〔Day Digest〕China Holiday Demand Holds: 100-City New Home +0.17% vs Secondhand -6.94%, HK Retail Beats 5.6% on 329M Trips — Yet US 10Y Tops 5.34% and 30Y Mortgage Spikes 25bps in a 4-Year Long-End Rout

0. Weekly Arc

The October data flow arrived with a sharp split. On the China side, domestic demand signals are bifurcating even as they mostly hold up: 100-city new home prices rose 0.17% m/m in September while secondhand extended a -6.94% y/y drop, the Oct 1 holiday logged 329.495M cross-regional trips, and Hong Kong's August retail surprised at +5.6% y/y ^[1][2][3]. On the global tape, the long end is doing the opposite damage — the US 10-year touched 5.34%, its highest since 2002, the 30-year mortgage jumped 25bps in a week to 7.28%, and US municipal bonds fell 4.4% in September, the worst month since Lehman ^[4][5][6]. Net: a resilient China demand pulse against a violent global long-duration repricing.

1. China Property and Consumption Pulse

• **[NEW] 100-city home price split (China Index Academy, Sept):** new home average 17,285 yuan/sqm, +0.17% m/m and +2.12% y/y; secondhand 12,452 yuan/sqm, -0.6% m/m and -6.94% y/y, with the m/m decline widening ^[1]. Shanghai secondhand flipped to +0.11% m/m on quality supply ^[1]. Cao Jingjing (China Index Academy) expects Q4 bottoming in core cities, with new home sales supported but secondhand prices likely to keep adjusting near term ^[1]. Source quality: single relay (Gelonghui/China Index Academy); the Y/Y split is the mechanism, not a data glitch.
• **[NEW] National Day Oct 1 trips (Ministry of Transport):** 329.495M cross-regional trips, -1.9% y/y but +50.2% m/m; rail 25.204M (+9.0% y/y), road 300.36M (-2.8% y/y including 4.471M commercial passenger +8.5% and 255.65M private + -4.5%), water 1.416M (+7.2% y/y), civil aviation 2.515M (+0.5% y/y) ^[3]. The y/y dip in road is structural (private car displacement), not a demand failure.
• **[NEW] Hainan duty-free first day (Haikou Customs):** 107M yuan from 18,900 shoppers on 83,000 items; sales, buyers and items +21.17%, +13.81% and +11.24% y/y ^[7][8].
• **[NEW] Hong Kong August retail surprise:** sales value +5.6% y/y vs +4.2% expected (prev +4.5%), volume +2.9% y/y vs +2.2% expected ^[2][9]. Two-source confirmation; both beat.
• **[NEW] Caixin New Economy Index:** fell to 34.1 in September, dragged by lower tech investment ^[10]. Treated as a complementary pulse, not a headliner.

2. Capital Flows and Policy Backdrop

• **[NEW] H1 2026 FDI (SAFE International Balance of Payments report):** foreign equity direct investment $63.8B, +55% y/y; capital contributions net increase $43.1B; reinvested earnings +31% y/y; non-financial $57.8B, financial $6.0B; new capital in high-tech services and manufacturing +61% y/y, 36% of non-financial total, up 11pp y/y — a clear shift from "Made in China" to "Created in China" framing ^[11][12].
• **[NEW] Public mutual fund scale (Asset Management Association of China):** 39.63 trillion yuan NAV at end-August 2026 across 165 managers (150 fund companies + 15 AM firms with license) ^[13][14].
• **[NEW] NDRC private investment promotion:** 52 manufacturing projects, 52.4B yuan total investment, 15.5B yuan private capital sought; covering chemicals, non-metallic minerals, metal products, general and specialized equipment ^[15].
• **[NEW] Beijing Chaoyang tax bureau:** multiple offices rolled out implementation steps for the offshore trust individual income tax policy two months after launch, including training, data analysis and risk monitoring ^[16].
• **[NEW] Chongqing advanced manufacturing VAT:** eligible firms can claim an additional 5% VAT input deduction ^[17].
• **[NEW] Animal husbandry 15th Five-Year plan:** 2030 total forage grass output targeted at 130M tons ^[18].

3. Global Long-End Rout

• **[NEW] US 10-year at 5.34%:** highest since 2002, per Bloomberg data via Wall Street aggregator coverage; the 30-year mortgage rate hit 7.28% with a +25bps weekly jump — biggest since October 2022 — pushing MBA mortgage applications down 6% (4th straight weekly drop) ^[5][6][19].
• **[NEW] US Treasury September:** worst month in 4 years, per the same relay; the spike is now transmitting into household balance sheets, not just market-to-market ^[5].
• **[NEW] US municipal bonds:** Bloomberg Muni Bond Index -4.4% in September, the worst single month since the Lehman failure month (September 2008); 10Y muni ~4.02% (-9bps Thursday), 30Y ~5.15% (-4bps Thursday), both at highest since at least 2011 ^[4]. Two-day bounce is tentative, not a reversal.
• **[NEW] Long-end demand absent:** Goldman trading desk head Rich Privorotsky said long-dated Treasuries remain "completely unwanted" despite softer PCE; BNP CIB's Florian Roger flagged 5.5% on the 10Y as the threshold at which equity valuations start to feel "substantive pressure" — "we are close to it" ^[19].

4. Equity Divergence and What Would Falsify It

• **[NEW] S&P 500 "two-faced" tape:** the index sits within 2% of its all-time high, but the median S&P stock is down 5% over the past month; semiconductors are the only sector carrying the cap-weighted index, up ~6% in a month ^[6].
• **[NEW] Equal-weight breakdown:** the RSP/cap-weighted S&P ratio just hit a record low, and the equal-weight index is on a 7-week losing streak — only previously seen during the 2002 dot-com unwind and the 2022 bear market ^[6].
• **[NEW] Breadth deteriorating:** in 17 of the past 18 sessions, more S&P 500 components hit 52-week lows than highs (12 consecutive days) — historically a post-selloff low signal, but this time the cap-weighted index is hanging near record highs ^[6]. iCapital's Dan Suzuki: most sectors are down 5%+ from highs, some over 15%, on rate rise and tighter financial conditions ^[6].
• **Falsification test:** the next China holiday-weekend read (HK retail, Hainan duty-free day-2/3, Oct 1-7 trip totals) is the test of the demand pulse; a US October CPI/PPI pair and a 10Y auction tail event are the test of the long-end rout.

5. Industrial, Energy and Trade Footnotes

• **[NEW] Tarim ultra-deep play (CCTV Finance, relayed by Xinhua/Tonghuashun):** Well Zhenyantan-1 retrieved a 6m continuous core at 8,080m — Cambrian Yuertusi Formation, ~500 million years old — the first hydrocarbon source rock sample at this depth on the NW Tarim margin ^[20]. Xu Yanan (Tarim Oilfield exploration project director): "this is the treasure… it shows another step in our 8,000m-plus drilling capability" ^[20]. Tarim has now drilled 270+ ultra-deep wells below 8,000m (>50% of national total); the 10,000m-class Shenditake-1 was completed in 2025; ultra-deep oil/gas annual output above 20M tons ^[20].
• **[NEW] Ningxia-Hunan DC peaking plant (National Energy Group):** Zhongwei Power Plant unit 6 passed the 168-hour test on Oct 2, completing full-capacity commissioning of 4×660MW units; pairs 13,000MW renewables (4,000MW wind, 9,000MW solar) with 4,640MW coal-fired peaking capacity for the Ningxia-to-Hunan ±800kV HVDC line — the first dual-NDRC/NEA "approved" desert-Gobi-marsh new-energy base ^[21].
• **[NEW] Trade certificates (CCPIT, People's Daily relay):** commercial certification data continues to show fast growth in foreign trade ^[22].
• **[ONGOING] Mortgage interest subsidy policy (People's Daily):** demand-side "investing in people" framing ^[23]; **[ONGOING] HSR buildout** coverage on regional integration ^[24]. Source quality: items ^[23][24][22] are headline-only People's Daily/Xinhua relays — no body copy in the packet, so the framing is thinner than the data items.