Daily Briefing | 2026-09-24: Obstacles Removed Ahead of US-China Summit: Interest Rate and Energy Risks Intertwine

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Today's main theme

Over the past 24 hours, the main theme of global markets has shifted from simply chasing AI growth to simultaneously repricing policy and geopolitical risks. Ahead of the summit between the two leaders on September 24, China and the United States continued to address "unfinished business" such as the trade truce and tariffs on rare earths and non-strategic goods. Both countries expressed their willingness to maintain strategic stability, but specific arrangements still need to be finalized. The People's Bank of China announced that it would replenish liquidity with overnight reverse repos of up to 1 trillion yuan per day before the National Day and Mid-Autumn Festival holidays, with a focus on smoothing funding needs at the end of the quarter and during long holidays, rather than changing the direction of interest rates. In the United States, expectations of further interest rate hikes pushed the dollar to a near two-month high; The popularity of AI applications continues to support technology risk appetite, but oil prices, bond yields, and the situation in the Middle East have amplified valuation volatility again. Iran has proposed reopening the Strait of Hormuz within seven days of the U.S. reducing military pressure and lifting the port blockade, providing a new diplomatic observation window for energy risks.

Five key news items

1. "Unfinished business" discussed again ahead of the US-China summit; trade truce and rare earth elements remain key variables.

U.S. Treasury Secretary Bessenter said on September 23 that he met again with Chinese Vice Premier He Lifeng in Washington that day to address the "unfinished business" left behind in Sunday's consultations and prepare for Trump's meeting with*on September 24. The nearly one-year trade truce between the two sides will expire on November 10; The previous truce had significantly reduced bilateral tariffs, which had once risen to triple digits, and China had also agreed to restore supplies of rare earth magnets and other key minerals. U.S. Trade Representative Greer previously stated that the two sides are also advancing the "Trade Commission" mechanism agreed upon in May to explore reducing some tariffs on consumer goods, low-tech products, and non-strategic goods such as U.S. energy, agricultural products, and medical devices. The current new progress does not mean that a comprehensive agreement has been reached, but rather that technical differences continue to be resolved before the summit. The market should focus on whether the truce will be extended, rare earth compliance standards, Boeing and agricultural product procurement, and whether the tariff list for non-strategic goods can be formulated into an enforceable text.Reuters

2. The People's Bank of China will inject up to 1 trillion yuan per day before the National Day and Mid-Autumn Festival holidays, focusing on alleviating short-term funding pressures at the end of the quarter.

On September 23, the People's Bank of China announced that it would conduct overnight reverse repurchase operations as needed from September 28 to October 8, with a maximum daily scale of RMB 1 trillion, in order to meet the short-term liquidity needs of the banking system. China's interbank bond market will be closed from September 25 to 27 during the Mid-Autumn Festival and from October 1 to 7 during the National Day holiday. Long holidays coinciding with the end of the quarter usually increase the demand for cash, payment settlement and institutional reserves. Therefore, the central bank has provided large-scale short-term liquidity arrangements in advance. At the current exchange rate, 1 trillion yuan is equivalent to approximately $149 billion, but the "maximum amount" does not mean that the full amount will be injected every day, nor can it be directly interpreted as a new aggregate stimulus. Its policy significance lies primarily in reducing abnormal fluctuations in cross-quarter funding rates and avoiding the transmission of short-term liquidity shortages to the bond and credit markets. Going forward, we should observe the actual amount of liquidity injected, the repurchase rate, the speed of fund withdrawal after the holiday, and whether the central bank will further extend temporary liquidity support into a medium-term tool.Reuters

3. The US dollar rose to a near two-month high as interest rate hike expectations regained dominance in global exchange rate pricing.

During the European trading session on September 23, the US dollar index rose about 0.36% to 100.92, hitting a near two-month high; The euro fell to around $1.1405, its lowest since the end of July, while the pound fell as much as 0.5% to around $1.3273. The core factor driving the dollar is the recent hawkish shift by major central banks, especially as the US market continues to digest the possibility of further interest rate hikes in the coming months. Previously, the Middle East conflict had pushed up energy prices and heightened inflation concerns, and this week several Federal Reserve officials said that further policy tightening may still be necessary if inflation does not fall quickly enough. At the same time, the recent decline in oil prices has provided some buffer to the global inflation outlook, so the interest rate path is not one-way determined. A stronger dollar will increase the cost of dollar financing in emerging markets and will also affect the policy space for Asian currencies such as the RMB and Japanese yen. The key variables going forward are US inflation and employment data, the two-year US Treasury yield, whether oil prices can maintain their decline, and whether central banks will continue to tighten in tandem.Reuters

4. AI applications continue to support technology trading, but oil prices and US Treasury yields amplify valuation volatility.

On September 23, Asian markets rose for the sixth consecutive trading day, with South Korean stocks up about 0.5%, Samsung Electronics up more than 2%, and Taiwanese markets up about 0.7% and near historical highs. Consumer demand for AI applications has rebounded, with Meta's Muse agent topping the US app download charts in the past two weeks, driving transactions related to semiconductors and data infrastructure. However, risk appetite fluctuated during the US session: oil prices and Treasury yields rebounded, while major indices such as the S&P 500 and Nasdaq came under pressure. The Philadelphia Semiconductor Index fell by about 1.5% in early trading, and AMD, Nvidia, and Intel weakened. Meta continued its upward trend this week. This divergence indicates that the AI narrative has not disappeared, but valuations are increasingly constrained by the interest rate discount rate. For the industry, the next stage is not just about comparing model capabilities, but also about verifying real user retention, inference costs, cloud capital expenditures, and monetization revenue. Going forward, we should also observe AI application download and payment data, chip orders, and whether the 10-year US Treasury yield has broken through key levels again.Reuters

5. Iran proposes to reopen Hormuz within seven days, providing the energy market with a new diplomatic observation window.

A senior Iranian official said on September 22 that Iran could reopen the Strait of Hormuz within seven days if the United States reduces military pressure and lifts the blockade of Iranian ports. The Iranian delegation is attending the UN General Assembly in New York and has been authorized to discuss the resumption of diplomacy through intermediaries. Iran stated that its plan to end hostilities was conveyed to the United States through intermediaries on September 16. Meanwhile, the Iranian military had previously warned that Tehran would retaliate if the United States resumed military operations. Hormuz is responsible for important global crude oil and liquefied natural gas transportation, and recent shipping disruptions have driven up insurance, freight and energy risk premiums. On September 23, Brent crude oil fell back to around $98 during trading before rebounding as the situation changed. The significance of the new statement lies in its first clear timeline for reopening, but it does not yet mean that the US and Iran have reached an agreement. Going forward, attention should be paid to New York's indirect contact, the United States' stance on port restrictions, the actual volume of navigation through the strait, and Saudi Arabia's alternative export routes.Reuters

Market Correlation and Today's Observation

Today's market can be summarized as "policy obstacles removed, liquidity supported, and risk premiums remained high." On the interest rate side, expectations of further tightening by the Federal Reserve continue to support the dollar and short-term yields, while a continued decline in oil prices will weaken some imported inflationary pressures. Therefore, the real determinants of the interest rate path will increasingly be US service prices, wages, and demand data. On the exchange rate side, after the US dollar index rises above 100, even if the RMB receives stable expectations from the China-US summit, it will still face the constraints of the China-US interest rate differential. The People's Bank of China's pre-holiday reverse repos primarily address short-term funding gaps and are not equivalent to a shift in exchange rate policy. In terms of risk appetite, the popularity of AI applications can still attract funds, but semiconductor stocks quickly came under pressure when yields rebounded, indicating that overvalued technology assets are still sensitive to discount rates.

On the commodity side, the core issue remains Hormuz: Iran has proposed a seven-day reopening condition, which may lead to a diplomatic cooling of oil prices, but the insurance and logistics risk premium will not completely disappear until the agreement is finalized and shipping resumes. Regarding Chinese policy, pre-holiday liquidity arrangements will help stabilize bond and credit markets, while if the summit can extend the trade truce and improve the predictability of rare earth supplies, it may further improve sentiment in Asian manufacturing and risk assets. The most noteworthy questions today are whether the meeting between the Chinese and US leaders can translate technical consultations into actionable arrangements, whether the US dollar and US Treasury yields will continue to rise, the sensitivity of Brent crude oil prices to diplomatic news, and whether AI trading can continue to be supported by profitability and real demand in a higher interest rate environment.

Cover image:NIR HIMI / Unsplash