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China Market
1. Central Financial Work Conference Emphasizes the Strengthening of Financial Regulation
The Central Financial Work Conference was held in Beijing, emphasizing the establishment of a long-term mechanism to prevent and resolve local debt risks, establishing a government debt management system compatible with high-quality development, optimizing the structure of central and local government debt, promoting a virtuous cycle between finance and real estate, improving the regulatory system and fund supervision of real estate enterprises, and refining real estate financial macro-prudential management. The conference aimed to maintain stable financial market operations, standardize financial market issuance and trading behaviors, guide expectations reasonably, and prevent the risk of cross-regional, cross-market, and cross-border transmission resonance.
2. Overnight Repo Rate Soared to 50%
Under the combined factors of month-end, concentrated supply of government bonds, fiscal payments, etc., some investors in overnight repurchase agreements made misjudgments. To avoid default risks, they significantly increased the repo rate, causing a sudden spike in money market rates and an increase in failed bond repurchase transactions. According to real-time trading data from the interbank market pledge-style repo transaction, the highest overnight repo rate reached 50%, with an average overnight repo rate of 3.455%.
3. China Becomes the Largest Gold Purchaser
According to the latest Global Gold Demand Trends report by the World Gold Council, central banks globally net purchased 337 tonnes of gold in the third quarter of 2023, making it the third highest quarterly net purchase in history. The demand for gold purchases by central banks in the first three quarters of 2023 increased by 14% year-on-year, reaching a record-breaking 800 tonnes. During this period, China continued its 11-month streak of gold accumulation, becoming the largest gold purchasing country, with a total increase of 181 tonnes in the first nine months, setting a new historical record. Poland (57 tonnes) and Turkey (39 tonnes) were the second and third largest purchasers, respectively, with another 8 central banks purchasing more than 1 ton each.
4. Major News From Beijing and Zhengzhou's Real Estate Market
Recently, Beijing and Zhengzhou released major news regarding their real estate markets. The Beijing Housing Provident Fund Management Center announced that starting from November 1, families with commercial loan records but no provident fund loans, and without a property in Beijing, can apply for first-home provident fund loan policies. Similarly, the Zhengzhou Housing Provident Fund Management Center announced that, effective from October 30, 2023, the determination of the number of family houses for the purposes of housing provident fund individual housing loans and combined loans will follow the principle of recognizing housing units without recognizing loans, with the number of housing units determined by the existing complete housing in the administrative region of Zhengzhou.
Overseas Market
1. Israeli Tanks and Bulldozers Enter Gaza
CCTV News, citing Al Jazeera, reported Israeli tanks advancing towards the northwest of the Gaza Strip and the south of Gaza City. An Israeli military spokesman stated that the Israeli forces continue to expand their operations in the Gaza Strip, with more heavy armored vehicles, tanks, and troops moving into Gaza to engage in combat with Hamas fighters. Videos released by the Israeli military also show Israeli infantry, tanks, and armored bulldozers conducting military operations in Gaza.
2. US Significant Housing Price Index Reaches New High in August
Data revealed that the US Standard & Poor's Case-Shiller (S&P/CS) National House Price Index adjusted seasonally reached a historic new high in August, marking the seventh consecutive month of increase. The index rose 0.9% month-over-month, with a year-over-year increase of 2.57%. Meanwhile, the Standard & Poor's Case-Shiller 20-city house price index rose 1.01% month-over-month in August, surpassing the expected 0.8%, marking a sixth consecutive month of gains. This also led to a year-over-year increase of 2.16% in the 20-city house price index for August, setting a new high since January of this year.
3. Japan Further Eases YCC
The Bank of Japan's policy meeting set the long-term yield cap at 1% as a reference, increasing the flexibility of the yield curve control policy. Since the introduction of the YCC (yield curve control) mechanism in September 2016, the Bank of Japan has held significant authority, with several rounds of "widow trades" repeatedly failing, and its bondholding shares even surpassing half of the Japanese bond market. However, as the gap between US and Japanese interest rates gradually widened, the Bank of Japan took a historic step. The seven-year-long yield curve control policy effectively became obsolete, returning the Japanese bond market to investors' hands and paving the way for an exit from loose monetary policy.
4. Eurozone Economy Enters Contraction Once Again
The Eurozone GDP managed to reverse the negative growth trend in the second quarter of the year, but under the pressure of high interest rates, the Eurozone economy once again entered contraction in the third quarter. The latest data released by Eurostat showed that the Eurozone GDP fell by 0.1% quarter-on-quarter in seasonal terms in the third quarter, worse than the analyst expectations of 0%. Despite the deteriorating economic environment, the notion of lowering interest rates to stimulate economic activity is considered premature. The market currently expects the European Central Bank's deposit rate to remain at least at 4% until April next year.
Today's Focus
Today, investors should pay attention to the manufacturing PMI from China and Western countries, the US ADP employment, JOLTs job openings, and EIA crude oil inventories among other economic data. In addition, investors should also closely monitor the Israeli-Palestinian conflict, the US Treasury's bond issuance plans, and other risk events.
