Employment Data - In July, the U.S. non-farm payrolls increased by 73,000, significantly below the expected 106,000 and the previous value of 14,000[3] - The unemployment rate slightly rose to 4.2%, with the previous value at 4.1% and the forecast at 4.3%[3] - The Labor Department revised the non-farm employment data for May and June, with May's initial value of 139,000 adjusted down to 19,000 and June's from 147,000 to 14,000, totaling a downward revision of 253,000[3] Labor Market Trends - The average monthly job growth over the past three months is now only 35,000, a sharp decline from the first quarter's average of 111,000, indicating a potential overestimation of previous employment strength[3] - The labor force participation rate decreased to 62.2%, contributing to the stability of the unemployment rate despite job losses[10] - The number of foreign-born workers decreased by 1.241 million from January to July, while the domestic-born workforce increased by 3.073 million, affecting overall labor supply[12] Market Reactions and Federal Reserve Implications - Following the employment data release, U.S. stock markets fell, bond yields declined, and the dollar weakened, reflecting heightened market risk aversion[5] - The disappointing employment figures have led to increased market expectations for the Federal Reserve to cut interest rates by 25 basis points in September and October[5] - Key factors for the Fed's decision will include inflation data for July and August and the potential impact of political pressures from the Trump administration[15]

Production Side - As of the fourth week of July, the blast furnace operating rate was 83.48%, stable compared to the previous period and above last year's average[19] - The rebar operating rate increased to 43.95%, up 2.38 percentage points from the previous period, exceeding last year's average[19] - The cement mill operating rate recorded 36.95%, a slight decrease compared to the previous period[19] - The asphalt inventory saw a significant decline, indicating an acceleration in physical work volume in the infrastructure sector[7] Demand Side - In July, the real estate market remained weak, with the transaction area of commercial housing in 30 cities down by 27.43% month-on-month and 11.26% year-on-year[7] - The average daily sales of passenger cars were 53,006.50 units, reflecting a month-on-month decrease of 21.88%[8] - The total box office revenue for movies was 84,200.00 million yuan, showing a month-on-month increase of 99.53% but a year-on-year decline of 14.85%[8] Trade and Prices - The CCFI (China Containerized Freight Index) rose to 1,305.40, with a month-on-month growth of 2.19%[9] - The SCFI (Shanghai Containerized Freight Index) decreased to 1,684.07, reflecting a month-on-month decline of 16.42%[9] - The CPI showed a mild increase in consumer prices, while industrial product prices fluctuated, with PPI pressures from weak energy prices[9]

Report Summary 1. Investment Rating No investment rating for the industry is provided in the report. 2. Core Viewpoints - The economic situation judgment is optimistically cautious, with the macro - policy emphasizing continuity and stability, and leaving room for policy adjustment. The "15th Five - Year Plan" is set to play a crucial role in China's modernization process [7]. - Monetary policy remains moderately loose, with a possibility of reserve requirement ratio cuts and interest rate cuts. Structural tools are emphasized for targeted support [8]. - Fiscal policy is more proactive, with accelerated implementation of existing policies and potential new policies in consumption, technology, and foreign trade [14]. - The mid - term bond market yield is expected to continue its downward trend despite recent upward fluctuations [18]. 3. Summary by Directory 3.1 Economic Situation and "15th Five - Year Plan" - The current macro - economy is stable with progress but still faces challenges. Macro - policies aim to maintain the upward trend, with a focus on stabilizing employment, enterprises, markets, and expectations [7]. - The "15th Five - Year Plan" is a key stage for China's modernization, with a dual mission of connecting the "14th Five - Year Plan" and the 2035 vision [7]. 3.2 Monetary Policy - The moderate - loose tone of monetary policy remains unchanged. The focus shifts to the priority of structural tools over aggregate ones, with an emphasis on guiding funds to the real economy [8]. - There is a possibility of interest rate cuts in the second half of the year due to factors such as the differentiated structural economic recovery, expected Fed rate cuts, and historical rate - cut rhythms [10][12]. 3.3 Fiscal Policy - Fiscal policy remains proactive, with a focus on accelerating the issuance and use of government bonds and ensuring the bottom - line of "Three Guarantees" at the grassroots level [14]. - In the second half of the year, the implementation of existing fiscal policies will accelerate, and new policies may be introduced to support consumption, technology, and foreign trade [17]. 3.4 Bond Market - The recent rise in bond yields is due to the resonance of economic fundamentals, policy, and capital factors. The 10 - year Treasury bond yield rose from about 1.65% to 1.75% in mid - to late July [18]. - Considering the policy's emphasis on continuity and stability and the economic weak - recovery reality, the mid - term bond yield is expected to continue its downward trend [18][19].

Production Insights - As of the fourth week of July, the national blast furnace operating rate was 83.48%, stable compared to the previous period and above last year's average[11] - The rebar operating rate increased to 43.95%, up by 2.38 percentage points from the previous period, also above last year's average[11] - The cement mill operating rate recorded 36.95%, showing a slight decline compared to the previous period[3] Inventory and Capacity Utilization - As of the fourth week of July, rebar inventory decreased by 4.29% compared to the previous period, indicating a reduction in stock levels[27] - The capacity utilization rate for electric furnaces was 53.48%, up by 2.51 percentage points from the previous month, slightly above last year's average[46] - Cement clinker capacity utilization was 58.10%, down by 0.45 percentage points from the previous month, below last year's average[46] Demand Trends - In July, the sales area of commercial housing in 30 cities decreased by 27.43% month-on-month and 11.26% year-on-year[4] - The average daily sales of passenger cars were 53,006.50 units, reflecting a month-on-month decline of 21.88%[4] - The volume of postal express collection was 3.704 billion pieces, down by 5.29% month-on-month but up by 15.14% year-on-year[4] Price Movements - The average price of cement was 338.17 yuan/ton, down by 0.33% month-on-month, below last year's average[67] - The price of rebar increased by 4.14% month-on-month to 3,310.40 yuan/ton, still below last year's average[68] - The price of asphalt rose by 0.40% month-on-month to 3,823.00 yuan/ton, above last year's average[69]

Economic Overview - The actual GDP growth rate for the US in Q2 was 3%, exceeding expectations of 2.6% and the previous value of -0.5%[3] - The contribution of net exports to GDP shifted from a drag of -4.61% in Q1 to a boost of 4.99% in Q2[3] - Inventory contributions turned negative at -3.17% in Q2, compared to a positive contribution of 2.59% in Q1[3] Consumption Insights - Consumer spending showed a mild recovery with a year-on-year growth of 1.4%, up from 0.5% in the previous quarter[4] - Durable goods consumption improved from -0.28% to 0.27%, while service consumption rose from 0.30% to 0.53%[4] - Non-durable goods consumption declined, contributing 0.18% compared to 0.29% in Q1, reflecting the impact of tariff policies[4] Investment Trends - Private investment decreased significantly, with an overall growth rate of -3.09% in Q2, down from 3.9% in Q1[4] - Equipment investment's contribution to GDP fell from 1.11% to 0.26%, despite knowledge-based investments maintaining growth[4] - Residential and construction investments continued to face pressure in a high-interest-rate environment, with contributions declining further[4] Trade and Inventory Dynamics - Imports decreased by 30.3% in Q2, a smaller decline than the previous quarter's increase of 37.9%[5] - Exports turned negative at -1.8% due to the impact of tariffs, indicating a shift in trade dynamics[5] - Inventory consumption in Q2 was greater than the accumulation in Q1, contributing -3.17% to GDP[5] Government Spending - Federal government spending remained low, contributing only 0.08% to GDP, while state and local government spending increased to 0.32%[5] - Defense spending rebounded to 0.08%, while non-defense spending continued to decline[5] Future Outlook - The economic growth in Q2 relied heavily on trade fluctuations, with weak performance in consumption, investment, and government spending[11] - The expectation of continued pressure on consumption and investment in Q3 due to tariff impacts and delayed interest rate cuts from the Federal Reserve[11] - The upcoming quarter is critical for assessing economic risks, particularly regarding inflation and labor market changes[12]

Investment Rating - The investment rating for the copper industry is Neutral, which has been downgraded [7] Core Insights - The significant drop in copper prices is attributed to the U.S. government's unexpected policy shift regarding tariffs on copper imports, which did not meet market expectations [4][5] - The U.S. is highly dependent on imported refined copper, with 2024 consumption projected at 1.545 million tons and domestic production at 826,000 tons, leading to a compromise in tariff policy to protect domestic manufacturing [5] - Short-term impacts include increased price volatility, a return to average price differentials between COMEX and LME copper, and rising U.S. copper inventories due to trade shifts [5] - Mid-term expectations suggest a return to fundamental pricing logic as the tariff policy stabilizes, with potential for price recovery during the fourth quarter production peak [5] - Long-term supply constraints remain, with challenges in copper mining exploration and development, supporting a bullish outlook for copper prices [9] Summary by Sections - **Tariff Policy Impact**: The U.S. imposed a 50% tariff on copper semi-finished products and high-copper derivatives, leading to a significant market reaction with a 17.88% drop in COMEX copper futures [3][4] - **Market Dynamics**: The initial expectation of comprehensive tariffs led to speculative trading, which was disrupted by the actual policy announcement, resulting in a historical price drop [4] - **Supply and Demand Outlook**: The long-term supply bottleneck in copper mining and the increasing importance of copper in electrical and AI industries suggest a sustained upward price trend despite short-term volatility [9]

Historical Context - From 1949 to 1977, China's monetary policy served as an administrative tool under a unified banking system, lacking market foundations and credit creation mechanisms[3][4]. - Post-1978, the separation of central and commercial banking functions led to an independent monetary policy framework, establishing a dual-layer currency creation mechanism[4][5]. Transition Phases - From 1998 to 2012, a quantity-based control system emerged, with M2 and total credit volume as core targets, driven by non-market interest rates and external pressures[5][6]. - After 2012, the effectiveness of quantity tools diminished, prompting a shift towards price-based monetary policy, with interest rates becoming central to regulation[6][7]. Structural Changes - By 2020, the proportion of new RMB loans in total social financing dropped from 91.9% in 2002 to 57.5%, indicating a shift towards off-balance-sheet financing[7][30]. - The balance of current accounts as a percentage of GDP decreased from around 10% in 2007 to below 3% post-2011, reflecting changes in foreign exchange reserves and monetary policy dynamics[7][34]. Policy Mechanisms - The establishment of a rate corridor in 2015 clarified policy signals, with the SLF as the upper limit and excess reserve rates as the lower limit, enhancing market expectations[9][10]. - As of 2023, the monetary policy framework has been optimized to strengthen the price-oriented function of policy rates, narrowing the rate corridor from 245 basis points to 70 basis points[10][11]. Future Outlook - The price-based framework is expected to deepen, with structural monetary policy tools gaining priority to address financing gaps in emerging sectors like technology and green industries[12][11]. - The focus will shift from total quantity control to structural optimization, emphasizing targeted resource allocation in key areas such as housing and infrastructure[12][11].

GDP Performance - In Q2, China's GDP grew by 5.2% year-on-year, while nominal GDP growth was only 3.9%, indicating a mismatch between supply and demand[3] - The deflator index further expanded to -1.3%, highlighting weak price levels[3] Production Insights - Industrial value-added growth was 6.8% in June, with a Q2 average of 6.4%, driven by strong exports[14] - The service sector maintained stable growth, with a cumulative production index increase of 5.9%[14] Investment Trends - Fixed asset investment growth slowed to 2.8% in Q2, down 1.4 percentage points from Q1[22] - Infrastructure investment growth was 8.9%, while real estate investment saw a significant decline of -12.9% in June, with a cumulative decline of -11.2%[24] Consumption Patterns - Retail sales grew by 4.6% year-on-year in Q2, a decrease from Q1, with durable goods consumption supported by "old-for-new" policies[39] - Restaurant consumption weakened significantly, with June's growth plummeting to 0.9%[39] Outlook and Policy Recommendations - To meet the annual GDP target of 5%, a growth rate of at least 4.7% is required in the second half of the year[42] - Continued policy support is essential to boost domestic demand, particularly in real estate and manufacturing sectors[42] Risk Factors - Potential risks include domestic policy implementation falling short of expectations and unexpected changes in overseas policies[43]

Group 1: Export Performance - June export growth rate was 5.9%, up 1.2 percentage points from the previous month, exceeding the Wind consensus forecast by 2.7 percentage points[3] - Cumulative export growth for the first half of the year was 5.9%, slightly higher than last year's full-year growth of 5.8%[3] - Trade surplus for the first half of the year reached $585.95 billion, a year-on-year increase of 34.52%, surpassing last year's growth of 20.7%[3] Group 2: Regional Export Trends - Exports to the U.S. decreased by 16.1%, but the decline narrowed by 18.4 percentage points from the previous month, with U.S. exports accounting for 12% of total exports[4] - Exports to ASEAN countries maintained high growth at 16.9%, with Vietnam, Thailand, and the Philippines showing growth rates of 23.8%, 27.9%, and 10.2% respectively[4] - Exports to the EU grew by 7.6%, down 4.4 percentage points from the previous month, with Germany's export growth slowing to 3.5%[4] Group 3: Product-Specific Insights - Labor-intensive product exports showed improvement, with declines narrowing to -7.1% for bags, -1.6% for textiles, and -4.0% for footwear[5] - Mechanical and high-tech product exports grew by 8.2% and 6.9% respectively, with integrated circuits, automobiles, and ships showing high growth rates of 24.2%, 23.1%, and 23.6%[5] - The contribution of mechanical products to export growth was 4.8 percentage points, while high-tech products contributed 1.6 percentage points[5] Group 4: Import Trends - Import growth returned to positive territory at 1.1%, a significant rebound of 4.5 percentage points from the previous month[6] - Mechanical and high-tech products were the main drivers of import growth, with rates of 6.4% and 10.0% respectively[6] - Energy product imports faced declines, with coal, crude oil, and natural gas showing decreases of -44.7%, -15.0%, and -5.9% respectively due to falling prices[6] Group 5: Future Outlook - Short-term export resilience is expected to continue, supported by tariff exemptions and ongoing "export grabbing" strategies[7] - However, medium to long-term pressures may build due to the expiration of tariff exemptions and potential demand exhaustion[7] - Risks include unexpected changes in overseas policies and slower-than-expected economic recovery abroad[8]

Group 1: Report's Investment Rating - No information provided on the industry investment rating Group 2: Core Views - The bond market yield has been oscillating at a high level and has declined. In 2025, the yields of treasury bonds and policy bank bonds at all tenors have shown a trend of high - level oscillation. The short - end interest rate has risen significantly, while the long - end interest rate has risen slightly, and the spread between the long - end and short - end has narrowed. The prices of treasury bond futures have corrected from high levels [3]. - Affected by multiple factors, the bond market yield has oscillated. In Q1 2025, the central bank tightened the money market in the short term, causing the yields of bonds at all tenors to rise and the prices of treasury bond futures to correct from high levels. Since Q2, due to Trump's tariff policies, the demand for bond - type assets as a hedge has increased, leading to a decline in bond yields and an increase in treasury bond futures prices. The monetary policy remains loose, the capital price has declined, and the bond yield is at a relatively low level [3]. - Looking forward, the bond yield may mainly show an oscillating pattern in the short term and remain in a downward trend in the long term. The macro - economic fundamentals are being repaired, but the repair progress of investment, prices, and profits is still slow. The monetary policy remains loose, the money supply growth rate is expected to increase, and there is still a possibility of reserve requirement ratio cuts and interest rate cuts in the second half of the year. The capital price is at a relatively low level. Overall, the bond yield is expected to remain in a downward trend [7]. Group 3: Summary by Directory 1. Bond Market Review: After Tariff Disturbances, Yields Oscillate at Low Levels - **1.1 Bond Yields: Overall in a Downward Trend with Short - Term Oscillations** - After the tariff disturbances, the bond market has mainly oscillated. The 10 - year treasury bond yield has mostly been between 1.6% and 1.7%, and was mostly below 1.65% in June. From the perspective of the term structure, the short - end interest rate has shown a downward trend, the long - end interest rate has oscillated, and the term spread is generally at a low level and has recently increased slightly [12]. - The closing prices of treasury bond futures at different tenors have oscillated at high levels. The prices of 2 - year, 5 - year, and 10 - year treasury bond futures have all shown a downward trend, with the 10 - year showing a steeper slope [3]. - **1.2 Attribution of Bond Market Fluctuations: Liquidity Tightening Pushes Up Yields, Tariff Disturbances Pull Down Yields** - In Q1, the bond yield showed a low - level oscillation and an upward trend, mainly related to the central bank's monetary policy operations. In January, the bond yield was at a relatively low level due to the moderately loose monetary policy. From February to March, the bond yield rose because of the central bank's short - term tight monetary policy [16]. - In Q2, the bond yield decreased rapidly and remained at a low level, related to Trump's tariff shock and the central bank's moderately loose monetary policy. In April, Trump's tariff policy increased the demand for hedging assets such as bonds, pulling down the bond yield. Since mid - April, the bond market has continued to oscillate at a low level, mainly due to the continued loose monetary policy, slow repair of the economic fundamentals, and low capital prices [17]. - **1.3 Bond Market Participants: Institutions Overall Increase Holdings of Interest - Rate Bonds, and Holdings of Credit Bonds Decline** - Financial institutions have overall increased their holdings of interest - rate bonds. Commercial banks, credit unions, insurance companies, securities companies, and overseas institutions have all increased their holdings of interest - rate bonds. For example, in May 2025, commercial banks' holdings of interest - rate bonds reached 73.2 trillion yuan, an increase of 3.5 trillion yuan compared to the end of 2024 [18]. - Financial institutions' holdings of inter - bank credit bonds have declined. Commercial banks, credit unions, insurance companies, securities companies, and overseas institutions have all reduced their holdings of credit bonds. For example, in May 2025, commercial banks' holdings of credit bonds were 2.586 trillion yuan, a decrease of about 180 billion yuan compared to the end of 2024 [21]. 2. Policy Front: Monetary Policy Remains Moderately Loose, and Structural Policies Continue to Exert Force - **2.1 Monetary Policy Tone: Moderately Loose and Precise and Effective** - The monetary policy tone has been adjusted from prudent to moderately loose. In December 2024, the Central Political Bureau Meeting and the Central Economic Work Conference proposed to implement a moderately loose monetary policy. In 2025, relevant policies have continued to emphasize this tone [33]. - In May 2025, the central bank introduced a structural monetary policy, including reducing the reserve requirement ratio by 0.5 percentage points, providing about 1 trillion yuan of long - term liquidity to the market; adjusting policy interest rates; and implementing a series of measures in terms of quantity, price, and structure to support the real economy [34]. - **2.2 Money Supply: The Growth Rates of M1 and M2 Continue to Increase, and the Financing Demand of the Real Economy Improves** - The M1 growth rate has continued to improve, and the gap between M2 and M1 has decreased. The M2 year - on - year growth rate has been on the rise. The M1 year - on - year growth rate has increased significantly, indicating the continuous repair of the real economy. The decrease in the gap between M2 and M1 indicates the continuous improvement of currency activation [37]. - The social financing increment has improved, and the decline in the difference between M2 and the year - on - year growth rate of social financing stock has narrowed. The year - on - year growth rate of social financing stock has been on the rise, indicating the continuous improvement of the financing demand of the real economy. From the perspective of important sub - items of social financing, RMB loans have increased year - on - year, and government bond financing has continuously supported the performance of social financing [40][45]. - **2.3 Money Price: The Central Bank Cuts Reserve Requirement Ratios and Interest Rates, and Market Liquidity is Abundant** - Policy interest rates are in a downward trend, and the reserve requirement ratio has been cut. The 7 - day reverse repurchase rate, MLF rate, and LPR rate have all been lowered, and the reserve requirement ratios of large, medium, and small financial institutions have been cut [68]. - **2.4 RMB Exchange Rate: Slightly Appreciated, and Expected to Remain Stable in the Future** - The RMB exchange rate against the US dollar has slightly appreciated but remained stable overall. The Sino - US treasury bond yield spread is at a low level. After the tariff disturbances, the RMB may appreciate slightly, but the exchange rate is expected to remain stable overall [72]. 3. Fundamental Aspects: The Growth Rates of Total Consumption and Exports are Fast, while Investment, Prices, and Profits are Under Pressure - **3.1 Aggregate: GDP Growth Rate is Higher than the Target, Highlighting Growth Resilience** - In 2024, China's GDP achieved a growth rate of 5%. In 2025, the annual growth target is still about 5%. In Q1, the GDP growth rate reached 5.4%, and in Q2, it reached 5.2%. The cumulative growth rate in the first half of the year was 5.3%, and it is expected that the annual growth target will be easily achieved [78]. - **3.2 Production: The Repair Progress is Moderately Fast, but Manufacturing Expectations are Weak** - The growth rate of industrial added value above a designated size has been relatively stable. The PMI has increased marginally but remained below the boom - bust line, indicating that the manufacturing production repair sentiment needs to be improved [81]. - From the perspective of high - frequency data, the year - on - year growth rate of the daily coal consumption of key power plants has been moderately fast. The blast furnace operating rate has been at a low level, indicating that the repair progress of the steel industry and related industries is slow. The operating rates of automobile semi - steel tires and full - steel tires have shown different repair progress, and the operating rates of PTA, PX, UPR, polyester staple fibers, and Jiangsu and Zhejiang looms have shown different trends, indicating that the chemical and textile industries' repair progress is moderate [83][85][89][95]. - **3.3 Investment: The Growth Rate Declines Marginally, and Real Estate Investment Growth Rate Continues to be Negative** - The overall repair progress of investment is slow. The cumulative growth rate of fixed - asset investment from January to June 2025 was 2.8%, a decrease of 0.9 percentage points compared to the previous value. Manufacturing investment has a relatively fast growth rate but is declining marginally. Infrastructure investment growth has decreased. Real estate development investment has continued to be negative, dragging down the investment growth rate [98]. - High - frequency indicators related to real estate investment, such as land transaction area, land premium rate, commercial housing transaction area, second - hand housing listing volume, and second - hand housing listing price index, are all at low levels, indicating that the real estate market may still be in the stage of stopping the decline [103]. - **3.4 Consumption: The Repair Progress is Moderate, and the Growth Rates of Different Industries Show Differentiation** - The overall repair progress of consumption has accelerated. The cumulative growth rate of social retail sales from January to June 2025 was 5%. From the perspective of sub - items of social retail sales, the growth rates of different types of commodity consumption vary greatly. For example, the cumulative year - on - year growth rate of automobile consumption has improved, while the growth rate of petroleum and its products has been in a downward trend [123]. - **3.5 Trade: Exports are Less Affected by Tariffs, and Import Growth Rate is Slow** - From January to June, the cumulative year - on - year export growth rate was 5.9%, indicating that China's exports have been less affected by Trump's previous tariff policies. The import growth rate has improved marginally but remained in the negative growth range [136]. - The tariff disturbances are coming to an end, and the capital market is becoming more insensitive to tariffs. After rounds of Sino - US trade consultations, the tariffs on bilateral trade have been significantly reduced [141]. - **3.6 Prices: Consumer Prices Improve but Remain at a Low Level, and Producer Prices are Continuously in Negative Growth** - The CPI growth rate has improved marginally but remained at a low level. In June, the CPI year - on - year growth rate was 0.1%, turning positive from negative. Many food price indices are at low levels, indicating that the rebound of consumer prices is under pressure [143]. - The producer price index has continued to be negative. In June, the PPI year - on - year growth rate was - 3.6%, remaining in the negative growth range for 33 consecutive months. Many production - related price indices are in a downward trend, indicating that the repair of the production - end price index is under pressure [153]. - **3.7 Profits: Fall into Negative Growth, and the Growth Rate of Finished Goods Inventory Declines** - The growth rate of industrial enterprise profits has declined marginally and fallen into negative growth. The PPI year - on - year growth rate, which is highly related to price factors, has been continuously in negative growth, dragging down the performance of industrial enterprise profits [167]. - The cost and expenses per 100 yuan of operating income of industrial enterprises are at a high level, the asset - liability ratio has declined from a high level, and the year - on - year growth rate of finished goods inventory is at a low level [170]. 4. Capital Aspects: Prices have Fallen from High Levels, and Liquidity is Abundant - **4.1 Capital Price: At a Relatively Low Level, and Liquidity Continues to be Loose** - Capital prices are at a low level and in a downward trend. The 7 - day reverse repurchase rate, DR007, and R007 are all at relatively low levels, indicating that the capital market is abundant [176]. - **4.2 Deposit - Loan Difference: Reaching New Highs Continuously, and Deposit Growth Rate is Rebounding** - The deposit - loan difference of financial institutions has reached new highs continuously. The year - on - year deposit growth rate has rebounded, while the year - on - year loan growth rate has declined. The excess reserve ratio of financial institutions has declined marginally, indicating that the liquidity among financial institutions is abundant [178]. - **4.3 Inter - Bank Certificates of Deposit: Capital Prices are Low, and Certificate Yields are in a Downward Trend** - The yields of inter - bank certificates of deposit have rebounded recently but are in a long - term downward trend. The yields of AAA - rated 1 - year and 1 - month inter - bank certificates of deposit are in a downward trend. The spread between the 1 - month and 1 - year yields has been compressed and even inverted [181]. 5. Supply Aspects: Fiscal Policy is Exerting Force at a Moderate Pace, and Bond Net Financing is at a High Level - **5.1 Fiscal Policy Tone: More Active and Continuously Exerting Force** - The fiscal policy tone is more active. In December 2024, relevant meetings proposed to implement a more active fiscal policy. In 2025, the "Government Work Report" made clear arrangements for the deficit ratio, special treasury bonds, and local government special bonds. The cumulative new government debt scale in 2025 is 11.86 trillion yuan [185]. - **5.2 Fiscal Exertion: Large Space and Moderate Pace** - The general public budget expenditure progress is moderate, the issuance progress of treasury bonds is relatively fast, special treasury bonds have been issued, and there is still a large space for ultra - long - term special treasury bonds. The issuance progress of local government bonds is moderate. It is expected that the fiscal exertion progress will accelerate in the second half of the year, and the issuance progress of local government special bonds will speed up [6]. - **5.3 Bond Market Supply: Net Increase is Generally at a High Level, and the Rhythm is Stable** - In the first half of the year, the monthly net increase in bond issuance was at a high level in the same period, and interest - rate bonds were the main driving factor for the net increase in bonds. The weekly issuance rhythm of bonds is stable [6].