**Equity Indexes:** The futures market has been oscillating near the lower bound of its range since October, with limited divergence between large-cap and small-cap indices. Sector rotation remains frequent, while market sentiment stays relatively subdued. The recent Politburo meeting and Central Economic Work Conference reinforced policy support, likely boosting short-term market influence. Key takeaways include maintaining a 5% GDP growth target for next year, with policy focus on stabilizing domestic demand and accelerating new productive forces. The meetings emphasized combining investments in physical and human capital to bolster household income and consumption—a critical factor for inflation recovery. Fiscal and monetary policies are expected to remain accommodative, with potential slight increases in deficit and debt levels. Overseas, the Fed cut rates by 25bps as expected but signaled divergence in 2026 rate expectations, triggering volatility in U.S. tech stocks. The Bank of Japan’s potential rate hike next week may impact carry trades. Weekly data showed Wind All-A up 0.26%, CSI 1000 +0.39%, CSI 500 +1.01%, while SSE 50 dipped 0.25%. Tech and property sectors rebounded.
Futures basis discounts widened, with CSI 1000 futures at a 13–15% discount, reflecting strong year-end hedging demand. Option implied volatility (IV) dropped sharply, with near-month ATM IV for IO below 17%—a multi-year low. Strategically, futures traders may consider mean-reversion plays within the September–November range, while options investors could position for a potential "year-end rally" or "spring躁动" by buying longer-dated volatility (e.g., calendar spreads).
**Treasuries: Cautious Sentiment Post Key Meetings** The Central Economic Work Conference reiterated accommodative monetary policy, including RRR and rate cuts, lifting bond market sentiment. Liquidity stayed loose, with DR001 hitting record lows. By December 12, yields for 2Y/5Y/10Y/30Y bonds stood at 1.40%/1.63%/1.84%/2.25%, down 0.85bp/0.43bp/0.84bp/0.84bp weekly. Futures (TS/TF/T/TL) edged up 0.04%/0.06%/0.11%, except TL (-0.04%). The PBOC injected a net ¥47bn via reverse repos this week, with R001 and DR007 at 1.35%/1.47%. Next week, ¥668.5bn reverse repos mature, alongside a ¥400bn outright repo operation.
Outlook: Short-term policy support may stabilize bonds after recent corrections, but long-term震荡persists amid economic recovery and inflation rebound.
**Macro: Pro-Growth Policy Stance** The conference stressed counter-cyclical measures to anchor 2026 growth (~5%) while aligning with 2035 modernization goals. Structural reforms will address labor/capital efficiency slowdowns. Key directives include expanding central fiscal spending, optimizing local special bonds, and stabilizing property markets via inventory absorption and affordable housing. Inflation recovery is increasingly likely, with policies targeting "reasonable price回升" through monetary easing and supply-side reforms.
**Precious Metals: Caution Ahead of BOJ Decision** - Spot gold rose 2.43% weekly to $4,299.29/oz; silver surged 6.23% to $61.92/oz (peaking at $64.66 before retreating). Platinum jumped 6.56% to $1,742.3/oz; palladium gained 2.28% to $1,490.33/oz. Gold/silver ratio hit 67.3; platinum-palladium spread widened to $252/oz. CFTC data showed gold net longs up 3,270 contracts; silver net longs rose 1,030 contracts. COMEX gold inventories fell 10.67 tonnes to 1,118.72 tonnes. - The Fed’s 25bps cut and Treasury purchases were offset by a divided dot plot (one 2026 cut projected). BOJ’s potential 25bps hike to 0.75% may unwind yen carry trades, pressuring risk assets. - Gold’s rally lacks momentum despite Fed liquidity support. Silver’s squeeze risks eased after Friday’s pullback. Platinum/palladium face correction risks if gold/silver cool. Next week’s BOJ decision could trigger global market volatility.
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