**Equity Market**: Yesterday, the A-share market experienced a volatile decline, with the TMT sector continuing to rise while real estate-related sectors retreated. The Wind All-A Index fell by 0.55%, with trading volume reaching CNY 1.92 trillion. The CSI 1000 Index dropped 0.57%, the CSI 500 Index declined 0.71%, the CSI 300 Index dipped 0.51%, and the SSE 50 Index slid 0.71%. The recent Politburo meeting outlined economic priorities for 2026, with the Central Economic Work Conference expected to convene soon. Boosting domestic demand remains a key focus for 2026. This week, the Federal Reserve’s policy meeting and potential Bank of Japan rate hikes are also in focus. Frequent policy shifts may temporarily enhance market liquidity and volatility. AI-driven productivity remains a core driver for equities, though cautious sentiment persists due to high valuations and incomplete profit models in tech sectors. Meanwhile, traditional sectors like consumption and cyclical industries remain in a slow recovery phase, lacking strong momentum for a near-term bull run. Market divergence may narrow as the Fed’s 2026 rate-cut path becomes clearer, but risk appetite stays subdued for now.
**Treasury Bonds**: Treasury futures closed higher yesterday, with the 30-year contract up 0.45%, the 10-year up 0.12%, the 5-year up 0.07%, and the 2-year up 0.02%. The PBOC conducted a CNY 117.3 billion 7-day reverse repo at 1.4%, matching the previous rate. With CNY 156.3 billion in maturing repos, a net withdrawal of CNY 39 billion was recorded. Interbank rates showed mixed movements: DR001 eased 0.35 bps to 1.30%, while DR007 rose 0.53 bps to 1.45%. Despite liquidity easing via MLF and reverse repos, weak rate-cut expectations have led to a "sell-the-news" trend, pushing yields slightly higher and steepening the curve. For the remainder of the year, bonds are expected to trade narrowly amid stable liquidity, resilient but softening growth, and mild inflation.
**Precious Metals**: Gold edged up overnight, while silver, platinum, and palladium surged—silver jumped 4.37% to USD 60.647/oz, narrowing the gold-silver ratio to 69.2. The platinum-palladium spread hovered around USD 184/oz. U.S. job openings in October rose slightly to 7.67 million, beating forecasts, while ADP data showed private payrolls adding 4,750 jobs weekly, ending a four-week decline. Fed policy expectations remain in focus, with potential rate cuts contingent on inflation trends. Geopolitical tensions, including Ukraine’s negotiations with the U.S. and EU, added to market uncertainty. Silver’s sharp rally suggests speculative positioning ahead of the Fed meeting, warranting caution amid potential volatility.
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