According to a research report from China Merchants Securities, September exports accelerated beyond seasonal norms and growth momentum broadened; PPI rose to 5.0% year-on-year, and higher oil prices could push October PPI further upward.
The report noted that the Federal Reserve should hold policy steady at this month's FOMC meeting, but a faster pace of rate hikes starting in December is highly likely. Before the 10-year and 2-year U.S. Treasury yield curve inverts, global liquidity remains in a contraction phase.
On the question of whether fundamentals or liquidity matter more, China Merchants Securities Co.,Ltd. (ASX: 600999) argued that unless strong growth momentum or reliable cost support serves as a safety cushion, liquidity tends to have a more direct impact on asset prices.
Capital IQ data still suggests that global capital expenditure may have peaked year-on-year in the third quarter. If confirmed, and with the Federal Reserve poised to accelerate rate hikes, U.S. equities also face significant correction risk in 2027.
Domestically, CMSC (ASX: 06099) believes government bond prices still have room to rise, while on the equity side it maintains a preference for traditional energy over consumer sectors and for dividend plays over other categories.
Key Domestic Observations
September's overall foreign trade performance showed exports accelerating beyond seasonal norms and growth momentum spreading further, though the divergence between order volumes and value growth has not been eliminated.
September PPI rose 5.0% year-on-year, 1.2 percentage points wider than August, and a higher oil price center could drive October PPI further upward.
As September was a quarter-end month, bank credit extension rose, and with some policy-based financial tools taking effect, credit showed signs of stabilizing at the margin.
Key Overseas Observations
First, U.S. AI risk is shifting from valuation to credit. On October 15, the five-year credit default swap spread of CoreWeave, an AI computing rental company backed by Nvidia, surged intraday to 1,195 basis points, a record high, implying a roughly 64% probability of default within five years.
In addition, Oracle's five-year CDS spread widened by 31 basis points to 288 basis points, SoftBank's widened by 24 basis points to 424 basis points, and data center project bonds leased by Meta, Microsoft, and Nvidia also fell into a pressured range.
Second, the Federal Reserve should hold steady at this month's FOMC meeting, but a faster pace of rate hikes beginning in December is highly likely. Before the 10-year and 2-year U.S. Treasury yield curve inverts, global liquidity remains in a contraction phase, and the sharp selloff in Indonesian markets on the 16th was a result of liquidity shocks.
Asset Perspective
Which matters more, fundamentals or liquidity? Unless strong growth momentum or reliable cost support provides a safety cushion, liquidity tends to affect asset prices more directly.
Capital IQ data still indicate that global capital expenditure may have peaked year-on-year in the third quarter. If that is confirmed, along with the Federal Reserve's future accelerated rate hikes, U.S. stocks also face considerable correction risk in 2027.
Turning back to the domestic market, China Merchants Securities Co.,Ltd. (ASX: 600999) believes government bond prices still have a basis to rise, while on the equity side it continues to favor traditional energy over consumer and dividend plays over others.
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