Nov 2 China-US Policy Brief: Capital-Market Support Package, Overnight Repo Anchor Debut, Midterms Eve

US Policy

Midterms eve: voting on November 3, Democratic lead narrows in final polls, but polls are not results

Voters decide all 435 House seats and 35 Senate seats on November 3. The House stands at 218 Republicans, 214 Democrats, one independent and two vacancies, so Democrats need a net gain of four seats to flip it. The final Reuters/Ipsos poll (October 29 to November 2, 1,765 US adults, margin of error about 2 points) put President Donald Trump's approval at 32%, unchanged from the previous week; Democrats led the generic ballot 46% to 38%, an 8-point lead narrowed from 11 points a week earlier; 50% of independents said their vote was against Trump. VoteHub gave Democrats an 89% chance of winning the House (projected 234 seats) and a 68% chance in the Senate (projected 52 seats). More than 54 million people had already voted early, according to CBS. Final results will depend on counting on the night of November 3 and into November 4.

Federal Reserve watch: December 8-9 hike odds around 72%-76%, up slightly (market pricing, not a Fed commitment)

As of November 2, Kalshi and Polymarket priced a 25-basis-point hike at the December 8-9 meeting at about 72.5%-74%, while futures-market pricing was about 76.1%-76.3%, up slightly from 70.5%-72% on November 1; the 10-year Treasury yield was about 4.95%, below the October peak of 5.3645%. Key tests this week are the midterms and AMD earnings on November 3 and October payrolls on November 6 (expected gain of about 60,000-65,000 jobs, unemployment 4.2%).

US-Iran diplomacy optimism and oil slide: a draft circulates, but no deal is done (market reaction and unconfirmed reports)

Reuters reported on November 2 that a draft proposal to end the US-Iran war was circulating after Iranian negotiators left Qatar, and Iran said the Strait of Hormuz could reopen within two days of a deal. Brent fell more than 4% intraday to about $108.61 a barrel and WTI dropped below $100 to about $99.62; yet Trump had previously hinted at renewed strikes after the election, Iran's foreign minister said Tehran was prepared for both defence and diplomacy, and Goldman Sachs raised its December Brent forecast from $90 to $105, citing Hormuz supply-security risks. The war premium has not fully unwound, and reversal risk remains high.

China Policy

Capital-market support package: swap facility opens November 3, buyback loans become permanent at 1% (confirmed)

The People's Bank of China, the National Financial Regulatory Administration and the China Securities Regulatory Commission held meetings on November 2 on two tools. The central bank will run a securities, fund and insurance company swap facility (SFISF) operation on November 3, with a one-year tenor that can be extended; 31 securities and fund firms have applied for more than 100 billion yuan, versus 50 billion yuan in October 2024 and 55 billion yuan in January 2025, with the final amount to be confirmed after bidding. The stock buyback and stake-increase relending facility becomes a permanent arrangement, with its rate cut from 1.25% to 1%; signed amounts total about 440 billion yuan, with more than 280 billion yuan disbursed. The CSRC also added a share-price "break" as a trigger for defensive buybacks and said it will revise buyback rules. BOE Technology said its buyback finished on November 2, repurchasing about 191 million A shares for about 1 billion yuan, all to be cancelled.

Overnight repo anchor debut: 541 billion yuan operation, net withdrawal of 515 billion yuan, funding steady (confirmed)

The People's Bank of China conducted a 541 billion yuan overnight reverse repo operation on November 2 at 1.25%, fully meeting primary dealers' demand; with 1 trillion yuan of overnight repos and 56 billion yuan of 7-day repos maturing, the open market saw a net withdrawal of 515 billion yuan. Reuters cited traders saying funding was broadly steady, the overnight repo rate (DR001) edged lower, and non-bank overnight funding quotes fell below 1.4%; the net withdrawal offset early-month ample liquidity, leaving funding costs little changed. As of October 20, more than 100 DR001-benchmarked floating-rate loans had been made across 24 provinces. The first-day net withdrawal should not be read as tightening.

Growth and ministry updates (confirmed)

The National Development and Reform Commission said first-three-quarter GDP grew 4.6% year on year, PPI rose 2.3%, industrial profits in the first eight months rose 15.7%, new-energy vehicle penetration reached 53.6%, and key integrated-circuit technologies made breakthroughs; it also said supply-demand imbalances persist and incremental policies, including computing-power layout optimisation, will be rolled out in a timely manner. Hainan detailed island-wide customs-closure management rules on November 2, including a 30% processing value-added threshold for encouraged industries selling in the island. The civil aviation regulator issued a green "15th Five-Year" implementation plan, and the draft Financial Law received a second reading, barring internet advertising of non-public financial products.

US-Stock Watchlist

Apple (AAPL): fiscal Q4 revenue $114.5 billion, iPhone and Services both set records

Apple reported after the close on November 2: revenue of $114.5 billion, up 12% year on year; diluted EPS of $2.10, up 14%, including about $0.05 from tariff refunds; iPhone revenue of $57.58 billion, up about 17%; Services revenue of $31.57 billion, an all-time high; net income of $30.71 billion; full-year revenue of $479 billion; gross margin of 47.9%, down from 50.1% in the prior quarter. JPMorgan's price target is $360; the TipRanks pre-earnings average was about $337.77. Risks: memory and component cost inflation, and December-quarter guidance. For informational purposes only, not investment advice.

Palantir (PLTR): Q3 revenue $2.313 billion, US commercial revenue passes government revenue for the first time

Palantir reported after the close on November 2: revenue of $2.313 billion, up 96% year on year, above the $2.18 billion consensus; adjusted EPS of $0.44, above the $0.41 consensus; US commercial revenue of $984 million, up 148%, overtaking US government revenue of $953 million, up 96%; full-year guidance raised to $8.530-$8.534 billion and Q4 guidance of $2.649-$2.653 billion. The key debate is total contract value of $2.92 billion, up only 6% year on year versus 49% in Q2. Targets diverge widely: JPMorgan $262, Oppenheimer $235, Cantor Fitzgerald $207 (neutral), TipRanks average about $221.27. Risks: rich valuation and slowing contract growth. For informational purposes only, not investment advice.

AMD (AMD): Q3 results due after the close on November 3, consensus revenue about $13.1 billion

Wall Street expects adjusted EPS of $1.95 and revenue of about $13.09-$13.10 billion, up about 41.5% year on year; AMD guided to about $13.0 billion, plus or minus $300 million, with an adjusted gross margin of about 56%; options price an approximately 8.95% move either way. Targets: Susquehanna $650, BMO $550, Morgan Stanley Hold at $510, TipRanks average about $664-$666. The focus is data-centre GPU momentum and Q4 guidance. Risks: memory and advanced-capacity constraints, and guidance disappointment. For informational purposes only, not investment advice.