〔Day Digest〕PBOC Sets a Daily 1.25% Overnight Auction as Yuan Breaks 6.65 per Dollar, but Euro-Area Unemployment Rises to 6.5% - Operational Shift Meets Labor Softness

0. Weekly Arc

• **[NEW] Operational shift:** The People's Bank of China announced daily overnight reverse-repo auctions beginning November 2 at a fixed 1.25% rate, while the onshore yuan closed at 6.6557 per dollar and the offshore rate broke through 6.65 ^[1][2][3].
• **[NEW] Mixed macro signal:** Euro-area September unemployment rose to 6.5%, above the 6.40% expectation, as the previous reading was revised to 6.5% ^[4]. China's first-three-quarter enterprise profits were reported up 15.5%, although the supplied item contains no breakdown, while Macau's real GDP grew 2.9% ^[5][6].
• **[NEW] Falsifiable read:** The clean test is whether the November 2 auction format is implemented as stated and whether the offshore yuan remains beyond 6.65; the supplied material establishes no causal link between the operating change and the currency move, so yuan strength alone would not validate that attribution ^[1][3].

1. Monetary Operations, FX and Rates

• **[NEW] Overnight anchor:** Every business day from November 2, the central bank will conduct overnight reverse-repo operations through a fixed-rate, quantity tender at a current rate of 1.25% ^[1].
• **[NEW] Curve plumbing:** The seven-day reverse-repo operation will use fixed quantity, a rate auction and multiple-price allocation, mainly around tax periods and month-end; temporary repo and reverse-repo operations, offshore central-bank repo tools and similar instruments will be priced as spreads from the overnight rate, with the spreads unchanged ^[1].
• **[NEW] Currency confirmation:** The onshore yuan closed at 6.6557 per dollar, gaining 64 pips from the prior trading day, while the offshore yuan moved through 6.65 per dollar to its highest level since June 2022 ^[2][3].
• **[NEW] Credit-price context:** The weighted-average interest rate on newly issued commercial personal housing loans nationwide was 3.05% in the third quarter ^[7].
• **[NEW] Treasury supply:** On November 6, the Finance Ministry plans a RMB120 billion reopening of a 2026 one-year fixed-rate book-entry Treasury bond at 1.16%, with Class A additional bidding, and a RMB20 billion reopening of a 2025 50-year fixed-rate bond at 2.28%, without Class A additional bidding; both competitive auctions are scheduled for 10:35-11:35 ^[8][9].

2. Trade, Earnings and Market Microstructure

• **[NEW] Macau trade:** Macau's Statistics and Census Service reported first-three-quarter exports of MOP12.41 billion, up 20.4% year on year, comprising MOP11.12 billion of re-exports, up 20.5%, and MOP1.30 billion of local-product exports, up 19.8%; imports rose 22.0% to MOP110.70 billion, total trade reached MOP123.12 billion and the trade deficit was MOP98.29 billion ^[10].
• **[NEW] Macau output:** Preliminary real GDP reached MOP316.13 billion in the first three quarters, up 2.9% year on year ^[6].
• **[NEW] Produce corridor:** Horgos Customs reported 490,000 tonnes of fruit and vegetable exports from January through September, up 23.7% year on year and a record high for the period ^[11].
• **[NEW] Bank earnings:** China Merchants Bank reported third-quarter revenue of RMB86.671 billion, up 6.41% year on year, and net profit attributable to shareholders of RMB40.031 billion, up 3.06% year on year and 3% quarter on quarter from RMB38.593 billion in Q2; first-three-quarter revenue was RMB264.852 billion, up 5.34%, and attributable profit was RMB116.476 billion, up 2.38% ^[12].
• **[NEW] AI-linked optical earnings:** Yangtze Optical Fibre reported third-quarter revenue of RMB9.316 billion, up 139.42%, net profit of RMB3.203 billion, up 1,741.52%, and recurring net profit of RMB3.056 billion, up 2,003.37%; first-three-quarter revenue was RMB19.124 billion, up 86.12%, net profit RMB6.128 billion, up 1,204.63%, and recurring profit RMB5.505 billion, up 1,846.32%, which the company attributed to AI data-center construction lifting industry volumes and average selling prices ^[13].
• **[ONGOING] Market discipline:** The Shenzhen Stock Exchange took self-regulatory measures against 113 cases of abnormal trading between October 26 and October 30 ^[14].

3. Industrial Policy and Energy Security

• **[NEW] Procurement framework:** The Ministry of Industry and Information Technology and the Ministry of Finance opened the first product-level public consultation under the domestic-product procurement framework established in September 2025, covering five product categories ^[15][16].
• **[NEW] Domestic-content thresholds:** Portable Fourier-transform infrared gas analyzers and reverse-osmosis water-treatment equipment face 70% domestic component-cost thresholds, fixed multi-joint industrial robots 70%, medium and small helicopters 60%, and field-emission scanning electron microscopes 50% ^[15].
• **[NEW] Implementation path:** The standards would begin five years after issuance for gas analyzers and water-treatment equipment and three years after issuance for robots, helicopters and electron microscopes; qualifying core components and processes must be produced or completed in China ^[15].
• **[ONGOING] Winter power balance:** National Energy Administration Electric Power Department Deputy Director Tan Hongjiang said national electricity supply and demand should remain broadly balanced this winter, but an extreme cold wave or primary-energy squeeze could leave some regions tight at peak hours; he said cross-region balancing and emergency measures could address those gaps ^[17].
• **[ONGOING] Coal backstop:** National Energy Administration General Office Deputy Director Wang Dapeng said overall coal supply is secure, with the agency promoting output, stabilization policies, thermal-coal long-term contracts, reserve mine capacity, field inspections and imports ^[17].
• **[ESCALATED] Retail-power cleanup:** National Energy Administration Market Regulation Department Deputy Director Wang Yunbo said forthcoming documents will cover management of electricity retailers, basic electricity-retail rules and power-market risk prevention, following recent retailer losses, delistings and fulfillment-risk concerns ^[18].
• **[NEW] Retail-power scale:** At end-September, 3,743 registered electricity retailers were actively trading and represented about 3.17 trillion kilowatt-hours, more than half of market volume; in Guangdong's first half, 202 retailers were profitable while 298 were loss-making, a loss-making share of nearly 60% ^[18].
• **[NEW] Nuclear capacity:** The National Nuclear Safety Administration issued construction permits for Units 5 and 6 of the Shandong Haiyang nuclear power project ^[19].
• **[NEW] Thin urban-renewal lead:** The supplied Xinhua item describes urban renewal as a trillion-yuan investment track but provides no project list, financing structure or schedule, making it a headline rather than a quantified allocation signal ^[20].

4. External Risks and Consumer Watch

• **[NEW] European labor:** Euro-area September unemployment was 6.5%, above the 6.40% expectation, while the previous reading was revised from 6.4% to 6.5%; the supplied item contains no central-bank reaction or market-pricing read ^[4].
• **[ESCALATED] US-China technology friction:** Referring to reports that US regulators had decided to bar all Chinese laboratories from testing smartphones and other US electronic equipment, Ministry of Foreign Affairs spokesperson Guo Jiakun said Washington was generalizing national security, abusing state power and unreasonably suppressing Chinese companies; China would take necessary measures to protect its legitimate rights, and the item confirms the official response rather than the reported decision itself ^[21].
• **[NEW] Travel-cost pass-through:** From November 5, adult domestic-flight fuel surcharges will be RMB80 for segments of 800 kilometers or less and RMB140 for longer segments, up RMB30 and RMB50 respectively; the corresponding rates for eligible children and specified discount groups will be RMB40 and RMB70 ^[22].
• **[NEW] Appliance squeeze:** First财经 reported rising memory-chip input costs, weaker end demand and discounting pressure across home appliances; a cited research institution expects no major Double 11 sales surge, but the item provides anecdotes rather than an aggregate contraction series ^[23].