Report Industry Investment Rating No relevant content provided. Core View of the Report Affected by the central bank's restart of treasury bond trading and the continued expectation of the Fed's interest rate cut, most treasury bond futures closed lower the previous day. Overall, the increasing uncertainty in global trade adds to the uncertainty of foreign capital inflows. The bond market fluctuates between the expectations of stable growth and monetary easing. In the short term, attention should be paid to the policy signals at the end of the month [3]. Summary by Related Catalog I. Interest Rate Pricing Tracking Indicators - The monthly China CPI had a 0.10% month - on - month change and a - 0.30% year - on - year change; the monthly China PPI had a 0.00% month - on - month change and a - 2.30% year - on - year change [9]. - The social financing scale was 437.08 trillion yuan, with a month - on - month increase of 3.42 trillion yuan and a rate of +0.79%. M2 year - on - year was 8.40%, down 0.40% from the previous value with a rate of - 4.55%. The manufacturing PMI was 49.00%, down 0.80% from the previous value with a rate of - 1.61% [10]. - The dollar index was 99.70, down 0.46 with a rate of - 0.46%. The offshore dollar - to - RMB exchange rate was 7.1272, down 0.004 with a rate of - 0.05%. SHIBOR 7 - day was 1.42, with no change in value and a rate of - 0.14%. DR007 was 1.43, down 0.01 with a rate of - 0.86%. R007 was 1.53, up 0.02 with a rate of +1.49%. The 3 - month inter - bank certificate of deposit (AAA) was 1.57, up 0.00 with a rate of +0.18%. The AA - AAA credit spread (1Y) was 0.08, down 0.01 with a rate of +0.18% [11]. II. Overview of Treasury Bonds and Treasury Bond Futures Market The report presents multiple graphs including the closing price trend of the main continuous contract of treasury bond futures, the price change rates of various treasury bond futures varieties, the trend of the settled funds of various treasury bond futures varieties, the proportion of open interest of various treasury bond futures varieties, the net open interest proportion of the top 20 traders in various treasury bond futures varieties, the long - short open interest ratio of the top 20 traders in various treasury bond futures varieties, the spread between China Development Bank bonds and treasury bonds, and the issuance of treasury bonds [14][16][17][20]. III. Overview of the Money Market Funding Situation The report shows graphs about the Shibor interest rate trend, the yield - to - maturity trend of inter - bank certificates of deposit (AAA), the trading statistics of inter - bank pledged repurchase, the issuance of local government bonds, the inter - term spread trend of various treasury bond futures varieties, and the spread between the spot - bond term spread and the futures cross - variety spread (4*TS - T) [24][25][29]. IV. Spread Overview The report presents graphs of the spread between the spot - bond term spread and the futures cross - variety spread (2*TS - TF), (2*TF - T), (3*T - TL), and (2*TS - 3*TF + T) [33][34][38]. V. Two - Year Treasury Bond Futures The report shows graphs of the implied interest rate and the treasury bond yield - to - maturity of the main contract of two - year treasury bond futures, the IRR of the TS main contract and the funding rate, the three - year basis trend of the TS main contract, and the three - year net basis trend of the TS main contract [36][39][47]. VI. Five - Year Treasury Bond Futures The report includes graphs of the implied interest rate and the treasury bond yield - to - maturity of the main contract of five - year treasury bond futures, the IRR of the TF main contract and the funding rate, the three - year basis trend of the TF main contract, and the three - year net basis trend of the TF main contract [49][53]. VII. Ten - Year Treasury Bond Futures The report shows graphs of the implied yield and the treasury bond yield - to - maturity of the main contract of ten - year treasury bond futures, the IRR of the T main contract and the funding rate, the three - year basis trend of the T main contract, and the three - year net basis trend of the T main contract [56][57]. VIII. Thirty - Year Treasury Bond Futures The report presents graphs of the implied yield and the treasury bond yield - to - maturity of the main contract of thirty - year treasury bond futures, the IRR of the TL main contract and the funding rate, the three - year basis trend of the TL main contract, and the three - year net basis trend of the TL main contract [63][65][69]. Strategy - For single - side trading, with the decline of the repurchase rate and the fluctuating price of treasury bond futures, the outlook for the 2512 contract is neutral [4]. - For arbitrage, attention should be paid to the decline of the basis of the 2512 contract [4]. - For hedging, as there is an adjustment pressure in the medium term, short - position traders can use far - month contracts for appropriate hedging [4].

Report Industry Investment Rating No relevant content provided. Core View Over the past half - week, the bond market showed an overall weak and volatile trend, characterized by "strong stocks and weak bonds, with sentiment disturbances as the main factor." The strong performance of A - shares and the rising expectations of Sino - US negotiations led to an obvious stock - bond seesaw effect. There was no urgent expectation for short - term interest rate cuts, resulting in insufficient motivation for loose trading. Emotional fluctuations made funds more inclined to play short - term bands rather than take long - term positions. The new redemption fee rules, active bond switching, and the wait - and - see sentiment before the release of external CPI data also suppressed long - term allocation demand. The bond market remained in a weak and volatile range, mainly reflecting the defensive behavior of trading desks and profit - taking at high levels. In the short term, attention should be paid to the rhythm of the stock market and the emotional recovery after the release of external inflation data [3]. Summary by Related Catalogs Market Analysis Macro - level - **Macro - policies**: On August 1, 2025, the Ministry of Finance and the State Taxation Administration announced that starting from August 8, 2025, VAT would be restored on the interest income of newly issued treasury bonds, local government bonds, and financial bonds. Previously issued bonds would still be exempt until maturity. From August 12, 2025, the 24% tariff was suspended for 90 days. The State Council emphasized measures to stabilize the real estate market, boost service consumption, and expand effective investment. The finance minister promised more proactive macro - policies, and the NDRC aimed to release domestic demand potential and manage over - capacity. In October, the US imposed export controls and special port fees on Chinese entities, and Trump threatened to impose a 100% tariff on China starting from November 1 [1]. - **Inflation**: In September, the CPI decreased by 0.3% year - on - year [1]. Capital - level - **Fiscal**: The fiscal data showed "moderate revenue recovery and strong expenditure expansion." In the first three quarters, the general public budget revenue increased slightly by 0.5% year - on - year, relying on individual income tax, VAT, and stamp duty. The expenditure on social security, education, and debt interest payments maintained high growth. The government - funded budget revenue was still weak, with a narrowing decline in land sales but limited recovery, while the fund expenditure increased by 23.9% year - on - year [2]. - **Financial**: Financial data continued to show "stable liquidity and structural deficiencies in broad credit." The M1 growth rate rose to 7.2%, and the gap narrowed, indicating improved business activity. However, social financing and credit were still at a low level, and enterprise medium - and long - term financing was weak. Government bonds were the main source of social financing growth, and the monetary policy remained moderately loose [2]. - **Central Bank**: On October 24, 2025, the central bank conducted 168 billion yuan of 7 - day reverse repurchase operations at a fixed interest rate of 1.4% [2]. - **Money Market**: The main repo rates for 1D, 7D, and 14D were 1.32%, 1.41%, and 1.57% respectively, and the repo rates had recently increased [2]. Market - level - **Closing Prices and Fluctuations**: On October 24, 2025, the closing prices of TS, TF, T, and TL were 102.33 yuan, 105.62 yuan, 108.01 yuan, and 115.01 yuan respectively. Their weekly fluctuations were - 0.002%, - 0.04%, - 0.1%, and - 0.25% respectively [3]. - **Net Basis Spreads**: The average net basis spreads of TS, TF, T, and TL were 0.02 yuan, - 0.01 yuan, 0.00 yuan, and 0.14 yuan respectively [3]. Strategy - **Single - side**: With the rising repo rates and the fluctuating treasury bond futures prices, the 2512 contract is considered neutral [4]. - **Arbitrage**: Attention should be paid to the rebound of the basis spread [4]. - **Hedging**: There is medium - term adjustment pressure, and short - side investors can use far - month contracts for appropriate hedging [4].

Report Industry Investment Rating No relevant content provided. Core Viewpoints - The bond market fluctuates between stable growth and easing expectations, and short - term attention should be paid to policy signals at the end of the month. Repo rates are rising, and Treasury futures prices are fluctuating, with a neutral outlook for the 2512 contract. Attention should be paid to the decline in the basis of the 2512 contract. There is medium - term adjustment pressure, and short - sellers can use far - month contracts for moderate hedging [4]. - Affected by the strong stock market, the rising risk appetite suppresses the bond market. Meanwhile, the continued expectation of Fed rate cuts and increasing global trade uncertainties add to the uncertainty of foreign capital inflows [3]. Summary by Directory 1. Interest Rate Pricing Tracking Indicators - Price indicators: China's monthly CPI has a 0.10% month - on - month increase and a - 0.30% year - on - year decrease; China's monthly PPI has a 0.00% month - on - month change and a - 2.30% year - on - year decrease [9]. - Monthly economic indicators: Social financing scale is 437.08 trillion yuan, with a 3.42 - trillion - yuan month - on - month increase and a 0.79% growth rate; M2 year - on - year is 8.40%, with a 0.40% decrease and a - 4.55% change rate; Manufacturing PMI is 49.80%, with a 0.40% increase and a 0.81% growth rate [9]. - Daily economic indicators: The US dollar index is 98.94, with a 0.35 increase and a 0.36% growth rate; The offshore US dollar - to - RMB exchange rate is 7.1191, with a 0.003 decrease and a - 0.04% change rate; SHIBOR 7 - day is 1.43, with a 0.01 increase and a 0.56% growth rate; DR007 is 1.44, with a 0.01 increase and a 0.70% growth rate; R007 is 1.53, with a 0.02 increase and a 1.49% growth rate; The 3 - month yield of AAA - rated inter - bank certificates of deposit is 1.60, with a 0.01 increase and a 0.31% growth rate; The 1 - year AA - AAA credit spread is 0.09, with a 0.00 increase and a 0.31% growth rate [9]. 2. Overview of Treasury Bonds and Treasury Bond Futures Market - On October 21, 2025, the closing prices of TS, TF, T, and TL were 102.37 yuan, 105.72 yuan, 108.15 yuan, and 115.59 yuan respectively, with daily changes of 0.04%, 0.05%, 0.05%, and 0.16% [2]. - The average net basis of TS, TF, T, and TL is - 0.018 yuan, - 0.005 yuan, - 0.034 yuan, and - 0.240 yuan respectively [2]. 3. Overview of the Money Market Funding Situation - Fiscal data shows "moderate revenue recovery and strong expenditure expansion." In the first three quarters, general public budget revenue increased slightly by 0.5% year - on - year, relying on the recovery of individual income tax, value - added tax, and stamp duty, but its sustainability remains to be seen. Expenditure continued to increase, with high growth rates in social security, education, and debt interest payments, providing stable support for aggregate demand. Government - managed fund budget revenue is still weak, and the decline in land sales has narrowed but the recovery is limited, while fund expenditure increased by 23.9% year - on - year, indicating that the fiscal side is hedging against economic downward pressure by accelerating the expenditure pace [2]. - On October 21, 2025, the central bank conducted 159.5 billion yuan of 7 - day reverse repurchase operations at a fixed interest rate of 1.4% through quantity tendering [2]. - The main - term repo rates of 1D, 7D, 14D, and 1M are 1.317%, 1.426%, 1.504%, and 1.557% respectively, and the repo rates have recently rebounded [2]. 4. Spread Overview - The report presents various spread data through multiple figures, including the inter - period spread trends of Treasury bond futures varieties, the term spread of spot bonds, and the cross - variety spread of futures [27][31][32]. 5. Two - Year Treasury Bond Futures - The report shows the implied interest rate of the two - year Treasury bond futures main contract and the Treasury bond yield to maturity, the IRR of the TS main contract and the funding rate, and the three - year basis and net basis trends of the TS main contract through figures [34][37][45]. 6. Five - Year Treasury Bond Futures - The report shows the implied interest rate of the five - year Treasury bond futures main contract and the Treasury bond yield to maturity, the IRR of the TF main contract and the funding rate, and the three - year basis and net basis trends of the TF main contract through figures [47][51]. 7. Ten - Year Treasury Bond Futures - The report shows the implied yield of the ten - year Treasury bond futures main contract and the Treasury bond yield to maturity, the IRR of the T main contract and the funding rate, and the three - year basis and net basis trends of the T main contract through figures [54][55]. 8. Thirty - Year Treasury Bond Futures - The report shows the implied yield of the thirty - year Treasury bond futures main contract and the Treasury bond yield to maturity, the IRR of the TL main contract and the funding rate, and the three - year basis and net basis trends of the TL main contract through figures [61][63][67].

Core Viewpoint - The People's Bank of China (PBOC) is maintaining a supportive monetary policy stance by continuously injecting liquidity into the banking system, as evidenced by the recent MLF operations and reverse repos, aimed at stabilizing market expectations and supporting government bond issuance [1][2][3]. Group 1: MLF Operations - On September 25, the PBOC announced a 600 billion yuan Medium-term Lending Facility (MLF) operation, marking the seventh consecutive month of increased MLF issuance [1]. - In September, the PBOC conducted two reverse repo operations, resulting in a total net liquidity injection of 300 billion yuan, maintaining the same scale as August [2]. - The MLF operations have shifted to a multi-price bidding mechanism, allowing financial institutions to better manage their liquidity needs and enabling the PBOC to monitor liquidity conditions more effectively [3]. Group 2: Monetary Policy Coordination - The PBOC's actions are seen as a coordinated effort with fiscal policy, particularly during a peak period for government bond issuance, to ensure smooth market operations [2]. - Analysts expect that the PBOC will continue to utilize various monetary policy tools, including MLF and reverse repos, to inject liquidity into the market, with potential for further quantitative easing in the fourth quarter [3]. - There is an increasing market demand for the PBOC to resume government bond trading operations, which could provide more flexible and effective monetary easing compared to monthly reverse repo operations [3].

Core Insights - The article discusses the current state of the Federal Reserve's interest rate decisions, highlighting the divide between dovish and hawkish perspectives on economic indicators and their implications for monetary policy [1][2][3]. Employment Data - The addition of 22,000 jobs is viewed by dovish analysts as a sign of impending recession, while hawkish analysts interpret it as a cooling labor market. The three-month average unemployment rate has risen by 0.5%, indicating a 62% probability of recession [2]. Inflation Metrics - The Consumer Price Index (CPI) stands at 2.6%, while core services inflation is at 5.1%. Dovish analysts focus on the six-month annualized rate returning to 2.2%, whereas hawkish analysts warn of persistent core service inflation. Quantitative models suggest that two rate cuts could lead to a rebound in core inflation to 3.3% by Q1 2026 [3]. Fiscal Concerns - The U.S. national debt has reached $34 trillion, with interest payments exceeding $1.2 trillion annually. This situation poses a dilemma for policymakers: not cutting rates could lead to escalating interest costs, while cutting rates risks triggering a second wave of inflation [4]. Dot Plot Insights - The dot plot indicates a median forecast of 75 basis points in rate cuts for the year, with the most hawkish member suggesting only 25 basis points and the most dovish suggesting 125 basis points. Each 25 basis point change is estimated to affect global equity and bond markets by approximately $500 billion [4]. Wealth Transfer Dynamics - The article suggests that the anticipated rate cuts are not merely about easing monetary policy but represent a pre-loaded transfer of wealth, impacting various market participants differently [5]. Emerging Markets Impact - A weaker dollar due to rate cuts could benefit countries like Argentina, Turkey, and Indonesia, which have borrowed nearly $500 billion in the past two years. However, countries with high current account deficits and low foreign reserves may face significant challenges [6]. Currency Valuation Concerns - The potential for a stronger euro and yen due to U.S. rate cuts raises concerns for European and Japanese exporters, as currency fluctuations could significantly impact profit margins [7][8]. Leverage in Financial Markets - The article notes that hedge funds have increased their leverage to an 18-month high, raising concerns about market stability. The U.S. stock market's valuation relative to GDP has reached 210%, indicating potential risks if inflation rebounds and interest rate expectations shift [9]. Unconventional Developments - The article highlights three significant trends: 1. Saudi Arabia's decision to allow transactions in yuan for oil sales, which could undermine the dollar's dominance [9]. 2. Central banks in Poland, Czech Republic, and Turkey have collectively increased gold reserves by 127 tons, indicating a shift towards gold as a hedge against inflation [10]. 3. Major tech companies are projected to spend $320 billion in capital expenditures, with a significant portion financed through debt, making them vulnerable to interest rate fluctuations [10]. Recommendations for Individuals - The article provides financial strategies for individuals, including diversifying investments into dollar-denominated money market funds, domestic short-term bonds, and gold ETFs to hedge against potential economic instability [10].

Market Overview - Investors are almost certain that the Federal Reserve will cut interest rates this week, with strong performance in tech stocks leading the S&P 500 to surpass 6600 points and the Nasdaq achieving a record closing high for six consecutive days [2] - Tesla shares rose over 7% during the day, recovering losses from the year, while Google saw a nearly 4.5% increase, reaching a market capitalization of $3 trillion [2] - The Nasdaq Golden Dragon China Index rose by 0.87%, approaching its January 2022 high, amid a consensus framework reached between China and the U.S. regarding TikTok [2][8] - U.S. Treasury yields fell, with the 10-year yield down by 3.45 basis points, and the dollar index dropped by 0.35%, falling below the 97 support level [2] Key News - China and the U.S. reached a basic framework consensus to properly resolve the TikTok issue, emphasizing cooperation and reducing investment barriers [3][8] - China's economic data for August showed signs of "industrial slowdown, weak investment, and subdued consumption," leading to expectations for a new round of policy easing [9] - The U.S. reduced import tariffs on Japanese automobiles to 15% effective from September 16 [10] - Trump proposed changing the requirement for companies to report earnings quarterly to semi-annually, which could increase market volatility and uncertainty [12] - The Chinese government is taking further antitrust actions against Nvidia for violating conditions related to its acquisition of Mellanox [13] Company Developments - Musk invested $1 billion to increase his stake in Tesla, which saw a 7.5% intraday rise, erasing its year-to-date losses [13] - Alphabet, Google's parent company, saw its stock rise by 4.8%, pushing its market cap above $3 trillion [14] - Apple’s new iPhone 17 series is seeing strong demand, particularly for the Pro Max model, while Xiaomi is positioning its new 17 series to directly compete with Apple [15] - JPMorgan downgraded Pop Mart's rating to "neutral" due to its stock price having risen 209% this year, indicating that the valuation has reached perfect expectations [17] - Citigroup raised the target price for Shenghong Technology to 447 yuan, citing an accelerating AI-PCB supercycle and ongoing supply-demand tightness [17] Industry Insights - The Chinese government is promoting a unified national market, emphasizing the need for open and standardized market practices [16] - The automotive industry is adopting a "60-day payment term" initiative to enhance supply chain resilience and protect supplier rights [18] - The laser radar market is experiencing growth as costs decrease, with significant orders being placed by leading companies in the autonomous driving sector [26] - The medical device industry in Shanghai is set to expand significantly, with plans to increase the number of approved high-end medical devices by 2027 [25]

Economic Outlook - The US is at the tail end of an economic recovery cycle while entering a new AI technology phase, with capital expenditure in the AI sector stabilizing[3] - Short-term market impacts are expected to be limited, with focus remaining on economic cycles, tariffs, fiscal policies, and geopolitical situations in the second half of 2025[3] Tariff Analysis - As of May, US tariff revenue was $22.17 billion, annualizing to approximately $266 billion, significantly lower than Navarro's estimate of $600 billion[3] - The weighted average tariff rate is projected to rise to 16.1%, potentially generating $665.91 billion in annual tariff revenue based on 2024 import levels of $4.1 trillion[3] - Tariff impacts on inflation may begin to manifest in Q3, with historical data suggesting a high pass-through rate to consumers[3] Fiscal Stability - The overall fiscal impact from the "Big Beautiful Bill" is expected to be limited, with a projected increase in the federal deficit of approximately $2.8 trillion over the next decade, but most of this will not materialize in 2025[3] - The expected interest expenditure in May was $86 billion, indicating significant ongoing fiscal pressures[3] - The upcoming maturity of US debt is not substantial, reducing concerns over debt sustainability in the near term[3] Geopolitical Risks - Geopolitical tensions, particularly in the Middle East, could lead to significant inflationary pressures and complicate the Federal Reserve's monetary policy decisions[3] - Two scenarios are outlined: one where escalating tensions lead to higher oil prices and potential stagflation, and another where stabilization allows for possible interest rate cuts by the Fed[3] Investment Strategy - The report suggests focusing on volatility trading strategies using tools like VIX and SIV, and considering domestic companies benefiting from reduced foreign competition due to tariffs[3] - In a stagflation scenario, commodities like gold may perform well, while in a shallow recession scenario, small-cap growth stocks and long-term US Treasuries may be favored[3] Risk Factors - Global economic performance may underperform expectations, leading to pressure on US equities and other risk assets[3] - Inflation could prove stickier than anticipated, complicating the Fed's rate-cutting plans[3] - Escalation of geopolitical conflicts could trigger rapid market volatility and inflationary pressures[3]