**Equity Indices:** The A-share market continued its volatile trend yesterday, with the Wind All Share Index declining by 0.58% on a trading volume of 2.8 trillion yuan. The CSI 1000 Index fell by 1%, the CSI 500 Index dropped 0.48%, the CSI 300 Index decreased by 0.33%, and the SSE 50 Index edged down 0.17%. Recent intensive economic adjustment policies from various government bodies have provided fundamental support for the indices. The National Development and Reform Commission recently held a press conference, indicating: (1) Research into establishing a national-level mergers and acquisitions fund to strengthen government investment and fund layout planning; (2) Comprehensive rectification of "involution-style" competition to further standardize local economic promotion activities; (3) Planning and advancing a number of landmark, pioneering major high-tech industry projects for the "16th Five-Year Plan" period. Last week, the central bank cut the interest rates on various structural monetary policy tools by 25 basis points. These tools primarily provide targeted support for specific societal financing needs, encompassing recent stock market hotspots such as technological innovation, inclusive elderly care, and carbon reduction. This rate cut reflects the central bank's additional financial support for specific sectors while maintaining overall stability, which, in the current liquidity-driven bull market, helps guide capital into related sectors and boost their valuations. Long-term, it aids these sectors in reducing financing costs, increasing capital formation, and implementing more proactive development strategies. Previously, the Shanghai and Shenzhen stock exchanges issued notices raising the minimum margin ratio for securities purchased on margin from 80% to 100%. Although the practical impact remains to be seen, risk-averse sentiment has noticeably increased, pushing the market into a high-level consolidation pattern with amplified short-term volatility; caution is advised against chasing highs, and a wait-and-see approach is preferable. The current bull market is driven by breakthroughs and innovations in technology themes, compounded by strategic resource procurement amid geopolitical uncertainties, all converging against a backdrop of global liquidity ease to propel the equity market upward. Medium to long-term, the aforementioned influences are not yet over, and the risk of a significant index correction remains low.
**Government Bonds:** Treasury bond futures closed higher yesterday. The 30-year main contract rose by 0.52%, the 10-year main contract gained 0.13%, the 5-year main contract increased by 0.09%, and the 2-year main contract edged up 0.05%. On January 20th, the People's Bank of China conducted 324 billion yuan in 7-day reverse repos at a winning bid rate of 1.4%, unchanged from the previous operation. According to Qeubee statistics, 358.6 billion yuan in 7-day reverse repos matured in the open market, resulting in a net withdrawal of 34.6 billion yuan. From a liquidity perspective, DR001 rose by 5 basis points to 1.37%, while DR007 increased by 2 basis points to 1.49%. On January 15th, the central bank announced a series of policies. First, interest rate cuts: effective January 19, 2026, it lowered the relending and rediscount rates by 0.25 percentage points. Post-adjustment, the 3-month, 6-month, and 1-year relending rates for agriculture and small businesses are 0.95%, 1.15%, and 1.25% respectively; the rediscount rate is 1.5%; the Pledged Supplementary Lending rate is 1.75%; and the rate for special structural monetary policy tools is 1.25%. Second, tool optimization: the carbon reduction tool now includes direct emission reduction projects like energy-saving renovations, and the sci-tech innovation relending facility covers privately-owned SMEs with high R&D investment, expanding the beneficiary sectors. Third, quota expansion: the sci-tech innovation relending quota was increased to 1.2 trillion yuan (+400 billion), relending for agriculture and small businesses was raised by 500 billion yuan with a separate 1 trillion yuan quota for privately-owned SMEs, aiming to promote enterprise production expansion, technological upgrades, green transformation, and foster new quality productive forces. These targeted rate cuts are expected to stimulate financing demand in related areas, potentially boosting market risk appetite. While the overall economy maintains resilience and its high-quality transformation accelerates, positive changes in price levels have emerged. The central bank has again emphasized considering a reasonable recovery in prices as a key factor in monetary policy. Against the backdrop of steadily warming price data and strong expectations for ultra-long bond supply, the weaker trend in ultra-long-end bonds is likely to persist. Expectations for reasonably ample liquidity remain relatively firm, suggesting relative stability for short-term bonds.
**Precious Metals:** London spot gold oscillated higher overnight, setting another record high. Spot silver traded within a high range, while spot platinum and palladium showed a stronger bias. The gold-silver ratio rebounded to around 50.3, and the platinum-palladium price gap widened to approximately $600 per ounce. Last night, anticipation of a snap election in Japan, coupled with narratives of expansionary fiscal policy, triggered heavy selling of long-term Japanese government bonds, stirring market tension. Internationally, statements about Greenland and threats to impose tariffs on multiple European countries ahead of the Davos high-level meeting provoked pushback from major EU nations, leading to a scenario where US stocks, bonds, and currency all faced pressure. As mentioned previously, with the Fed potentially pausing rate cuts in January, geopolitical issues have become the short-term focus. Conflicts involving the US and Venezuela, the Greenland situation, and tensions with Iran have renewed global investor unease about frequent geopolitical clashes, making it difficult for gold's short-term appeal to wane amid safe-haven demand. For other precious metals, silver maintains a relatively strong trend supported by gold's strength, but the rapid decline of the gold-silver ratio to near 50 indicates heightened market enthusiasm alongside elevated risk; cautious observation is advised. Platinum and palladium are experiencing high volatility as gold attracts capital; however, the gold-platinum (palladium) ratio is becoming increasingly attractive given gold's high levels. Prices are expected to maintain high volatility in the short term, and stabilization after rapid declines may present better buy-and-hold opportunities for investors.
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