Nov 4 US-China Policy Brief: PBOC Cuts Buyback Loan Rate to 1%, Democrats Retake Congress, Dow Posts Best Day Since April

US Policy

Midterm control settled: Democrats retake House and Senate, divided government ahead (media projections, not certified final results)

Votes cast Nov 3, counting confirmed Nov 4: the Associated Press live tally had Democrats at 232 House seats called plus 29 leading (218 for a majority) against 146 for Republicans, and 52 Senate seats; NBC projected at least 258 House seats for Democrats. Seven Senate seats flipped: Iowa, Kansas, Ohio, Maine, North Carolina, South Carolina and Texas; five governorships flipped: Texas, Georgia, Nevada, Ohio and Iowa. President Trump accepted the outcome and congratulated Democrats, saying he would work with them on issues such as immigration, while warning he could veto "insane" bills; Vice President JD Vance wrote that "the reason we lost is the war," referring to the Iran war. Timing matters: Republicans still control Congress until the new Congress is seated in January 2027, and Democrats hold neither a Senate two-thirds majority (67) nor a House two-thirds majority (290), so impeachment and veto overrides are out of reach. The market read it as a "predictable gridlock": a constrained legislative agenda, stronger congressional checks on tariffs and the Iran war, but a presidential veto still in place.

Fed hike odds, 35th tracking round: ADP beat, ISM services cooled slightly, December hike odds near 79%-82% (released Nov 4)

ADP private payrolls rose 86,000 in October, above the 69,000 consensus, with September revised down to 86,000 from 90,000. The ISM Services PMI eased to 54.5 from 54.9, below the 54.8 consensus but still expansionary; new orders fell to 55.9 from 59.8, business activity to 53.8 from 56.5, employment improved to 51.4 from 50.1, and prices paid eased to 73.0 from 74.0. CME FedWatch put a 25bp December 9 hike at about 79.2%-82%, up from roughly 77%-78% on Nov 3. The tracking line runs from a 43% October-hike probability on Sep 28 to about 79%-82% for December now: a hike remains the market base case, but pricing has stopped climbing steeply. Next: nonfarm payrolls on Nov 6 (consensus around 60,000-65,000 new jobs, unemployment 4.2%) and the Dec 8-9 FOMC meeting with new economic projections.

US stocks Nov 4: Dow's best day since April 2025 (confirmed close)

The Dow rose 1,569.40 points (+3.03%) to 53,356.12, its best post-midterm single-day gain since 1982; the S&P 500 gained 1.58% to 7,688.62 and the Nasdaq 1.44% to 25,736.51, while the VIX fell about 18% to near 17. Leaders included Microsoft (+6.68% to $555.80), Amazon (+6.12%) and Apple (about +5%-6%); laggards included defense stocks, on concern that a proposed $1.5 trillion defense budget faces resistance in a Democratic Congress, and Trump Media (-24.54%). WTI crude fell about 8% to $88.55 a barrel, a near two-month low. Analysts cited three drivers: election uncertainty removed, divided government constraining extreme policy outcomes, and lower oil easing inflation worries.

Lisa Cook investigation committee hearing: timing still uncertain (to be verified)

Earlier reports pointed to a Nov 5 hearing, while other reports suggested a delay until after the Dec 8-9 FOMC meeting. No definitive update on a Nov 5 hearing was found in this round, so it is carried forward as an open item rather than reported as held.

China Policy

PBOC steps up stock buyback relending: rate cut to 1%, banks applied for over RMB 200 billion (released Nov 4)

The People's Bank of China cut the stock buyback and shareholding-increase relending rate by 25bp to 1% from Nov 4. Eligible borrowers are 21 national banks and 5 systemically important city commercial banks, with 100% funding support, one-year tenor and possible extension. After a Nov 2 symposium, banks had already submitted applications exceeding RMB 200 billion. The move coincided with a sharp afternoon rebound in A-shares: the Shanghai Composite rose 2.16% to 3,686.17, the ChiNext gained 6.40%, the STAR 50 jumped 9.92%, and total turnover reached RMB 2.05 trillion.

PBOC to conduct RMB 300 billion buyback reverse repos on Nov 5: smaller 3-month rollover (announced Nov 4)

RMB 500 billion of 3-month buyback reverse repos mature in November, so the RMB 300 billion operation is a RMB 200 billion net reduction, versus a RMB 200 billion net increase in October. Funding conditions are not tight: the overnight DR001 rate fell to 1.2591% on Nov 4, its lowest in nearly four months, even as RMB 257.5 billion of overnight reverse repos against RMB 772 billion maturing produced a RMB 514.5 billion net drain for the day. A smaller rollover is not the same as tightening.

State Council financial work report to the NPC Standing Committee: moderately loose policy plus normalized property whitelist (released Nov 3)

The report, submitted to the 25th session of the 14th NPC Standing Committee, sets out five priorities: continue a moderately loose monetary policy with ample liquidity; strengthen financial regulation, crack down on illegal financial activity and explore AI in financial management; improve financial services for the real economy; use monetary-policy tools supporting the capital market, run the property "whitelist" mechanism on a normalized basis, and manage the market-based transition of financing platforms; and deepen reform and opening, including wider international use of the renminbi and a self-controlled cross-border payment system.

FX reserve requirement ratio raised to 6% from Nov 15: first hike in nearly five years (announced Nov 3, analysis added this round)

The PBOC raised the FX reserve requirement ratio by 2 percentage points, from 4% to 6%, effective Nov 15 — the first increase since December 2021. Based on roughly $1.2 trillion of FX deposits at end-September, the move freezes about $24 billion of FX liquidity. Context: the renminbi broke through 6.65 per dollar on Nov 2, a more than four-year high, and the CFETS index rose from 101.49 on Sep 11 to 103.77 at end-October. Expert commentary carried by China Securities Journal reads the move as steadying the pace of appreciation and guarding against overshooting, not reversing the trend — a distinction that matters for exporters' settlement timing.

NDRC private-investment push: 50 projects, RMB 24.6 billion of private capital sought (released)

The NDRC's private-economy bureau promoted 50 projects in agriculture, manufacturing and other sectors, with total investment of RMB 32.6 billion and RMB 24.6 billion of private capital sought, open to sole ownership, controlling stakes, equity participation, debt or joint operation. It extends the "foster new growth drivers" agenda into concrete private-investment deals.

Home-purchase subsidy and second capital-injection bond: no new official totals this round

No new official nationwide totals for the home-purchase interest subsidy (document Caijin [2026] No. 95) or for the second tranche of capital-injection special bonds (scheduled Nov 18) were found; both are carried forward without repeating old figures.

US Stock Watchlist

Microsoft (MSFT): earnings beat and raised guidance, up 6.68% on Nov 4

Microsoft reported fiscal Q1 2027 EPS of $4.89, beating the $4.72 consensus, and guided fiscal Q2 revenue to $96.0-$97.1 billion, above the $95.7 billion consensus; several brokers raised targets afterwards. Shares closed Nov 4 at $555.80 (+6.68%), with a market cap of about $4.12 trillion. Analyst targets: MarketBeat consensus about $609.54 (50 analysts, Moderate Buy), DA Davidson raised to $650 (Buy), Jefferies to $650, Guggenheim to $595, with a $440-$870 range. Risk note: AI monetization must keep pace with a very large capex program, and the wide target range itself signals sharp disagreement.

Broadcom (AVGO): AI revenue guidance doubles, yet the stock fell 2% on Nov 4

Broadcom closed Nov 4 at $325.48 (-2.00%), diverging from the broad rally — a reminder that AI chip names are not moving together. The company has said AI revenue could double to $115 billion in fiscal 2027 and double again to $230 billion in fiscal 2028, with fiscal 2028 adjusted EPS above $30; Anthropic plans to deploy 5 gigawatts of the TPUs Broadcom co-developed in fiscal 2027 and another 10 gigawatts in fiscal 2028. Analyst targets: DA Davidson raised to $400 on Oct 27 (upgraded to Buy from Neutral), Rosenblatt reiterated Buy at $600, MarketBeat consensus about $530.52 (Moderate Buy). Risk note: the guidance depends heavily on a few hyperscalers delivering their capex plans; any order delay could trigger a sharp de-rating.

Nvidia (NVDA): extreme target dispersion, Melius cut to $315 but kept Buy

Nvidia traded around $200.13 after hours on Nov 4, versus a $206.69 prior close. Target dispersion is the story: Melius cut its target to $315 from $420 on Nov 2 while keeping a Buy rating; MarketBeat consensus is about $318.85 (Buy); another median estimate is about $265; Seaport Research rates it Sell with a $140 target. Key data: market cap about $4.93 trillion and a P/E near 25.6x (Finnhub figures), with analysts expecting roughly 37%-53% annual adjusted earnings growth over the next three years depending on the house. Risk note: a $140-$420 target range means the bull and bear cases barely overlap — order cadence, export controls and hyperscaler capex shifts can rewrite the narrative quickly.

This article is for informational purposes only, not investment advice.

Byline: AISTIM