Economic Growth - In Q4 2025, GDP growth slowed to 4.5%, down from 4.8% in Q3, with an annual growth rate of 5.0%, matching the previous year[1][2] - The contribution of net exports to GDP growth was 1.6 percentage points, significantly higher than the ten-year average of 0.4 percentage points[8] Industrial Production - In December 2025, industrial output increased by 5.2%, up 0.4 percentage points from November, driven by strong export performance[11][12] - The cumulative industrial value added for 2025 grew by 5.9%, slightly up by 0.1 percentage points from the previous year, indicating resilience in the manufacturing sector[13] Consumption - Retail sales in December 2025 grew by 0.9%, a decline from 1.3% in November, with an annual growth rate of 3.7%, slightly up by 0.2 percentage points from the previous year[15][17] - The tightening of consumption subsidy policies and ongoing adjustments in the real estate market have negatively impacted consumer confidence[17] Investment - Fixed asset investment in 2025 decreased by 3.8%, a decline that accelerated from the previous year's drop of 2.6%[20][26] - Infrastructure investment (excluding electricity) fell by 2.2%, with a significant drop of 12.2% in December alone, reflecting ongoing challenges in the real estate sector[21][26] Outlook for 2026 - GDP growth is projected to reach approximately 4.8% in 2026, supported by more proactive macroeconomic policies aimed at boosting domestic consumption and stabilizing investment[3][10] - The focus will be on accelerating the development of high-tech manufacturing and stabilizing real estate policies to support economic growth[4][10]

Loan Data - In December 2025, new RMB loans amounted to 910 billion, a year-on-year decrease of 80 billion, with a month-on-month increase of 520 billion[1] - For the entire year of 2025, new RMB loans totaled 16.27 trillion, a decrease of 1.82 trillion compared to the previous year, primarily due to a declining real estate market and weak investment and consumption[7] - December's corporate loans showed a year-on-year increase of 5.8 trillion, while residential loans experienced a negative growth of 916 billion, reflecting weak consumer demand[6] Social Financing - In December 2025, the total social financing (social financing scale) was 22.075 trillion, a year-on-year increase of 646.2 billion, but a month-on-month decrease of 285.1 billion[1][8] - For the year 2025, social financing increased by 3.34 trillion, with government bond financing and corporate bond financing being the main contributors to this growth[9] Monetary Supply - As of the end of December, M2 growth was 8.5%, up 0.5 percentage points from the previous month, driven by high government bond financing converting into deposits[10] - M1 growth was 3.8%, down 1.1 percentage points from the previous month, indicating weak consumer and investment activity amid ongoing adjustments in the real estate market[10] Monetary Policy Outlook - The central bank announced a 0.25 percentage point reduction in various structural monetary policy tool rates, indicating potential for further policy rate cuts of 20-30 basis points in 2026[3][12] - There remains a potential for a 1.3 percentage point reduction in the reserve requirement ratio, suggesting ample room for monetary easing in 2026[13] - The forecast for new RMB loans in 2026 is approximately 17.5 trillion, an increase of about 1.2 trillion from 2025, driven by expected recovery in corporate loans despite ongoing challenges in the real estate sector[14]

Report Summary 1. Investment Rating - No investment rating for the industry is provided in the report. 2. Core View - On January 16, the liquidity gradually returned to a loose state, with major repurchase rates declining; the bond market generally warmed up; the main indices of the convertible bond market rose collectively, and most convertible bond issues saw price increases; yields of U.S. Treasury bonds across various maturities generally went up, and yields of 10 - year government bonds in major European economies also mostly increased [1][2]. 3. Summary by Section 3.1 Bond Market News - **Domestic News** - The central bank and the National Financial Regulatory Administration adjusted the minimum down - payment ratio for commercial real estate mortgages to no less than 30% on January 17 [4]. - The Ministry of Finance and the State Taxation Administration extended the tax incentives for public rental housing until December 31, 2027, on January 16 [4]. - The China Securities Regulatory Commission emphasized maintaining market stability, strengthening monitoring, and guiding long - term investment at its 2026 system work meeting on January 15 [5]. - The National Financial Regulatory Administration called for promoting the regular operation of the urban real estate financing coordination mechanism and supporting the resolution of financing platform debt risks at its 2026 regulatory work meeting on January 15 [5]. - **International News** - On January 16, Federal Reserve Governor Bowman called on the Fed to be ready to cut interest rates if the labor market does not improve sustainably [7]. - **Commodities** - On January 16, international crude oil futures prices turned up while international natural gas prices turned down. WTI February crude oil futures rose $0.25, or 0.42%, to $59.44 per barrel; Brent March crude oil futures rose 0.58% to $64.13 per barrel; COMEX gold futures fell 0.57% to $4597 per ounce, with a cumulative weekly increase of 2.12%; NYMEX natural gas prices fell 1.11% to $3.109 per ounce [8]. 3.2 Liquidity - **Open - Market Operations** - On January 16, the central bank conducted 7 - day reverse repurchase operations worth 86.7 billion yuan at a fixed interest rate of 1.40%, with a net injection of 52.7 billion yuan after 34 billion yuan of reverse repurchases matured [10]. - **Funding Rates** - On January 16, the liquidity gradually loosened, and major repurchase rates declined. DR001 dropped 4.73bp to 1.320%, and DR007 dropped 5.94bp to 1.443% [11]. 3.3 Bond Market Dynamics - **Interest - Rate Bonds** - **Yield Trends of Cash Bonds** - On January 16, due to the loosening liquidity and the decline of the stock market, the bond market generally warmed up. As of 20:00 Beijing time, the yield of the 10 - year Treasury bond active issue 250016 dropped 1.20bp to 1.8430%, and the yield of the 10 - year China Development Bank bond active issue 250215 dropped 0.40bp to 1.9640% [14]. - **Bond Tendering Results** - The 3 - year 25 Jinchu 13 (Increment 7) was issued with a scale of 6 billion yuan, a winning yield of 1.6176%, a full - field multiple of 4.66, and a marginal multiple of 5.32 [16]. - **Credit Bonds** - **Abnormal Secondary - Market Transactions** - On January 16, the trading prices of 3 industrial bonds deviated by more than 10%. "21 Vanke 06" rose over 10%, "23 Vanke 01" rose over 21%, and "23 Vanke MTN003" rose over 39% [16]. - **Credit Bond Events** - Shenye Group cancelled the issuance of "26 Shenye MTN001" due to market reasons. Moody's revoked Hailong Holdings' "Ca" corporate family rating at the company's request. Fitch downgraded Wanda Commercial and Wanda Hong Kong's long - term foreign - currency issuer ratings to "RD" and then upgraded them to "CC". Guang'an Aizhong expected its net profit in 2025 to be negative. Gome Electric was listed as a dishonest executor with a total execution target of 116 million yuan. The Shanghai Stock Exchange publicly condemned Jiangsu Baoguangli Video Technology Group for failing to disclose its interim report on time [17]. - **Convertible Bonds** - **Equity and Convertible Bond Indices** - On January 16, the three major A - share indices fell. The Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index dropped 0.26%, 0.18%, and 0.20% respectively, with a total trading volume of 3.06 trillion yuan. The main convertible bond market indices rose collectively. The CSI Convertible Bond Index, Shenzhen Convertible Bond Index, and Shanghai Convertible Bond Index rose 0.47%, 0.59%, and 0.31% respectively. The trading volume of the convertible bond market was 103.48 billion yuan, an increase of 8.109 billion yuan from the previous trading day. Among 388 convertible bond issues, 236 rose, 139 fell, and 13 remained flat [18]. - **Convertible Bond Tracking** - On January 17, Changgao Electric and Haitian Co., Ltd. received CSRC approval for convertible bond issuance. On January 16, Meinuo Convertible Bond proposed a downward revision of the conversion price; Changqi Convertible Bond, Oujing Convertible Bond, Jidong Convertible Bond, Aojia Convertible Bond, and Mars Convertible Bond were about to trigger the downward - revision clause of the conversion price. Guanglian Convertible Bond, Jiamei Convertible Bond, and Fumiao Convertible Bond announced early redemption; Huazheng Convertible Bond and Daotong Convertible Bond were expected to trigger the early - redemption clause [26]. - **Overseas Bond Markets** - **U.S. Bond Market** - On January 16, yields of U.S. Treasury bonds across various maturities generally went up. The 2 - year U.S. Treasury bond yield rose 3bp to 3.59%, and the 10 - year yield rose 7bp to 4.24%. The 2/10 - year U.S. Treasury bond yield spread widened by 4bp to 65bp, and the 5/30 - year yield spread narrowed by 1bp to 101bp. The break - even inflation rate of the 10 - year U.S. Treasury Inflation - Protected Securities (TIPS) rose 4bp to 2.33% [22][23][24]. - **European Bond Market** - On January 16, yields of 10 - year government bonds in major European economies generally increased. The 10 - year German government bond yield rose 3bp to 2.84%, and those of France, Italy, Spain, and the UK rose 3bp, 1bp, 1bp, and 1bp respectively [25]. - **Daily Price Changes of Chinese - Issued U.S. Dollar Bonds (as of the close on January 16)** - The prices of some Chinese - issued U.S. dollar bonds changed. For example, the price of New World Development's bond rose 13.6%, while that of Bilibili's bond fell 1.3% [27].

Group 1: Inflation Overview - December inflation in the U.S. showed a moderate performance, confirming the downward trend in inflation despite concerns over November's data distortion due to government shutdown effects[4] - The overall CPI year-on-year growth remained stable at 2.7%, while the core CPI year-on-year growth was steady at 2.6%, both aligning with expectations[4] - The decline in energy prices, which fell from 4.2% in November to 2.3% in December, significantly contributed to the moderate inflation figures[5] Group 2: Price Dynamics - The prices of used cars, a key indicator, dropped from 3.6% in November to 1.6% in December, indicating a significant easing in core inflation pressures[5] - Food prices increased from 2.6% in November to 3.1% in December, driven by higher dining out costs and seasonal consumption effects[6] - Medical service prices rebounded to 3.5%, reflecting resilience in service consumption despite overall inflation moderation[6] Group 3: Future Inflation Outlook - The inflation trajectory for 2026 is expected to show moderate declines, influenced by tariff costs being passed to end prices, but countered by falling housing prices and energy prices due to oversupply[7] - The impact of tariffs is anticipated to peak in the first half of 2026, with inflation likely to rise initially before declining in the latter half of the year[7] Group 4: Federal Reserve Policy Implications - The moderate inflation data in December is unlikely to prompt the Federal Reserve to lower interest rates in January, as current policy rates are near neutral levels[8] - The labor market remains stable, with no significant deterioration, which does not support the case for further rate cuts[10] - Concerns regarding the independence of the Federal Reserve due to ongoing investigations may also deter premature rate cuts, as this could undermine market confidence[10]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report On January 12, the liquidity tightened, with major repo rates rising; the entry of allocation funds intensified, leading to a stronger bond market; the main indices of the convertible bond market rose collectively, with most individual convertible bonds increasing; the yields of U.S. Treasury bonds across different tenors showed divergent trends, and the 10-year government bond yields of major European economies generally declined [1]. 3. Summary by Related Catalogs 3.1 Bond Market News 3.1.1 Domestic News - Four departments formulated the "Working Measures for Strengthening the Layout Planning and Investment Guidance of Government Investment Funds (Trial)" and the "Administrative Measures for the Evaluation of Government Investment Fund Investment Directions (Trial)" to guide government investment funds to support the construction of a modern industrial system [3]. - The Shanghai Head Office of the People's Bank of China emphasized six key tasks in 2026, including promoting financial reform and opening up, and advancing the internationalization of the RMB [3]. 3.1.2 International News - U.S. President Trump announced a 25% tariff on countries doing business with Iran, causing international oil prices to rise briefly [4]. 3.1.3 Commodities - On January 12, international crude oil futures prices continued to rise, and international natural gas prices turned up. WTI February crude oil futures rose 0.64%, Brent March crude oil futures rose 0.84%, and NYMEX natural gas prices rose 6.78% [5]. 3.2 Liquidity 3.2.1 Open Market Operations - On January 12, the central bank conducted 86.1 billion yuan of 7-day reverse repurchase operations, with a net injection of 36.1 billion yuan after 50 billion yuan of reverse repurchases matured [7]. 3.2.2 Funding Rates - On January 12, the liquidity tightened, and major repo rates rose. DR001 rose 5.43bp to 1.327%, and DR007 rose 1.75bp to 1.490% [8]. 3.3 Bond Market Dynamics 3.3.1 Interest Rate Bonds - **Spot Bond Yield Trends**: As the 10-year Treasury bond yield reached around 1.90% on January 12, allocation funds entered the market, driving the bond market stronger. By 20:00, the yield of the 10-year Treasury bond active bond 250016 fell 1.50bp to 1.8710%, and the yield of the 10-year CDB bond active bond 250215 fell 0.60bp to 1.9640% [10]. - **Bond Tendering Situation**: Information on the tendering of multiple bonds such as 26Nongfa01 (Increment 2) and 25Nongfa23 (Increment 17) was provided, including issuance scale, winning yield, and other data [11]. 3.3.2 Credit Bonds - **Secondary Market Transaction Anomalies**: On January 12, the transaction prices of 4 industrial bonds deviated by over 10%. "H1 Bidi 01" fell over 98%, "H1 Bidi 03" fell over 90%, "H1 Bidi 04" fell over 47%, and "H1 Bidi 02" rose over 360% [12]. - **Credit Bond Events**: Multiple companies announced events such as loan repayment extensions, bank loan defaults, and equity freezes [15]. 3.3.3 Convertible Bonds - **Equity and Convertible Bond Indices**: On January 12, the three major A-share indices rose collectively, and the main convertible bond market indices also rose. The CSI Convertible Bond Index, Shanghai Stock Exchange Convertible Bond Index, and Shenzhen Stock Exchange Convertible Bond Index rose 1.37%, 1.37%, and 1.27% respectively. The trading volume of the convertible bond market was 108.474 billion yuan [14]. - **Convertible Bond Tracking**: Jin 05 Convertible Bond will be listed on January 14. Taifu Convertible Bond announced no early redemption, and Sailong Convertible Bond is expected to trigger the early redemption clause [21]. 3.3.4 Overseas Bond Markets - **U.S. Bond Market**: On January 12, the yields of U.S. Treasury bonds across different tenors showed divergent trends. The 2-year U.S. Treasury bond yield remained unchanged at 3.54%, and the 10-year U.S. Treasury bond yield rose 1bp to 4.19%. The 2/10-year U.S. Treasury bond yield spread widened by 1bp to 65bp [18][19]. - **European Bond Market**: On January 12, the 10-year government bond yields of major European economies generally declined. The 10-year German government bond yield fell 3bp to 2.80% [22]. - **Daily Price Changes of Chinese Dollar Bonds**: The daily price changes of Chinese dollar bonds as of the close on January 12 were provided, including information on bonds of companies such as New Lake (BVI) 2018 Holdings and Huazhu Group [24].

Group 1: CPI Analysis - In December 2025, the CPI increased by 0.8% year-on-year, up from 0.7% in the previous month, marking the highest increase since August 2023[2] - The cumulative CPI for January to December 2025 was 0.0%, indicating a stagnation in price growth over the year[1] - The main drivers for the December CPI increase included rising vegetable and fruit prices due to adverse weather, consumer promotion policies boosting appliance and vehicle prices, and an increase in international gold prices[3] Group 2: PPI Analysis - The PPI in December 2025 decreased by 1.9% year-on-year, a slight improvement from a 2.2% decline in November, with a cumulative decline of 2.6% for the year[1] - The December PPI saw a month-on-month increase of 0.2%, marking the third consecutive month of rising prices[6] - Key factors contributing to the PPI changes included improved supply-demand dynamics in certain industries and rising prices in the non-ferrous metals sector, with specific increases of 3.7% and 2.8% in mining and refining respectively[7][8] Group 3: Economic Outlook - The overall economic environment in 2025 was characterized by weak demand and a "strong supply, weak demand" scenario, leading to a continued decline in PPI[10] - Looking ahead to January 2026, the CPI is expected to drop to around 0.2% year-on-year due to a higher base effect from the previous year and seasonal price fluctuations[5] - The forecast for 2026 indicates a continued low inflation environment, with an expected annual CPI of approximately 0.4%[5]

Group 1: Federal Reserve Insights - The Federal Reserve's December meeting minutes indicate a division among officials regarding future policy paths, with a cautious signal for potential rate cuts if inflation aligns with expectations[3] - A majority of officials support further rate cuts if inflation trends downward, while some advocate for a pause to observe more data[7] - The U.S. labor market remains resilient, with initial jobless claims falling to 199,000, below the expected 218,000, indicating a strong labor market[9] Group 2: Bank of Japan Developments - The Bank of Japan's December meeting minutes suggest that several members believe actual interest rates remain very low, hinting at future rate hikes[8] - The benchmark interest rate was raised to 0.75%, the highest in 30 years, with expectations for further increases approximately every six months[8] Group 3: Market Reactions - Following the Fed's hawkish minutes and strong employment data, the 10-year U.S. Treasury yield rose by 5 basis points to 4.19%[4] - The Japanese bond market was closed for the New Year holiday, while European bond markets experienced overall declines[28]

1. Industry Investment Rating - The report does not mention the investment rating of the industry. 2. Core Viewpoints - In the short term, the convertible bonds are expected to perform strongly due to the pull of the underlying stocks and the return of funds. The recent increase in market trading volume and the strong performance of Hong Kong stocks during the New Year holiday suggest a strong short - term pulling effect of underlying stocks on convertible bonds. The signs of allocation - type funds entering the market through convertible bond ETFs and the positive impact of the new fund redemption fee regulations on the bond market sentiment are also beneficial to convertible bonds. However, the subsequent impact of the conflict between the US and Venezuela needs continuous attention. Overall, with the market risk appetite remaining high, it is still cost - effective to buy the main - line technology convertible bonds and bottom - position weighted convertible bonds on dips to prepare for the spring rally [3][12]. 3. Summary by Directory Policy Tracking - On December 29, 2025, the National Development and Reform Commission and the Ministry of Finance issued the "Notice on Implementing the Policy of Large - scale Equipment Upgrading and Consumer Goods Trade - in in 2026", which optimized the support scope, subsidy standards, and implementation mechanism of the "two new" policy in 2026 [4][6]. - On December 31, 2025, the National Development and Reform Commission and the National Energy Administration issued the "Guiding Opinions on Promoting the High - quality Development of the Power Grid", aiming to build a new power grid platform by 2030, with the proportion of new energy power generation reaching about 30% [4]. - On December 31, 2025, the China Securities Regulatory Commission revised and issued the "Administrative Provisions on the Sales Fees of Publicly - Offered Securities Investment Funds", which optimized the redemption fee collection methods, added conditional exemption provisions for bond - type and index - type funds, and extended the transition period to 12 months [5][7]. Secondary Market - The equity market was differentiated last week. The Shanghai Composite Index rose 0.13%, while the Shenzhen Component Index and the ChiNext Index fell 0.58% and 1.25% respectively. Overseas, the US employment data exceeded expectations, and the market's interest - rate cut expectations were revised down. Domestically, the manufacturing PMI in December returned to the expansion range for the first time since April [7]. - The convertible bond market indexes fell collectively last week. The CSI Convertible Bond Index, the SSE Convertible Bond Index, and the SZSE Convertible Bond Index fell 0.27%, 0.14%, and 0.45% respectively, with an average daily trading volume of 8.1011 billion yuan, a marginal increase of 95.3 million yuan from the previous week. The net redemption scale of Boshi CSI Convertible Bond ETF significantly shrank to 565 million yuan, while Haitong Securities SSE Convertible Bond ETF net - subscribed 498 million yuan of convertible bonds [9]. - Structurally, low - rated convertible bonds outperformed last week, and medium - priced convertible bonds rose against the trend, while high - priced convertible bonds underperformed. In terms of historical quantiles, the median level of the underlying stock price, conversion value, and convertible bond price decreased slightly, and the conversion premium rate and trading sentiment also declined [10]. - In terms of industries, most convertible bonds in various industries rose last week. National defense and military industry convertible bonds led the market with an average increase of over 7%, and building material convertible bonds also performed well with an average increase of over 3%. Only food and beverage, agriculture, forestry, animal husbandry, and fishery convertible bonds fell slightly. In terms of valuation, most industries' convertible bond valuations increased [11]. - In terms of individual bonds, most convertible bonds in the market fell last week. Among the rising bonds, Tianchuang Convertible Bond led the market with a weekly increase of over 58%, while among the falling bonds, Haohan Convertible Bond fell more than 13% [14]. Primary Market - No convertible bonds were issued last week. Shenyu Convertible Bond, Tianzhun Convertible Bond, and Dingjie Convertible Bond were listed, and Zhongqi Convertible Bond and Chutian Convertible Bond were redeemed early. As of December 31, the convertible bond market's outstanding scale was 554.3 billion yuan, a decrease of 179.593 billion yuan from the beginning of the year and 4.491 billion yuan from the previous week [33]. - The conversion ratio of one convertible bond exceeded 5% last week, 5 less than the previous week. It was Huanxu Convertible Bond, mainly due to the high conversion caused by the negative conversion premium rate after the notice of the impending call - back clause [36][37]. - The issuance of convertible bonds by companies like Shang Sheng Electronics, Ai Wei Electronics, Chun Feng Power, and Hua Feng Measurement and Control has obtained the registration approval from the CSRC. As of last Friday, 7 convertible bonds have been approved by the CSRC to be issued, totaling 8.583 billion yuan, and 6 convertible bonds have passed the review of the issuance examination committee, totaling 3.361 billion yuan [37][38]. - In terms of clause tracking, one convertible bond announced a downward revision of the conversion price, and one convertible bond announced an early redemption last week. Some convertible bonds also announced the impending triggering of the conversion price downward - revision condition or the early redemption condition [37].

Group 1: Core Viewpoints - The bond market continued to fluctuate last week, with the yield curve flattening and rising. Affected by multiple factors such as the long - term local bond issuance plan in Shandong, the increase in cross - year funding costs, and better - than - expected official PMI data in December, the market sentiment weakened at the end of the year, and the bond market continued to operate weakly. After the New Year's Day holiday, the new regulations on public fund fees were officially implemented and were more lenient than expected, and the funding pressure eased after the New Year, so the bond market recovered somewhat. Overall, the bond market fluctuated weakly last week, and long - term bond yields rose slightly. For short - term bonds, although the central bank made continuous net injections before the holiday, affected by the cross - New Year's Day holiday, the increase in funding costs led to a significant rise in short - end yields, and the yield curve showed a flat upward trend. [3] - This week (the week of January 5), the bond market is expected to maintain a weakly fluctuating pattern. Although the implementation of the new regulations on public fund fees and the loose funding at the beginning of the year will support the bond market to some extent, due to the high supply of local bonds with a high proportion of long - term bonds under the front - loaded fiscal efforts, the expected warming of the A - share spring market may cause capital diversion, and the "good start" of credit, the bond market will continue to fluctuate weakly in the short term. [3] Group 2: Last Week's Bond Market Review Secondary Market - The bond market fluctuated weakly last week. Long - term bond yields first rose and then fell, with an overall slight increase. The 10 - year Treasury bond futures main contract fell 0.39% cumulatively last week. The 10 - year Treasury bond yield rose 0.51bp compared with the previous Friday, and the 1 - year Treasury bond yield rose 2.50bp compared with the previous Friday, with the term spread narrowing. [4] - On December 29, the local bond issuance plan in Shandong broke the previous expectation of "term contraction" of local bonds, causing concerns about the supply of ultra - long - term bonds. Coupled with the cross - year funding fluctuations, the market sentiment cooled, and the bond market weakened significantly. On December 30, the market sentiment recovered somewhat, ultra - long - term bonds recovered, but medium - and short - term bonds were still weak. On December 31, the official PMI data was better than expected, the market sentiment weakened, and the bond market fluctuated weakly. On January 4, the new regulations on fund fees were implemented, which were significantly more lenient than expected, the market sentiment recovered, and the bond market had a good start. [5] Primary Market - A total of 9 interest - rate bonds were issued last week, the same as the previous week. The issuance volume was 26 billion yuan, a decrease of 184.1 billion yuan compared with the previous week, and the net financing was - 32.6 billion yuan, a decrease of 207.4 billion yuan compared with the previous week. There were no Treasury bonds and policy - financial bonds issued last week, while the issuance volume and net financing of local bonds increased compared with the previous week. The overall subscription demand for interest - rate bonds last week was acceptable, with an average subscription multiple of 6.91 times for 9 local bonds issued. [16][17] Group 3: Last Week's Important Events - In December, China's manufacturing PMI was 50.1%, a rebound of 0.9 percentage points from November; the non - manufacturing business activity index was 50.2%, a rebound of 0.7 percentage points from November; the comprehensive PMI output index was 50.7%, an increase of 1.0 percentage point from November. Driven by factors such as the implementation of growth - stabilizing policies and the resilience of exports, the manufacturing PMI index rebounded significantly in December and returned to the expansion range since April. However, the service industry PMI index only increased slightly and was still in the contraction range, and the weak consumer demand needs further improvement. Looking forward, the supporting effect of growth - stabilizing policies on manufacturing prosperity is expected to continue, and the manufacturing PMI index in January 2026 is expected to remain in the expansion range. [19] Group 4: Real - Economy Observation - Most of the high - frequency data on the production side increased last week. The blast furnace operating rate, the operating rate of petroleum asphalt plants, and the average daily pig iron output all increased, while the semi - steel tire operating rate decreased significantly. From the demand side, the BDI index continued to decline, while the China Containerized Freight Index (CCFI) continued to rise; the sales area of commercial housing in 30 large and medium - sized cities decreased significantly. In terms of prices, pork prices rebounded slightly overall last week, and most commodity prices rose. Among them, copper and rebar prices both increased, while oil prices fell significantly. [20] Group 5: Last Week's Liquidity Observation - The central bank made a net injection of 73.74 billion yuan in the open - market last week. The R007 and DR007 first rose and then fell, with an overall decline; the issuance interest rate of inter - bank certificates of deposit of joint - stock banks decreased slightly overall; the discount interest rates of national and stock - holding banks at all terms increased significantly; the trading volume of pledged repurchase continued to decrease; and the leverage ratio in the inter - bank market fluctuated and decreased. [31][33][35]

Report Summary 1. Report's Investment Rating for the Industry No investment rating for the industry is provided in the report. 2. Core View of the Report On December 31, affected by the New Year's Day holiday, major repurchase rates generally rose; the bond market showed a weak and volatile trend; the main indices of the convertible bond market showed mixed performance, with most individual convertible bonds rising; yields of U.S. Treasuries across various maturities generally increased, and the yields of 10 - year government bonds of major European economies showed divergent trends. Meanwhile, 12 - month manufacturing PMI rose to the expansion range [1]. 3. Summary by Relevant Catalogs 3.1 Bond Market News - **Domestic News**: - China will implement more proactive and effective macro - policies in 2026, focus on the real economy, and prioritize the development of new - quality productive forces [3]. - In December 2025, the manufacturing PMI was 50.1%, up 0.9 percentage points from the previous month, entering the expansion range; the non - manufacturing business activity index was 50.2%, up 0.7 percentage points; the composite PMI output index was 50.7%, up 1.0 percentage point [4]. - The third - stage fee reform of the public fund industry was implemented, reducing the comprehensive fee level by about 20% and saving about 51 billion yuan in investment costs for investors annually [4][5]. - The CSRC launched a pilot program for commercial real - estate investment trust funds, aiming to expand the market scale and improve the system [5]. - The Beijing Stock Exchange solicited public opinions on the "Listing Rules for Privately Offered Corporate Bonds on the Beijing Stock Exchange" [6]. - In November 2025, the bond market issued 7.01793 trillion yuan of various bonds, and the bond market custody balance reached 196.3 trillion yuan by the end of November [7]. - The National Development and Reform Commission issued an early - batch list of "two major" projects and central budgetary investment of about 295 billion yuan for 2026 [8][9]. - **International News**: - In the week of December 20, the number of initial jobless claims in the U.S. dropped to 199,000, and the number of continued claims also decreased, indicating the resilience of the labor market [10]. - **Commodities**: - On December 31, international crude oil futures prices continued to fall, with WTI February crude futures down 0.91% and Brent February crude futures down 0.78%. COMEX gold futures fell 1.31%, and NYMEX natural gas prices fell 6.71% [11]. 3.2 Fundamentals - **Open - market Operations**: - On December 31, the central bank conducted 528.8 billion yuan of 7 - day reverse repurchase operations, with a net investment of 502.8 billion yuan [13]. - **Funding Rates**: - Affected by the New Year's Day holiday, major repurchase rates generally rose. DR001 rose 9.30bp to 1.333%, and DR007 rose 29.47bp to 1.982% [14]. 3.3 Bond Market Dynamics - **Interest - rate Bonds**: - **Spot Bond Yield Trends**: - On December 31, due to better - than - expected PMI data, the bond market was weakly volatile. The yield of the 10 - year Treasury bond active bond 250016 fell 1.00bp to 1.8500%, and the yield of the 10 - year CDB bond active bond 250215 fell 0.10bp to 1.9480% [17]. - **Bond Tendering**: - There were no Treasury or CDB bond issuances on that day [19]. - **Credit Bonds**: - **Secondary - market Transaction Abnormalities**: - On December 31, 4 industrial bonds had a transaction price deviation of over 10%. "23 Chanrong 09" fell over 15%, while "22 Vanke 04", "22 Vanke 06", and "22 Vanke 02" rose over 13%, 14%, and 14% respectively [20]. - **Credit - bond Events**: - Vanke will review proposals such as adjusting the repayment arrangement of part of the bond principal and interest and adding a grace period for "21 Vanke 02" [21]. - China Aoyuan's domestic debt restructuring plan is basically completed and is seeking opinions [21]. - Fangyuan Real Estate passed two proposals on adjusting the repayment arrangement for "20 Fangyuan 01" [21]. - China Fortune Land Development completed a trust debt - for - asset transaction of 22.348 billion yuan, and a remaining 1.653 billion yuan transaction is in progress [21]. - Country Garden's overseas debt restructuring took effect on December 30 [21]. - **Convertible Bonds**: - **Equity and Convertible Bond Indices**: - On December 31, the A - share market was volatile and differentiated. The Shanghai Composite Index rose 0.09%, while the Shenzhen Component Index and the ChiNext Index fell 0.58% and 1.23% respectively. The turnover was 2.07 trillion yuan [22]. - The main indices of the convertible bond market showed mixed performance. The CSI Convertible Bond Index and the Shanghai Stock Exchange Convertible Bond Index rose 0.02% and 0.08% respectively, while the Shenzhen Stock Exchange Convertible Bond Index fell 0.09%. The turnover was 81.89 billion yuan [22]. - **Convertible Bond Tracking**: - On January 1, the convertible bond issuances of Shang Sheng Electronics and Ai Wei Electronics were approved by the CSRC. On December 31, Yingte Convertible Bond announced an early redemption, and Huarui, Luwei, and Chaoda Convertible Bonds were about to trigger early - redemption conditions [29]. - **Overseas Bond Markets**: - **U.S. Bond Market**: - On December 31, yields of U.S. Treasuries across various maturities generally increased. The 2 - year yield rose 2bp to 3.47%, and the 10 - year yield rose 4bp to 4.18%. The 2/10 - year yield spread widened 2bp to 71bp, and the 5/30 - year yield spread narrowed 2bp to 111bp. The 10 - year TIPS break - even inflation rate rose 1bp to 2.25% [26][27][28]. - **European Bond Market**: - On December 31, the yields of 10 - year government bonds of major European economies showed divergent trends. Germany's yield rose 1bp to 2.86%, while France and Italy's remained unchanged. Spain and the UK's yields fell 1bp [30]. - **Daily Price Changes of Chinese - funded U.S. Dollar Bonds**: - As of the close on December 31, the prices of Chinese - funded U.S. dollar bonds showed significant fluctuations. The top - gainers included SMIC with a 16.9% increase, and the top - losers included Pinduoduo with a 3.4% decrease [32].