Broker Morning Meeting Highlights | Fed's "Hawkish Pause"; Rate Hikes May Continue Within the Year

On the previous trading day (October 29), the Shanghai Composite Index fell 0.82% to 3,651.43 points, the Shenzhen Component Index fell 2.92% to 11,138.20 points, and the ChiNext Index fell 4.45% to 2,517.59 points; combined turnover of the two markets was RMB1.975881 trillion; across the entire market, 781 stocks rose, 4,728 fell, 68 were flat, 36 hit the daily limit up, and 3 hit the daily limit down. Guotai Haitong believes the October FOMC meeting was a short-term "hawkish pause," with a 25bp rate hike still highly likely in December; Sinolink believes active equity fund consensus had already loosened in Q3, with ETFs remaining the main supporting force; CITIC SEC believes CDS spreads on US AI companies price financing risk rather than survival risk, and default is not the base case; Huayuan Securities believes the release of Genie 4 drives iteration of world models and accelerates release of demand for physical data. Guotai Haitong: Fed's "Hawkish Pause"; Rate Hikes May Continue Within the Year The October FOMC meeting kept the federal funds rate at 3.75%-4%, but the resolution passed 10:2 with two officials dissenting, and Warsh throughout avoided addressing whether the current rate level is sufficient and avoided forward guidance. Five marginal changes emerged from the meeting: the description of the economy was changed from "moderate expansion" to "strong expansion"; the 2% PCE inflation target was reiterated, with emphasis that inflation remains elevated; institutional reform of the meeting was advanced, with the FOMC still holding 8 meetings per year from autumn 2027, one of which discusses monetary policy strategy without voting, while from 2028 strategy meetings increase to 2 and rate decision meetings fall to 6; and Fed independence was emphasized, excluding political factors such as midterm elections. The institution judges this to be a short-term "hawkish pause": the pause stems from financial conditions having already tightened, some decline in employment data, and the need to keep energy prices flexible; but a 25bp rate hike in December remains highly likely, as on one hand fed funds futures market expectations for a December hike have reached around 80%, and on the other hand the inflation impact from energy and AI demand shows no sign of reversing. In 2027, if geopolitics ease and a divided government forms after the midterm elections, a turning point for a liquidity reversal may arrive, at which point US Treasuries and US tech equities would be favored. Sinolink: Active equity fund consensus loosened in Q3; active funds with higher exposure to high profitability/dividend/low valuation gained more favor 1. Reversal after extreme divergence among active equity funds: active funds with higher exposure to high profitability/dividend/low valuation gained more favor. 2. 2026Q3 active equity funds: consensus has already loosened. 3. "Fixed income plus" funds: still saw incremental capital inflows, mainly adding resource stocks and defense. 4. Since October 2026, the market has again undergone "deleveraging," with ETFs remaining the main supporting force. CITIC SEC: Rising CDS spreads on US AI companies price financing risk; default is not the base case Since 2026, CDS spreads on US AI and technology companies have risen overall, pricing financing risk rather than survival risk, and market concerns over debt-servicing capacity have already shown up in financial statements. CDS spreads of leveraged buildout entities such as CoreWeave and Oracle have hit or approached records, while spreads of entities with sound cash flow have barely moved, and within the industry the gap is widening based on the multiple of cash flow covering capital expenditure. The institution believes current spread pricing is tiered and localized, and default is not the base case. This round of widening was driven by increased bond issuance and capital expenditure expansion; the precondition for convergence is capital expenditure growth returning toward revenue growth, and the exit mechanism needs to be generated by cash flow realization; in terms of allocation, holding by premium tiers and verifying quarter by quarter with cash flow is preferable to judging whether the bubble will rise or fall. Huayuan Securities: Google releases Genie 4; pay attention to major-company supply chains On local time October 27, Google DeepMind released the new-generation world model Genie 4, with core upgrades including real-time interaction, physical simulation, native audio, deep Gemini integration, and Siasun Robot&Automation training. The institution believes world models are still in an early stage of development, with bottlenecks remaining in complex physical interaction, long-horizon consistency, and spatial accuracy; however, as leading manufacturers such as Google and ByteDance continue to increase investment, demand for real physical-world data in model training is expected to keep growing, especially ego first-person perspective, 4D spatial, and simulation-synthesized data containing action, spatial, and physical interaction information, and the physical AI data supply chain is expected to be an important beneficiary of world model iteration.