Core Viewpoint - The expectation for a Federal Reserve interest rate cut in December has decreased significantly, leading to a decline in risk appetite across global markets, particularly affecting equities and high-valuation technology stocks [1][3][5]. Market Overview - The probability of a December rate cut has dropped to 44.36%, creating uncertainty in the market [2][3]. - Global risk assets, including U.S. stocks, gold, and commodities, have experienced increased volatility due to the cooling of rate cut expectations [3][5]. - If the Fed does not implement a rate cut in December, it may lead to short-term market shocks, particularly affecting high-valuation growth sectors [11][15]. Convertible Bond Market - The convertible bond market is showing resilience, with current valuations providing stronger support compared to previous periods of fluctuating rate cut expectations [11][14]. - The supply-demand dynamics for convertible bonds remain tight, with a projected market size reduction of over 150 billion yuan in the coming year, potentially leading to further valuation inflation [21][25]. - Recent trends indicate a net outflow from convertible bond ETFs, yet valuations remain high, with a premium rate of 32.64% as of November 14, 2025 [20][21]. Investment Strategy - The current market environment suggests that short-term adjustments in equities may present opportunities for convertible bond positioning [11][15]. - A balanced approach focusing on high-quality convertible bonds with low valuations and strong underlying equities is recommended [28][30]. - Attention should be given to sectors with improving fundamentals, such as energy storage and cyclical industries, as well as defensive sectors like consumer goods and pharmaceuticals [15][30]. Issuance and Redemption Trends - The issuance of convertible bonds remains limited, with only 12 companies currently in the approval stage for a total of 10.235 billion yuan [46]. - There has been a noticeable increase in the number of convertible bonds triggering early redemption, indicating a shift in market dynamics [36][40]. - The demand for convertible bonds is expected to rise as investors seek yield in a low-interest-rate environment, despite the current asset scarcity being more pronounced than in previous high-valuation periods [25][46].