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].

Economic Indicators - In December 2025, China's manufacturing PMI rose to 50.1%, an increase of 0.9 percentage points from November, marking the first return to expansion since April[1] - The non-manufacturing business activity index for December was 50.2%, up 0.7 percentage points from November, with the construction index at 52.8%, rising 3.2 percentage points[1] - The comprehensive PMI output index increased by 1.0 percentage point to 50.7% in December[1] Policy Impact - The recovery in market demand is attributed to effective growth stabilization policies, including the introduction of two 500 billion yuan policies, which have positively impacted infrastructure and manufacturing investments[2] - The issuance of an additional 500 billion yuan in special bonds is expected to provide 200 billion yuan in new funding for project construction, further stimulating domestic demand[2] Sector Performance - The manufacturing new orders index rose by 1.6 percentage points to 50.8%, driven by strong market demand and resilient export conditions, with the new export orders index increasing by 1.4 percentage points to 49.0%[2] - The production index within the manufacturing PMI increased by 1.7 percentage points to 51.7%, contributing significantly to the overall PMI rise[3] - The construction PMI returned to expansion at 52.8%, primarily due to the impact of new policy financial tools and favorable weather conditions in southern provinces[5] Challenges and Outlook - The service sector PMI remained in contraction at 49.7%, despite a slight increase of 0.2 percentage points, indicating ongoing weak consumer demand, particularly in retail and dining sectors[4][5] - The overall economic outlook suggests continued support from growth stabilization policies, but challenges remain due to high tariffs affecting global trade and ongoing adjustments in the real estate market[6]

Group 1: Core Views - Market liquidity easing expectations led to an accelerated rise in gold prices last week. On December 26, the Shanghai gold futures price rose 3.71% to 1016.30 yuan/gram, and the COMEX gold futures price rose 4.42% to 4562.00 US dollars/ounce. Spot gold prices also increased. The rise was due to Trump's statement and dovish remarks from a potential Fed chair candidate, geopolitical tensions, and reduced market liquidity during the Christmas holiday. This week, gold prices are expected to fluctuate and correct due to profit-taking, margin adjustments, etc. However, the long - term upward logic remains unchanged [3]. Group 2: Last Week's Market Review 1. Gold Spot and Futures Price Movements - On December 26, the Shanghai gold futures price closed at 1016.30 yuan/gram, up 36.40 yuan/gram from the previous week; the COMEX gold futures price closed at 4562.00 US dollars/ounce, up 193.30 US dollars/ounce. Gold T+D spot price closed at 1008.80 yuan/gram, up 32.98 yuan/gram, and the London gold spot price closed at 4532.51 US dollars/ounce, up 191.45 US dollars/ounce [4]. 2. Gold Basis - On December 26, the international gold basis (spot - futures) was - 96.80 US dollars/ounce, down 80.40 US dollars/ounce from the previous week; the Shanghai gold basis was - 2.06 yuan/gram, up 0.36 yuan/gram from the previous week [8]. 3. Gold Domestic - Foreign Price Difference - Last week, the foreign gold price increase was more significant than the domestic one. The domestic - foreign price difference was - 53.82 yuan/gram on December 26, down from - 41.09 yuan/gram the previous week. The gold - oil ratio continued to rise, the gold - silver ratio continued to fall, and the gold - copper ratio continued to decline [9]. 4. Position Analysis - In terms of spot positions, the gold ETF holdings increased slightly last week. As of December 26, the SPDR gold ETF holdings were 1071.13 tons, up 18.59 tons. The cumulative trading volume of domestic gold T+D increased significantly, but decreased 5.44% from the previous week. In terms of futures positions, as of December 16, the net long positions of gold CFTC asset management institutions continued to rise. The COMEX gold futures inventory continued to rise, and the SHFE gold inventory increased by 5976 kilograms to 97692 kilograms [14]. Group 3: Macroeconomic Fundamentals 1. Important Economic Data - The preliminary data of the US Q3 GDP showed an annualized quarterly - on - quarterly rate of 4.3%, higher than the expected 3.3% but lower than the previous 3.8%. The core PCE price index was 2.9%, in line with expectations and higher than the previous 2.6%. Consumer spending increased by 3.5%, while non - residential investment growth slowed and residential investment declined. In October, US durable goods orders decreased by 2.2% month - on - month, but core durable goods orders increased for the seventh consecutive month. The number of initial jobless claims in the week of December 20 decreased to 214,000 [19][20][21]. 2. Fed Policy Tracking - 2026 FOMC voter and Cleveland Fed President Hammack said there is no need to cut interest rates in the next few months and questioned the accuracy of November inflation data. New York Fed President Williams also said there is no urgency to further cut interest rates [33]. 3. US Dollar Index Movement - Last week, the US dollar index fluctuated downward, dropping 0.69% to 98.03 as of December 26 due to the Christmas holiday and continued market easing expectations [34]. 4. US TIPS Yield Movement - Last week, the US 10 - year TIPS yield decreased slightly by 1bp to 1.91% due to continued market expectations of liquidity easing [38]. 5. International Important Event Tracking - There was significant progress in the Russia - Ukraine peace plan. Trump said the talks with Zelensky on December 28 made "great progress", and Zelensky said 90% of the peace framework was agreed upon [41].

Report Summary 1. Investment Rating - No investment rating for the industry is provided in the report. 2. Core View - On December 29, overnight funds were abundant, but the contradiction of cross - year stratification still existed. The concern over ultra - long bond supply and cross - year fund fluctuations led to a significant weakening of the bond market. The main indexes of the convertible bond market closed down collectively, and most convertible bond issues declined. Yields of U.S. Treasuries across all maturities generally decreased, and yields of 10 - year government bonds of major European economies also generally declined [2]. 3. Summary by Directory 3.1 Bond Market News - **Domestic News** - The People's Bank of China issued an action plan for digital RMB, and a new generation of digital RMB measurement framework, management system, operation mechanism, and ecosystem will be officially launched on January 1, 2026 [4]. - From January to November, the total operating income of state - owned enterprises was 756257.6 billion yuan, a year - on - year increase of 1%; the total profit was 37194.5 billion yuan, a year - on - year decrease of 3.1%; the payable taxes were 52803 billion yuan, a year - on - year increase of 0.2%. As of the end of November, the asset - liability ratio of state - owned enterprises was 65.2% [4]. - Starting from January 1, 2026, the State Council Tariff Commission will adjust the import tariff rates and tariff items of some commodities, including implementing temporary import tariff rates lower than the most - favored - nation rates for 935 commodities and canceling the temporary import tariff rates of some commodities [5]. - As of the end of November, the net asset value of public funds in China reached 37.02 trillion yuan, an increase of about 60 billion yuan from the end of October, breaking through the 37 - trillion - yuan mark for the first time and setting a new high for eight consecutive months [6]. - **International News** - The minutes of the December meeting of the Bank of Japan suggested more interest rate hikes as many members thought the real interest rate was still very low. The meeting raised the benchmark interest rate to 0.75%, a 30 - year high. Economists expect another rate hike in about six months, with most believing the terminal rate of this hiking cycle will be 1.25% [7]. - **Commodities** - On December 29, WTI February crude oil futures rose 1.84% to $58.08 per barrel; Brent February crude oil futures rose 2.14% to $61.94 per barrel; COMEX gold futures fell 4.47% to $4349.20 per ounce; NYMEX natural gas prices fell 10.81% to $3.943 per ounce [8]. 3.2 Funding Situation - **Open Market Operations** - On December 29, the central bank conducted 4823 billion yuan of 7 - day reverse repurchase operations at a fixed - rate and quantity - tender method, with an operating rate of 1.40%. The net investment of funds on the day was 4150 billion yuan [10]. - **Funding Rates** - On December 29, the central bank increased the net investment scale. Overnight funds were abundant, but the cross - year stratification contradiction still existed. DR001 decreased by 1.39bp to 1.242%, and DR007 increased by 7.07bp to 1.594%. Other funding rates also showed different changes [12][13]. 3.3 Bond Market Dynamics - **Interest - rate Bonds** - The local bond issuance plan announced by Shandong on December 29 triggered concerns about ultra - long bond supply, and combined with cross - year funding fluctuations, the bond market weakened significantly. As of 20:00, the yield of the 10 - year Treasury active bond 250016 rose 2.25bp to 1.8580%, and the yield of the 10 - year CDB active bond 250215 rose 3.30bp to 1.9395% [15]. - **Credit Bonds** - One industrial bond, "H0 Zhongnan 02", had a trading price deviation of over 10% on December 29. There were also announcements from many real - estate and other companies regarding bond repayment, resumption of trading, debt restructuring, etc. [18][19]. - **Convertible Bonds** - On December 29, the three major A - share indexes showed different trends. The convertible bond market followed the equity market and adjusted. The main convertible bond indexes closed down collectively, and most convertible bond issues declined. Shenyu Convertible Bonds will be listed on December 30 [20][21]. - **Overseas Bond Markets** - **U.S. Bond Market**: Yields of U.S. Treasuries across all maturities generally decreased on December 29. The 2 - year U.S. Treasury yield decreased by 1bp to 3.45%, and the 10 - year yield decreased by 2bp to 4.12%. The 2/10 - year U.S. Treasury yield spread narrowed by 1bp to 67bp; the 5/30 - year yield spread remained unchanged at 113bp. The 10 - year inflation - protected Treasury (TIPS) break - even inflation rate decreased by 1bp to 2.22% [22][23][24]. - **European Bond Market**: Yields of 10 - year government bonds of major European economies generally decreased on December 29. The 10 - year German government bond yield decreased by 3bp to 2.83%, and those of France, Italy, Spain, and the UK also decreased [25][26]. - **Price Changes of Chinese - funded U.S. Dollar Bonds**: The report shows the daily price changes of some Chinese - funded U.S. dollar bonds as of the close on December 29, including the daily and monthly changes in yields and prices of different bonds [27].

Economic Outlook - The actual GDP growth rate for China in 2026 is projected to be around 4.8%, maintaining a medium-high growth level[2] - Global GDP growth is expected to slow to 3.1% in 2026, down from 3.2% in 2025[4] - China's fixed asset investment growth is forecasted to turn positive at 2.5% in 2026, recovering from a negative growth of -3.0% in 2025[4] Trade and Export Impact - China's export growth is anticipated to decline significantly from approximately 5.0% in 2025 to around 1.0% in 2026 due to increased U.S. tariffs[15] - The average U.S. import tariff rate is projected to rise to 19.5% in 2026, impacting global trade dynamics[8] Policy Measures - The target fiscal deficit rate for 2026 is set to remain at 4.0%, with an increase in new special bond issuance expected to reach 5.0 trillion yuan[41] - A reduction in interest rates by 0.3 percentage points is anticipated in 2026, with a focus on maintaining liquidity in the market[52] Consumer and Investment Trends - Consumer retail sales growth is expected to accelerate to 5.0%-6.0% in 2026, up from 3.9% in 2025, driven by enhanced consumption policies[65] - Infrastructure investment growth is projected to increase to 5.0% in 2026, significantly higher than the previous year's performance[71] Inflation and Price Levels - The Consumer Price Index (CPI) is expected to rise to 0.4% in 2026, indicating a slight improvement in the low inflation environment[76] - The Producer Price Index (PPI) is forecasted to decline by -1.8% in 2026, reflecting ongoing price pressures in the economy[76]