanized sheets is 2.36 million tons, an increase of 20,000 tons. The sales volume of galvanized sheets is 2.36 million tons, a decrease of 60,000 tons [3]. - The monthly new housing construction area is 587.6996 million square meters, an increase of 53.1326 million square meters. The monthly housing completion area is 603.4813 million square meters, an increase of 208.942 million square meters [3]. - The monthly automobile production is 3.4115 million vehicles, a decrease of 107,500 vehicles. The monthly air - conditioner production is 21.6289 million units, an increase of 6.6029 million units [3]. 6. Option Market - The implied volatility of the at - the - money call option for zinc is 41.66%, a decrease of 1.7%. The implied volatility of the at - the - money put option for zinc is 41.65%, a decrease of 1.7% [3]. - The 20 - day historical volatility of the at - the - money zinc option is 39.69%, an increase of 5.89%. The 60 - day historical volatility of the at - the - money zinc option is 18.58%, an increase of 3.75% [3]. 7. Industry News - In January, China's RatingDog Manufacturing PMI reached a three - month high. Positive signals include growth in new orders (including export orders) and a three - month first rebound in employment. However, business confidence dropped to a nine - month low, input costs had the strongest increase in four months, and product sales prices rose for the first time in 14 months [3]. - In January, the US ISM Manufacturing PMI index soared from 47.9 in the previous month to 52.6, far exceeding the expected 48.5. It was mainly boosted by robust growth in new orders and output. The employment index reached a one - year high but remained in the contraction range, and the price - paid index reached a four - month high [3]. - Trump nominated Kevin Warsh as the Chairman of the Federal Reserve. His core proposition is to push the Federal Reserve to significantly shrink its huge $6.6 trillion balance sheet and seek a new agreement with the Treasury to clarify the central bank's independent boundaries and prevent fiscal monetization [3].

Core Viewpoint - The nomination of Kevin Warsh as the next Federal Reserve Chair has shifted market focus from short-term interest rates to the Fed's $6.6 trillion balance sheet and its role in the market [1] Group 1: Warsh's Critique and Potential Actions - Warsh has been a vocal critic of the Fed's balance sheet expansion, suggesting he may quickly act to reduce asset size, which has led to speculation about rising long-term U.S. Treasury yields and a stronger dollar [1][2] - He believes the Fed has overstepped its bounds, aligning with Treasury Secretary Mnuchin's desire for reform, but acknowledges that significant changes could impact long-term rates and major markets crucial for global financial institutions [1][2] - Warsh's past support for quantitative easing (QE) has turned into criticism, leading to his resignation from the Fed due to dissatisfaction with ongoing asset purchases [2][4] Group 2: Implications for Government and Market - If the Fed withdraws, it may conflict with the government's goal of lowering long-term borrowing costs, potentially increasing pressure on the Treasury and other U.S. agencies to manage the market more actively [2] - Warsh's approach could lead to a tightening of financial conditions, allowing the Fed to cut benchmark rates significantly [2][4] - The need for a new Treasury-Fed agreement, similar to the 1951 accord, has been emphasized by Warsh to redefine the relationship between the Fed and the Treasury [5] Group 3: Market Sensitivity and Future Outlook - The financial market has shown sensitivity to even minor changes in liquidity, as evidenced by past instances where the Fed had to intervene to alleviate funding pressures [5][6] - Analysts suggest that there is some flexibility within the Fed's definition of "ample" reserves, which could allow for adjustments in asset purchases and financing costs [7][8] - The current framework makes it difficult to envision a shift in policy soon, but the addition of a more hawkish member to the Fed could suppress future asset purchases or reinvestment policies [8]