Market Overview - Gold experienced significant volatility, with fluctuations around the $4100 mark, ultimately dipping below $4000 [1][12] - The market saw a rapid rise and fall, with a notable $70 range of movement, indicating high trading activity [1] Recent Influences - The Bank of Japan's aggressive monetary policy and unexpected stimulus measures led to a sharp decline in the yen and a strengthening dollar, contributing to gold's price drop [13] - The delayed release of the U.S. non-farm payroll data and rising unemployment rates created mixed signals in the market, further complicating gold's performance [13][15] Upcoming Indicators - The upcoming U.S. November PMI is anticipated to provide insights into the strength of the U.S. economy, which could impact stock and bond markets, as well as the dollar and gold prices [14] - The Federal Reserve's ongoing policy discussions and mixed signals regarding inflation and labor market conditions are expected to create further market uncertainty [14][16] Trading Strategy - Current trading strategies suggest monitoring key resistance levels at $4110 and $4064 for potential short positions, while looking for long opportunities around $1965 and $4000 [12] - Emphasis is placed on the importance of entry and exit points in trading, with a focus on maintaining low risk while maximizing profit potential [14]

Group 1: Report's Investment Rating - No investment rating information for the industry is provided in the report. Group 2: Core Views of the Report - After the Japanese bond yield broke below 2%, it remained in a long - term low - level oscillation. The weak economic reality restricted the upward movement of the yield, but there were still significant obstacles to further decline. The Japanese stock market, on the other hand, experienced a long - bull market due to factors such as positive macro - economic expectations, improved corporate micro - profitability, and the support from the Bank of Japan [1]. Group 3: Summary Based on the Directory 1. Japan's Stock and Bond Review and Insights ➢ Japanese Bonds: Long - term Oscillation after Breaking below 2% - **1990 - 2018 Phases**: From 1990 to 1998, the 10 - year Japanese bond yield was in a downward period, dropping from over 8% to 0.77%. From 1999 to 2008, it was in an oscillation period, fluctuating around a 1.5% central level. From 2008 to 2018, under continuous and substantial monetary policy easing, the yield steadily declined and remained in a low - level oscillation. Since 2018, as Japanese monetary policy gradually normalized, the bond's elasticity increased, and the yield moved from a long - term zero - interest state to positive interest [10]. - **1998 - 1999**: Fiscal adjustment and the Asian financial crisis led to a significant deterioration of the Japanese economy. The Bank of Japan cut interest rates, causing the 10 - year Japanese bond yield to break below 2% in October 1997 and reach a low of 0.77% in October 1998. Subsequently, due to the imbalance between the supply and demand of national bonds (the government's large - scale fiscal expansion increased bond issuance, while the main buyer, the Ministry of Finance's Fund Management Bureau, suspended bond purchases), the yield quickly rebounded to 2.43% [13][14][19]. - **2002 - 2003**: The Japanese government adopted fiscal austerity while the central bank implemented loose monetary policies. The 10 - year Japanese bond yield started a new downward trend in February 2002 and reached a low of 0.43% in June 2003. After 2002, the global economic recovery improved Japan's economic outlook, and the yield rebounded. The sell - off by commercial banks using the VAR model accelerated the bond market's adjustment, with the yield rising by nearly 120BP from June to September 2003 [20][22][23]. ➢ Japanese Stocks: Long - Bull Trend after 2013 - After hitting a historical high in 1989, the Japanese stock market entered a long - term correction. In 2013, it started a new long - bull market, reaching a new high in February 2024. As of the end of October 2025, the Nikkei 225 index was at 52,411.34 points, a cumulative increase of 512.27% compared to the beginning of 2012 [28]. - Abenomics was an important catalyst for the rise of the Japanese stock market. In 2013, the Abe cabinet launched a 20.2 - trillion - yen economic stimulus package, the Bank of Japan introduced the QQE policy, and the government launched the "Japan Revitalization Strategy". Multiple factors such as positive macro - economic expectations, the development of high - tech industries, and the support from the central bank led to a double - whammy of improved corporate profitability and valuation, driving the long - bull market [31][32].

Group 1 - The article presents an "all-weather" asset allocation framework consisting of Strategic Asset Allocation (SAA), Tactical Asset Allocation (TAA), and Major Event Review Adjustments to guide investment decisions [1][8] - The framework aims to diversify macro risks through SAA, set long-term allocation benchmarks for portfolio stability, and use TAA to identify short-term risk-return characteristics for asset adjustments [1][8] - The recommendation for November includes an overweight position in Chinese A/H shares and industrial commodities, with equity allocation at 45%, bonds at 45%, and commodities at 10% [1][2] Group 2 - The outlook for Chinese equities is optimistic, suggesting a 45% allocation with overweight positions in A-shares (8.5%) and Hong Kong stocks (8.5%), while maintaining standard allocations for US (15%), European (5%), and Japanese stocks (5%) [2] - The improvement in Sino-US relations and stable domestic financial conditions are seen as favorable for Chinese assets, with a strong demand for quality assets amid ongoing market reforms [2][12] - The bond allocation is suggested to be neutral at 45%, with standard positions in long-term and short-term government bonds for both China and the US [3] Group 3 - The commodity allocation is viewed as neutral to slightly optimistic, recommending a 10% allocation with standard positions in gold (5%) and industrial commodities (3.75%), while underweighting oil (1.25%) [3] - Industrial metals, particularly copper, are expected to experience price increases due to supply-demand imbalances driven by construction, electric grid modernization, and electric vehicle demand [3][14] Group 4 - The macroeconomic analysis emphasizes the importance of tracking macroeconomic expectations and their impact on asset pricing, highlighting that deviations from expectations can lead to significant asset price fluctuations [10][15] - The article discusses the significance of macroeconomic cycles in guiding long-term investment strategies, with a focus on the cyclical nature of economic indicators [19][15]

Core Viewpoint - Guotai Junan has established an "all-weather" asset allocation framework consisting of Strategic Asset Allocation (SAA), Tactical Asset Allocation (TAA), and Major Event Review Adjustments to guide investment decisions [1][2] Asset Allocation Framework - The framework aims to diversify macro risks through SAA, setting a long-term allocation benchmark for portfolio stability [2] - TAA employs quantitative methods to identify assets with superior short-term risk-return characteristics, allowing for moderate adjustments in portfolio weights to enhance returns [2] - Major events are subjectively reviewed to calibrate and supplement the quantitative results [2] Equity Market Outlook - The firm holds an optimistic view on Chinese equities, recommending a 45% allocation in November, with overweight positions in A-shares (8.50%) and Hong Kong stocks (8.50%), while maintaining benchmark positions in US (15.00%), European (5.00%), and Japanese stocks (5.00%), and underweight in Indian stocks (3.00%) [3] - The improvement in China-US bilateral relations is seen as beneficial for Chinese assets, supported by stable domestic financial conditions and a favorable fiscal and monetary environment [3] - The demand for quality assets in China continues to surge, driven by a solid development logic [3] Bond Market Outlook - The firm maintains a neutral stance on bonds, suggesting a 45% allocation in October, with benchmark positions in long-term (10.00%) and short-term (12.50%) government bonds, as well as US Treasury bonds [4] - The bond market is supported by an imbalance in credit supply and demand, along with stable liquidity, which enhances the cost-effectiveness of bond allocations [4] - Geopolitical uncertainties and rising risk aversion are expected to lead to wide fluctuations in domestic interest rates [4] Commodity Market Outlook - The firm holds a neutral to slightly optimistic view on commodities, recommending a 10% allocation in October, with benchmark positions in gold (5.00%), underweight in oil (1.25%), and overweight in industrial commodities (3.75%) [4] - Industrial metals, particularly copper, are anticipated to experience performance opportunities due to supply-demand imbalances driven by construction, power grids, and electric vehicles [4] - The rising complexity and cost of copper development may reduce investment willingness, potentially pushing copper prices higher [4]

Core Viewpoint - The election of Fumio Kishida as Japan's Prime Minister has led to the emergence of "Kishida Economics," which continues the principles of "Abenomics" with a focus on expansive fiscal and monetary policies [2][3]. Group 1: Election and Policy Framework - Fumio Kishida was elected as Japan's 104th Prime Minister on October 21, 2023, after a tumultuous path that included the withdrawal of the Komeito party from the ruling coalition and subsequent support from the Japan Innovation Party [2]. - Kishida's economic policy, termed "Kishida Economics," emphasizes a continuation and development of "Abenomics," advocating for a combination of loose monetary policy and expansionary fiscal measures [2][3]. Group 2: Economic Challenges - Kishida's administration faces significant challenges, including Japan's high government debt-to-GDP ratio, which is the highest among developed countries, potentially complicating fiscal expansion efforts [3]. - The current inflationary environment is markedly different from the low inflation experienced during the Abenomics era, raising concerns that large-scale stimulus could exacerbate inflation [3]. Group 3: Central Bank Independence - Kishida's approach raises questions about the independence of the Bank of Japan (BOJ), as he has previously advocated for greater government intervention in monetary policy [4][5]. - Despite Kishida's recent comments supporting the BOJ's autonomy, the future path of monetary policy remains uncertain, with market expectations for interest rate hikes being postponed [5]. Group 4: Market Reactions - Following Kishida's election, the market experienced a "Kishida Trade," characterized by rising Japanese stocks and a weakening yen, with the yen falling below the 153 mark against the dollar for the first time since October 10 [1][6]. - Analysts caution that the current market environment differs significantly from the Abenomics period, suggesting that the "Kishida Trade" may not be sustainable in the long term [6][7].

Core Viewpoint - Cathay Securities believes that rising geopolitical uncertainties may temporarily increase volatility in global equity markets, presenting opportunities for Chinese equity assets and gold. The recommendation for October is to increase holdings in A-shares, overweight gold, and maintain a standard allocation in bonds [1][2]. Asset Allocation Framework - The asset allocation framework consists of Strategic Asset Allocation (SAA), Tactical Asset Allocation (TAA), and Major Event Review Adjustments. SAA aims to diversify macro risks and set long-term allocation benchmarks, while TAA identifies short-term risk-return characteristics to adjust portfolio weights for improved returns. Major events are subjectively reviewed to correct and supplement quantitative results [2][3]. Equity Market Outlook - The recommendation for equity allocation in October is 41.25%, with overweight positions in A-shares (8.75%) and Hong Kong stocks (8.75%), standard allocation in U.S. stocks (15.00%), underweight in European stocks (2.75%), standard allocation in Japanese stocks (3.25%), and underweight in Indian stocks (2.75%). The outlook for Chinese A/H shares remains positive, with market adjustments viewed as buying opportunities [3][4]. Bond Market Outlook - The recommendation for bond allocation in October is 45%, with standard allocations in long-term government bonds (10.00%), short-term government bonds (12.50%), long-term U.S. Treasuries (10.00%), and short-term U.S. Treasuries (12.50%). The bond market is supported by imbalanced credit supply and demand, along with stable liquidity. The ongoing themes of "central bank bond purchases" and adjustments in redemption fees for bond funds will continue to play a role [4]. Commodity Market Outlook - The recommendation for commodity allocation in October is 13.75%, with an overweight position in gold (10%), underweight in oil (1.25%), and standard allocation in industrial commodities (2.5%). The gold market remains strong, having surpassed key resistance levels, supported by factors such as Federal Reserve rate cuts, geopolitical tensions, and continued purchases by the Chinese central bank [4].

Group 1 - The report suggests an increase in allocation to Chinese equity assets and gold, while maintaining a standard allocation to bonds due to rising geopolitical uncertainties and potential market volatility [1][5]. - The recommended equity allocation weight is 41.25%, with specific allocations to A-shares (8.75%), Hong Kong stocks (8.75%), US stocks (15.00%), European stocks (2.75%), Japanese stocks (3.25%), and Indian stocks (2.75%) [5][9]. - The report expresses optimism regarding the performance of Chinese A/H shares, viewing current market adjustments as buying opportunities [5][9]. Group 2 - The bond allocation is suggested to be 45%, with standard allocations to long-term and short-term government bonds in both domestic and US markets [5][9]. - The report indicates a neutral to slightly optimistic view on commodities, recommending a 13.75% allocation, with a focus on gold (10%) and a lower allocation to oil (1.25%) [5][9]. - Gold prices are expected to remain strong, having recently surpassed key resistance levels, supported by factors such as Federal Reserve rate cuts and ongoing geopolitical tensions [5][9].

Core Viewpoint - The company has developed a "three-part" asset allocation framework consisting of Strategic Asset Allocation (SAA), Tactical Asset Allocation (TAA), and Major Event Review Adjustments to guide investment decisions. This framework aims to diversify macro risks, set long-term allocation benchmarks, and adjust based on short-term risk-return characteristics and significant events [1][10]. Group 1: Strategic Asset Allocation (SAA) - The SAA framework aims to mitigate macro risks by establishing a long-term allocation benchmark to ensure portfolio stability [1][10]. - The recommended asset allocation for October includes 41.25% in equities, 45% in bonds, and 13.75% in commodities, with specific allocations for A-shares, H-shares, and gold [1][2]. Group 2: Tactical Asset Allocation (TAA) - The TAA approach utilizes quantitative methods to identify assets with superior short-term risk-return characteristics, allowing for moderate adjustments to portfolio weights to enhance returns [1][10]. - The company remains optimistic about Chinese equities, suggesting an overweight position in A-shares and H-shares, while maintaining a neutral stance on bonds and a slightly optimistic view on commodities, particularly gold [2][3]. Group 3: Major Events Review - The company emphasizes the importance of subjective review of major events in conjunction with quantitative results to refine investment strategies, particularly in response to geopolitical uncertainties and market volatility [1][52]. - Recent events, such as the Chinese government's financial reforms and the U.S. Federal Reserve's interest rate adjustments, are expected to influence market dynamics positively, particularly for A-shares and gold [54]. Group 4: Performance Metrics - The performance of various asset classes has shown significant fluctuations, with notable increases in the Shanghai Composite Index and other Chinese indices over the past year, indicating a robust recovery in the equity market [6]. - The macro factor risk parity model has demonstrated effectiveness in enhancing returns while maintaining a balanced asset allocation, achieving an annualized return of 26.5% in 2025 with a Sharpe ratio of 2.59 [48][50].

Core Viewpoint - The election of Kishi Sanae as the new president of the Liberal Democratic Party (LDP) in Japan has raised expectations for fiscal expansion policies, leading to a surge in the Japanese stock index and a rapid depreciation of the yen to early-year levels. However, recent developments have cast uncertainty on her prospects of becoming the next Prime Minister of Japan [1]. Group 1: Political Developments - The Komeito party leader, Saito Tetsuo, announced the end of the 26-year coalition with the LDP due to dissatisfaction with Kishi Sanae's handling of a political scandal, complicating her chances of becoming Japan's first female Prime Minister [2]. - The dissolution of the "LDP-Komeito alliance" means that Kishi Sanae's path to premiership is now more uncertain, as the LDP holds 196 seats and Komeito 24 in the 465-seat House of Representatives, which is still short of a majority [2]. - The election process for the Prime Minister involves a two-round voting system, where if no candidate receives a majority in the first round, a runoff will occur between the top two candidates [2]. Group 2: Opposition Response - The main opposition party, the Constitutional Democratic Party (CDP), views this as a significant opportunity to unseat the LDP, with its leader, Noda Yoshihiko, expressing willingness to support other party leaders [3][4]. - Noda emphasized the need for cooperation among opposition parties to prevent Kishi Sanae from ascending to the premiership, despite the CDP holding 148 seats [4]. - Tamaki Yuichiro, leader of the Democratic Party for the People, expressed caution regarding the formation of a united opposition front, acknowledging the lack of consensus on various policy issues [4]. Group 3: Market Implications - The political turmoil has created a "dilemma" for the Japanese markets, with expectations of monetary easing leading to a significant depreciation of the yen, which may prompt government intervention if the yen weakens further [5]. - The Japanese bond market is under pressure, with long-term bond yields rising, and concerns may escalate if Kishi Sanae compromises fiscal discipline to gain support from opposition parties [5]. - Moody's Analytics highlighted that Kishi Sanae's past controversial statements and economic proposals raise concerns about her ability to address Japan's deep-rooted macroeconomic challenges effectively [5].

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The further decline of US Treasury yields before September may be primarily driven by weaker economic data leading to higher expectations of interest rate cuts, or by the "see - saw effect" triggered by the weakness of other assets. The 10 - year yield is expected to fluctuate at a low level in the range of 4.00 - 4.30%, but inflation and the "Big and Beautiful" Act may impede the decline of long - term yields [4][14]. - In the two - week period from July 18 to August 1, 2025, affected by the US July non - farm payroll report, global investors' risk - aversion increased, resulting in a double - kill situation in the US stock and bond markets. Different asset classes showed various trends, including significant declines in US and UK government bond yields, a new high in the Japanese stock market, a slump in the US stock market, an upward trend in the coking coal index, a decline in Chicago agricultural product futures prices, and a depreciation of the ruble and the euro [5][15]. Summary According to the Directory 1. What Conditions are Needed for the Further Decline of US Treasury Yields? - **Monetary Policy**: At the July FOMC meeting, the interest rate and other monetary policies remained at the June level, in line with market expectations. Waller and Bowman voted against interest rate cuts, citing signs of weakness in the labor market, and Kugler, who was set to leave early, did not attend or vote. Kugler's early departure may increase Trump's influence on the Fed and lead to more divided views within the Fed [1][10]. - **Growth**: Q2 GDP showed a quarter - on - quarter increase of 3.0%, but the main drivers were a decline in imports and accelerated consumer spending. Private consumption and investment weakened, with PDFP growing by 1.2% quarter - on - quarter, lower than the 1.9% in Q1 [2][10]. - **Inflation**: In June, inflationary pressures emerged, with CPI at 2.7%, core CPI at 2.9%, PCE at 2.6%, and core PCE at 2.8%, all reaching the highest levels since March [2][10]. - **Employment**: In July, the ADP employment figure rebounded unexpectedly, but the non - farm payroll data was disappointing, with significant downward revisions to previous months' data. The unemployment rate rose from 4.1% to 4.2%, which greatly disrupted the interest rate market expectations, causing the 1 - year yield to decline by about 17bp on August 1 [2][11]. - **Policy Stance**: Some Fed presidents still recognize the resilience of the economy and employment and maintain a restrictive monetary policy stance, denying the risk of recession and affirming the risk of stagflation [3][12]. 2. Bi - weekly Overseas Macro - analysis - **Interest Rates**: In the past two weeks, US Treasury yields declined significantly, with the 1 - year and 10 - year yields both dropping 21bp to 3.87% and 4.23% respectively. Affected by US Treasuries, UK government bond yields also declined on August 1, increasing investors' risk - aversion [5][16]. - **Equities**: The Japanese stock market reached a new high, with the Nikkei 225 index rising 2.46% in the past two weeks, driven by the US - Japan trade agreement on July 23. However, trading volume was low in July. The US stock market slumped after the release of the July non - farm payroll report, with the Nasdaq index dropping 2.29% on the night of the report release [17]. - **Commodities**: The coking coal index rose 12.07% in the past two weeks after the central government emphasized governance of low - price and disorderly competition in the coal industry. Chicago agricultural product futures prices fell across the board, pressured by high expectations of a bumper US autumn harvest [18]. - **Foreign Exchange**: The ruble depreciated by 3.44% in the past two weeks after the Russian central bank cut interest rates by 200 basis points on July 25. The euro fell 1.24% due to the impact of the US - EU trade agreement and a decline in investor confidence [19]. 3. Market Tracking - The report presents multiple charts, including the bi - weekly fluctuations of global major economies' government bond yields, global major stock indices, major commodities, and global major foreign exchange rates (against the RMB), as well as the latest economic data panels of the US, Japan, and the Eurozone, and the yield curves and inflation trends of US, Japanese, and German government bonds [24][28][30][32][35][41][45].