Core Viewpoint - The recent escalation of trade tensions between the US and China has led to the re-emergence of the "Taco trade" strategy, characterized by Trump's pattern of pressuring China with tariffs followed by signals of easing tensions, creating potential investment opportunities [1][4][11] Group 1: Trade Tensions and Market Reactions - The current trade friction is perceived to have a lesser impact compared to April, with the market expected to show greater resilience [2][3] - Trump's announcement of a 100% tariff effective after the APEC summit on November 1 indicates that the summit will be a critical point for negotiations [2][3] - Historical patterns suggest that the time between Trump's threats and subsequent retreats is short, indicating limited windows for market declines [2][3] Group 2: Taco Trade Logic - The "Taco trade" logic remains valid despite increasing tensions, with the potential for negotiations at the upcoming APEC summit [4][6][11] - The market has gained experience and adaptability since the trade war began in 2018, leading to reduced volatility compared to previous instances [3][6] - The current market environment, characterized by "loose monetary and fiscal" policies, differs from April, with investors having more experience in handling such situations [6][7] Group 3: Investment Opportunities - The "Taco trade" has historically provided good buying opportunities following market declines triggered by tariff threats [6][8] - The technology sector, particularly in AI and semiconductor industries, is recommended for investment, especially if short-term market corrections occur [6][7] - The Hong Kong stock market is expected to face short-term pressure but may present buying opportunities due to its limited exposure to US exports [7][8] Group 4: Future Outlook - The upcoming APEC summit is seen as a potential venue for US-China negotiations, with expectations that the intensity and duration of the current trade conflict will be limited [5][9] - The market's response to trade tensions is becoming more rational, with diminishing marginal effects from tariff impacts as both sides continue to engage in economic cooperation [11]

Report Industry Investment Rating - The rating for stock index futures is "relatively strong", and for treasury bond futures is "volatile" [1] Core Viewpoints - The A-share market was volatile and differentiated yesterday, with the technology sector falling again. The Wind All A index dropped 0.44%, and the trading volume was 1.95 trillion yuan. The CSI 1000 index declined 1.09%, the CSI 500 index fell 0.86%, while the SSE 50 index rose 0.59% and the SSE 300 index increased 0.26%. The resurgence of Sino-US trade disputes may impact the index in the short term, but there are still many uncertainties. Before the important meeting on October 20, the index may be in an adjustment phase. Some domestic securities firms have adjusted the margin conversion ratio of some stocks from 60% to 0, which may affect the valuation of technology stocks if leveraged funds leave in the short term. However, the long-term upward momentum of the index mainly comes from internal policy expectations, which remain unchanged. The short-term decline in IV may be a buying opportunity, and small positions can be used to layout out-of-the-money call options for November. Domestically, the Politburo meeting in September announced that the Fourth Plenary Session of the 20th Central Committee will be held in Beijing on October 20, and the market has high expectations for the meeting content [1] - Treasury bond futures closed with the 30-year main contract up 0.42%, the 10-year main contract up 0.06%, the 5-year main contract down 0.01%, and the 2-year main contract down 0.01%. The central bank conducted 236 billion yuan of 7-day reverse repurchase operations with a stable interest rate of 1.4%. There were 612 billion yuan of reverse repurchases maturing in the open market, resulting in a net withdrawal of 376 billion yuan. In the inter-bank market, the weighted average rate of DR001 rose 0.01bp to 1.3139%, and DR007 rose 0.55bp to 1.4225%. In the exchange repurchase market, the weighted average rate of GC001 fell 13.98bp to 1.3906%, and GC007 fell 1.29bp to 1.4754%. With the central bank's support, the liquidity situation has marginally eased. The escalation of the Sino-US tariff war has increased risk aversion, and treasury bonds are expected to perform strongly next week. However, the central bank did not restart treasury bond trading in September, and the expectation of monetary policy interest rate cuts has cooled, along with the increase in quasi-fiscal tools, so treasury bonds lack the impetus for significant upward movement [1][2] Summary by Directory 1. Research Views - **Stock Index Futures**: The A-share market showed a mixed performance, with the technology sector weakening. Sino-US trade disputes and the adjustment of margin conversion ratios may impact the market in the short term, but long-term policy expectations remain positive. Small positions can be used to buy out-of-the-money call options for November [1] - **Treasury Bond Futures**: Treasury bond futures had different performances, and the central bank's operations led to a marginal easing of liquidity. The escalation of the tariff war increased risk aversion, but treasury bonds lack the momentum for significant upward movement [1][2] 2. Daily Price Changes - **Stock Index Futures**: IH rose 0.72%, IF increased 0.30%, IC dropped 1.10%, and IM declined 0.96% [3] - **Stock Indexes**: The SSE 50 index rose 0.59%, the SSE 300 index increased 0.26%, the CSI 500 index fell 0.86%, and the CSI 1000 index declined 1.09% [3] - **Treasury Bond Futures**: TS fell 0.02%, TF dropped 0.02%, T rose 0.03%, and TL increased 0.33% [3] - **Treasury Bond Yields**: The yields of 2-year, 5-year, and 10-year treasury bonds increased slightly, while the 30-year treasury bond yield decreased [3] 3. Market News - A Federal Reserve governor suggested a 50-basis-point interest rate cut, but the actual cut is expected to be 25 basis points. Tariffs may cause inflation, but it has not shown up yet. The expected economic growth rate in 2025 is about 2% [4][5][6] 4. Chart Analysis - **Stock Index Futures**: The report presents the trends and basis trends of IH, IF, IC, and IM main contracts [7][8][9][11] - **Treasury Bond Futures**: It shows the trends of treasury bond futures main contracts, treasury bond yields, basis, inter-period spreads, cross-variety spreads, and capital interest rates [14][15][18][20] - **Exchange Rates**: The report includes the middle rates of the US dollar and euro against the RMB, as well as forward exchange rates and currency exchange rates [22][23][24][26][28][29]

Summary of Key Points from the Conference Call Industry or Company Involved - The discussion primarily revolves around the **U.S. economy** and **U.S. Treasury market** analysis, with a focus on macroeconomic indicators and fiscal policies. Core Insights and Arguments 1. **Macroeconomic Shifts**: The global macro trading narrative in 2025 has shifted multiple times, influenced by factors such as Trump's policies and trade disputes, with a need to monitor the potential reversal risks associated with "Taco trading" [1][5][6]. 2. **Impact of Trump's Policies**: The passage of the "Big Beautiful Plan" has enhanced Trump's negotiation flexibility, particularly as the August 1 tariff deadline approaches, which could influence market dynamics [1][8]. 3. **Consumer Spending as Economic Indicator**: Personal consumption accounts for over 60% of U.S. GDP, making it a critical focus for assessing economic trends through retail sales and consumer confidence indices [1][12][16]. 4. **Real Estate Market Challenges**: The U.S. real estate market is currently facing high interest rates and reduced housing demand, with new and existing home sales being key indicators to monitor [1][24][25]. 5. **Federal Reserve's Role**: The Federal Reserve's monetary policy is primarily driven by inflation and employment factors, with potential interest rate cuts expected in response to labor market weaknesses [3][9][44]. 6. **Treasury Market Dynamics**: The U.S. Treasury market serves as a global asset pricing anchor, with significant portions held by international investors, impacting global interest rates and capital flows [10][11][38]. 7. **Trade Policy Implications**: Trump's trade policies are a significant variable in macro trading for 2025, with the U.S. experiencing trade deficits while maintaining a surplus in services [26]. 8. **Labor Market Resilience**: The labor market shows signs of resilience, with non-farm employment data and unemployment rates being crucial metrics for understanding economic health [27][28]. Other Important but Potentially Overlooked Content 1. **Consumer Confidence and Retail Data**: Retail sales and consumer confidence indices are vital for gauging economic performance, with soft data sometimes conflicting with hard data [20][21]. 2. **Inflation Indicators**: Recent increases in core consumer prices suggest that tariff policies may be influencing inflation, which could affect future Federal Reserve decisions [33][34]. 3. **Market Reactions to Economic Data**: The relationship between stock and bond markets indicates that rising yields can negatively impact equity valuations, highlighting the interconnectedness of asset classes [14]. 4. **Federal Budget Concerns**: The U.S. fiscal budget process is complex, with recent spending levels raising concerns about fiscal sustainability, particularly with the "Big Beautiful Plan" increasing the deficit ceiling [36]. 5. **Investment Strategies in Treasury Market**: Current strategies suggest a focus on short-term Treasury securities due to anticipated interest rate cuts, while long-term securities face greater uncertainty due to inflation risks [47].

Core Viewpoint - The article discusses the sensitivity of Trump to the nickname "Taco," which symbolizes his tendency to back down from strong positions, particularly in trade negotiations [2][4][8]. Group 1: Trump's Reaction to the Nickname - Trump reacted angrily to the nickname "Taco," calling it a disgusting question during a press conference [2]. - The nickname "Taco" was derived from a phrase indicating that Trump often retreats from his strong statements, particularly regarding tariffs [6]. Group 2: The Taco Trading Strategy - The "Taco trading" strategy emerged from Trump's pattern of creating market panic with threats of tariffs, followed by a retreat that leads to market rebounds [6]. - This trading strategy involves buying low during Trump's panic-inducing announcements and selling high when he eases tensions [6]. Group 3: Trump's Negotiation Tactics - Trump's negotiation style resembles a game theory scenario, where he initially threatens high tariffs but lacks the resolve to follow through, leading to concessions [15][20]. - The article compares Trump's approach to a "prisoner's dilemma," where he fails to maintain a strong position, allowing China to counter his tactics effectively [17][20]. Group 4: Underlying Reasons for Trump's Behavior - Trump's frequent retreats in negotiations are attributed to his desire for too much without sufficient backing, leading to a lack of confidence [8][20]. - The article suggests that the U.S. market's dependency on Chinese goods contributes to Trump's inability to take a hardline stance [20].