Precious Metals: The Federal Reserve cut interest rates by 25 basis points as expected, but Powell's remarks were hawkish. He stated that a December rate cut was uncertain and that more and more members were advocating for a pause in rate cuts. However, this did not provide directional guidance for the precious metals market. Gold and silver rose and then fell overnight, exhibiting a wide range of fluctuations overall. The meeting between the leaders of China and the United States in Busan, South Korea, further indicates that there is room for easing in the Sino-US trade situation, while weakening short-term support for precious metals. Overall, the Fed's rate cut had limited impact. After the previous sharp fluctuations, precious metals gradually stabilized and may enter a period of consolidation in the short term. However, long-term supporting factors such as "de-dollarization" remain, and precious metals are still in a long-term bull market. In terms of trading strategy, long-term long positions can be held. The reference range for Shanghai Gold 2512 is 890-930 yuan/gram, and the reference range for Shanghai Silver 2512 is 11000-11500 yuan/kilogram.


Stock Index Futures: On the previous trading day, the Shanghai Composite Index rose 0.70%, the Shenzhen Component Index rose 1.95%, the ChiNext Index rose 2.93%, the STAR Market 50 Index rose 1.18%, the CSI 300 Index rose 1.19%, the SSE 50 Index rose 0.41%, the CSI 500 Index rose 1.91%, and the CSI 1000 Index rose 1.20%. The total turnover of the two markets was 2,256.03 billion yuan, an increase of approximately 108.17 billion yuan from the previous trading day. Among the Shenwan Level 1 industries, the best performing industries were: Power Equipment (4.79%), Non-ferrous Metals (4.28%), and Non-bank Financials (2.08%). The worst performing industries were: Banking (-1.98%), Food and Beverage (-0.56%), and Comprehensive (-0.56%). Regarding basis, the basis of all four major stock index futures rose slightly. The annualized basis rates for the IH and IF quarterly contracts were 0.30% and -2.60% respectively, while the annualized basis rates for the IC and IM quarterly contracts were -8.70% and -11.30% respectively. For hedging, short positions could consider quarterly contracts. On the previous trading day, the Shanghai and Shenzhen stock markets opened slightly higher and then trended upwards, with the Shanghai Composite Index closing above the 4000-point mark. Both markets closed higher, with trading volume slightly higher than the previous trading day. Looking at the performance of primary sectors, power equipment, non-ferrous metals, and non-bank financial institutions led the gains, while banking, food and beverage, and conglomerates saw the largest declines. The leading sectors may have been boosted by recent policies, and improved operating conditions in the third quarter attracted significant market attention. The poor performance of large-cap stocks may have been due to a shift in investment focus. In terms of indices, the SSE 50 index significantly underperformed the other three major indices yesterday due to the weak performance of large-cap stocks. As third-quarter financial reports are gradually released, the market may favor small and mid-cap stocks with greater growth potential in the short term. This afternoon, the leaders of China and the United States will meet and exchange views on China-US relations and issues of common concern. Considering the outcomes of last week's negotiations between China and the US in Malaysia, the meeting is likely to be positive, and continued attention is needed. Meanwhile, listed companies are gradually releasing their third-quarter financial reports. Judging from the profit growth rate of industrial enterprises, the profitability of listed companies is expected to improve. It is recommended to maintain long positions in IC and IM.

Stock Index Options: On the previous trading day, the Shanghai Composite Index rose 0.7%, the Shenzhen Component Index rose 1.95%, the ChiNext Index rose 2.93%, the STAR Market 50 Index rose 1.18%, the CSI 300 Index rose 1.19%, the SSE 50 Index rose 0.41%, the CSI 500 Index rose 1.91%, the CSI 1000 Index rose 1.2%, and the SZSE 100 ETF rose 2.0%. The total turnover of the two markets was 2,256.03 billion yuan, an increase of approximately 108.1 billion yuan from the previous trading day. Among the Shenwan Level 1 industries, the best performing industries were: Power Equipment (4.79%), Non-ferrous Metals (4.28%), and Non-bank Financials (2.08%). The worst performing industries were: Food and Beverage (-0.56%), Comprehensive (-0.56%), and Banking (-1.98%). Recently, market risk appetite has clearly recovered, and stock indices have continued their rebound. In the medium to long term, supported by policy and capital flows, A-shares are likely to continue their slow and steady bull market. Furthermore, if policy support intensifies and fundamentals improve, the stock index has ample room for further upward movement, and the market is likely to experience a gradual, upward-trending, oscillating upward movement in the long term. In the short term, after reaching new highs, the index may experience consolidation; holding long positions in stock index futures combined with a collar strategy for hedging could be considered.

Treasury Bond Futures: On Wednesday, treasury bond futures diverged. In terms of directional trading, based on closing prices, the 30-year main contract fell 0.27%, the 10-year main contract rose 0.13%, the 5-year main contract rose 0.16%, and the 2-year main contract rose 0.1%. The yield on the most actively traded 30-year treasury bond rose 0.85 basis points to 2.176%, the yield on the most actively traded 10-year bond remained unchanged from the previous day, and the yield on the most actively traded 2-year bond fell 3.75 basis points to 1.4025%. Regarding cross-product spreads, the spreads for 4TS-T, 2TF-T, and 3T-TL changed by RMB 0.279, RMB 0.185, and RMB 0.745, respectively. Directional Strategy: The divergence in treasury bond futures showed a characteristic of long-term bonds being weaker and short-term bonds stronger. TL showed a negative correlation with the equity market, while TS demonstrated resilience due to the loose liquidity environment. Looking ahead, we believe that bond market pricing will return to fundamentals, and under the expectation of loose monetary policy, we recommend holding long positions in TS. Cross-product strategy: We recommend holding a long-short (TS) and long-term (T) arbitrage strategy. With expectations of ample liquidity, short-term bonds may show greater resilience. Hedging strategy: The T net basis is fluctuating at low levels, and the overall level is not high. We recommend continuing to hold a long T basis portfolio.

Industrial Silicon: Industrial silicon futures rose yesterday, possibly boosted by expectations of a rebound in demand. The strong performance of related commodities also contributed to the rise of industrial silicon, but the fundamentals of industrial silicon remain largely unchanged. From a fundamental perspective, industrial silicon operating rates are at a high level for the year. The pace of increase in operating rates in the north is gradually slowing, while in the south, with the dry season approaching, shutdowns are increasing slowly. Downstream market demand is stable in the short term, but subsequent reductions in polysilicon production and maintenance shutdowns in organosilicon also make demand expectations less optimistic. Overall, the fundamentals of industrial silicon currently lack highlights, with supply and demand relatively balanced. However, renewed expectations of a rebound in demand could lead to increased volatility in industrial silicon futures. For trading, a wait-and-see approach is recommended. The reference range for the SI2601 contract is 8800-9300 yuan/ton.

Copper: On Wednesday evening, the main Shanghai copper contract rose over 1% to 89,130 yuan, while LME copper initially strengthened before weakening, reaching a record high of $11,200 before retreating to the upper edge of $11,000. Macroeconomic outlook: Neutral. Trump's signals of reciprocity regarding Thursday's meeting between China and the US boosted copper prices. However, the Federal Reserve cut interest rates by 25% as expected overnight.
Copper prices rose slightly, but Powell's hawkish comments about uncertainty surrounding a December rate cut fueled market anxieties, limiting gains. The fundamentals are neutral to slightly bullish. Yesterday, Shanghai Futures Exchange copper warrants decreased by 101 tons to 35,700 tons, while LME copper inventories increased by 775 tons to 135,000 tons. Attention should be paid to the inflection point in domestic inventory reduction. According to SMM, while copper prices surged, downstream companies saw weak new orders and deliveries. Several refined copper rod manufacturers have suspended production to avoid inventory buildup. Furthermore, downstream expectations for repurchasing copper materials are around 85,000 yuan. Overall, reduced tariff risks, improved domestic policy confidence, and tight raw material supply have boosted copper prices with a slightly bullish bias. However, downward revisions to rate cut expectations and negative feedback effects on industry demand limit gains, and caution is advised regarding the risk of a price pullback after a surge. Today, the main Shanghai copper contract is expected to trade between 87,000 and 89,500 yuan/ton. Strategically, reduce positions and take profits at previous highs, while for medium- to long-term positions, consider buying on dips.

Ferroalloys: Domestic macro sentiment is positive, and futures prices are trending slightly upward with fluctuations. Fundamentals remain largely unchanged, with downstream buyers primarily purchasing on an as-needed basis, and overall supply remaining high. Manganese silicon plant inventories are high, while ferrosilicon inventories are relatively normal, with ferrosilicon fundamentals continuing to be stronger than ferrosilicon. Coke prices are trending upward, providing strong cost support overall. However, after the price increase, hedging profits on the futures market have improved, and with ample production, the willingness to sell for hedging may increase. Overall, although ferroalloys have undervalued characteristics, the upward momentum is not strong. Viewpoint: Remain on the sidelines for the January futures contract; continue to hold out-of-the-money put options for the December contract.

Rebar: Macroeconomic sentiment is slightly positive, with the next window of opportunity for economic policy negotiations closing at the Central Economic Work Conference in December. In terms of industry, rebar production increased by 59,100 tons to 2,070,700 tons last week, while social inventory decreased by 189,300 tons to 4,374,800 tons, and mill inventory decreased by 100 tons to 1,846,300 tons. Apparent demand rebounded by 62,600 tons compared to the previous week. Rebar demand is seasonally recovering, while supply is also increasing. Under this situation of both supply and demand growth, the fundamental improvement is limited, and inventory reduction pressure remains. The relative positive factor is cost support, and the price is expected to continue its volatile trend.

Hot-rolled coil: Last week, hot-rolled coil production increased by 6,200 tons, while inventory decreased by 42,700 tons. Surface demand rebounded by 111,800 tons to 3,267,300 tons. Short-term supply and demand pressures remain high, and inventory reduction during the peak season is less than expected. Demand is performing reasonably well, but there are underlying concerns. The fundamental fabric market is unlikely to see substantial improvement, with cost support being a relative positive factor. The market is expected to continue its volatile but upward trend.

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