Nov 3 China-US Policy Brief: 100 Billion Yuan Swap Facility, Midterm First Calls, AMD and Supermicro Beat

US Policy

Midterms voting day: first calls in, House control undecided (in progress, partly confirmed)

Voters decided all 435 House seats, 35 Senate seats and 36 governorships on November 3. Early evening projections gave Georgia incumbent Democratic Senator Jon Ossoff re-election over Republican Representative Mike Collins (NBC News and Decision Desk HQ), and Democrats held a Senate seat in Virginia. The Associated Press national House count, with only about 2.84% of precincts reporting, showed Democrats ahead in counted votes, far from enough to call control of the chamber; tight races may take days or even weeks to settle. Until control is clear, markets are mainly trading election uncertainty itself.

Federal Reserve watch: December hike odds near 75%, 10-year yield at 4.95% (market pricing, not a Fed commitment)

On November 3, Kalshi priced a hike at the December 8-9 meeting at about 76% (25bp hike 74.5%, hold 24%), while CME fed funds futures implied about 78.9% for a 25bp move, up slightly from about 72%-76% in the prior issue; the 10-year Treasury yield closed near 4.95% and spot gold slipped to about $3,927-$3,934 an ounce. September JOLTS job openings came in at 7.523 million, above the 7.10 million expected, with August revised up to 7.19 million; September factory orders rose 1.8% month on month, above the 1.2% expected. Stronger-than-expected data supports hike pricing, but the October payrolls report on November 6 (expected gain of about 65,000 jobs, unemployment 4.2%) remains the key test.

US stocks on election day: Dow down, S&P and Nasdaq up, chips rebound, Apple drags (confirmed)

The Dow closed at 51,786.72 (-0.38%), the S&P 500 at 7,568.92 (+0.36%) and the Nasdaq at 25,372.01 (+0.83%), snapping a three-day losing streak; semiconductors rose about 2.5%, with Nvidia up 2.3% to $206.69, Broadcom up 3.07% and AMD up 3.65% to $483.90 at the close; Apple fell 1.90% to $331.90 as rising memory-chip costs are set to pressure holiday-quarter margins. After the bell, AMD and Supermicro both beat expectations, with shares up roughly 8%-9% after hours. The Nasdaq-100 remains more than 10% below its record high, in technical correction territory, so election results and Friday payrolls will decide whether the rebound holds.

Binance security incident: initial report cites $6.34 billion affected, $2.85 billion frozen (company statement, pending independent verification)

Binance published an initial report on the evening of November 3 on its October 29 security incident: about $6.34 billion in digital assets affected, about $2.85 billion frozen or intercepted as of the update; 98% of affected tokens had been replenished as of October 31, with the company absorbing the financial impact and users bearing no loss; the FBI's latest information attributes the attack to North Korea (attribution remains subject to the official investigation). A November 2 update said the zero-knowledge proof of reserves for the October 31 snapshot was complete, letting holders of 10 major tokens verify 1:1 backing; Reuters reported on November 2 that net customer outflows after withdrawals resumed were about $4.72 billion, about 3% of platform assets. A proof of reserves only captures a snapshot in time and does not substitute for an independent investigation into the cause and recovery.

China Policy

Third swap-facility operation lands: 100 billion yuan at 10bp, 31 institutions (confirmed)

The People's Bank of China conducted its third securities, fund and insurance company swap facility (SFISF) operation on November 3: 100 billion yuan, fee-bid, 31 securities and fund companies bidding, winning fee 10bp, one-year term extendable. It is the largest single SFISF operation since the tool was created in October 2024, close to the combined total of the first two (50 billion and 55 billion yuan); the fee matches the second operation and sits below the first operation's 20bp. Guotai Haitong and CITIC Securities each won 10 billion yuan, Dongwu Securities 5 billion, Great Wall Securities 2 billion and Huafu Securities 1.2 billion, with several firms pledging to deploy the full amount promptly. SFISF is a "securities-for-securities" swap: institutions pledge bonds, stock ETFs and CSI 300 constituents in exchange for treasury bonds and central bank bills, then finance stock purchases; it does not directly inject base money, so the actual pace of market entry depends on each firm's deployment.

Overnight repo day two: 621 billion yuan, net withdrawal of 332 billion yuan (confirmed)

On November 3 the central bank conducted 621 billion yuan of overnight reverse repos at 1.25% via fixed-rate, quantity bidding, fully meeting primary dealers' demand; 541 billion yuan of overnight repos and 412 billion yuan of 7-day repos matured, leaving a single-day net withdrawal of 332 billion yuan and an outstanding balance down to 902 billion yuan. DR001 edged down to around 1.28%, with early-month net withdrawals leaving liquidity broadly comfortable. Daily overnight operations now anchor short-term rates, but two consecutive days of net withdrawals mean the tax period later in the month still bears watching.

NDRC "Striving for the 15th Five-Year Plan" briefing: emerging pillar industries may exceed 10 trillion yuan by the end of the period (confirmed)

On November 3 the National Development and Reform Commission briefed on cultivating new growth drivers: improve the "AI+" policy system with detailed implementation plans for key industries, prioritizing "dangerous, dirty, tiring, tedious and difficult" scenarios such as mining, high-altitude work and emergency rescue; future industries will follow a nationally coordinated, locally adapted approach rather than "covering everything," focusing on quantum technology, biomanufacturing, hydrogen and fusion energy, brain-computer interfaces, embodied intelligence and 6G mobile communications; marine GDP is expected to exceed 13 trillion yuan by 2030; monitoring and early warning for AI job-displacement risks will be strengthened, with new occupations such as model trainers and data annotators to be added to the national occupational classification; China is pushing the World AI Cooperation Organization toward full operational status, with 38 countries as founding members. The policy chain extends from the October 23 State Council "AI + employment" guidance into 15th Five-Year industrial targets and employment safeguards.

Housing-loan interest subsidy and capital-injection bonds: no new official aggregate this round

No nationwide aggregate on the housing-loan interest subsidy and no new development on the second tranche of capital-injection special treasury bonds (scheduled for issuance on November 18) were retrieved this round; both remain marked as pending rather than repeated as old news.

US-Stock Watchlist

AMD (AMD): Q3 beat, Q4 guide of $17 billion, 2027 growth target above 80%

AMD reported Q3 revenue of $13.38 billion (+45%), above the $13.1 billion expected; data center revenue of $8.5 billion (+97%), 64% of sales; non-GAAP EPS of $2.09 (+74%), above the $1.95 expected; Q4 guidance of about $17 billion (plus or minus 3%), about 66% year-on-year growth, above the $16.29 billion consensus; management expects 2027 revenue growth above 80%, with data center AI revenue growing faster than server CPU revenue. Analyst targets: Susquehanna Buy, $650; Morgan Stanley Hold, $510; Wall Street average about $664 (30 Buys, 6 Holds). Risks: GAAP EPS of $1.46 absorbed about $1.1 billion of non-cash warrant remeasurement charges that rise with the share price; Q4 gross margin guidance of about 55% sits slightly below Q3's 56%.

Supermicro (SMCI): revenue of $19.95 billion (+298%), full-year guide raised to $72-82 billion

Supermicro's fiscal Q1 2027 revenue reached $19.95 billion (+298%), above the $16.81 billion expected; non-GAAP EPS of $1.81, above the $1.23 expected; non-GAAP gross margin of 12.8%; next-quarter revenue guidance of $19.5-21.5 billion and full-year guidance raised to $72-82 billion (from $65-72 billion). Analyst targets: Wall Street average about $40.58, implying roughly 18% upside; Bank of America stays cautious, warning of margin pressure as the product mix normalizes. Risks: a single data center customer accounted for 44% of revenue (28% across fiscal 2026); full-year gross margin guidance of only 11.8%-12.2% implies a weaker second half; operating cash flow was negative $434 million in the quarter.

Apple (AAPL): record September quarter, but holiday-quarter margin guide disappoints

Apple's fiscal Q4 2026 revenue reached $114.48 billion (+11.7%), above the $113.4 billion expected; EPS of $2.10, above the $1.99 expected; gross margin of 47.9%. Holiday-quarter guidance: revenue growth of 7%-10%, services growth of 8%-9%, gross margin of 45%-46%, below the market's 46.6%-46.7% expectation, with management saying memory costs will keep rising and constrain Mac and iPad supply. Analyst targets: Morgan Stanley cut to $350 (Overweight), JPMorgan cut to $355 (Overweight), Bernstein Outperform at $370; KeyBanc Sell at $250, calling the stock extremely overvalued; Wall Street average about $337.17, a Moderate Buy consensus. Risks: memory-cost pressure may extend beyond December; services growth has slowed to single digits; the stock trades at more than 40 times FY27 EPS estimates, above its three-year average of about 28 times.

For informational purposes only, not investment advice.