EBSCN·2025-06-03 03:45Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core View of the Report The report argues that there is no need to be overly worried about the liquidity situation at this stage. The probability of the monetary authorities actively tightening the liquidity is low, and factors such as CD maturities and deposit rate cuts are not the main factors affecting money market interest rates. There is a high probability of an expected difference in the liquidity situation, and the medium - and long - end of the yield curve may be repriced. However, the downward space of the yield curve this year is limited compared to the same period last year [2][4]. 3. Summary by Related Catalog Why Not Worry About the Liquidity? - Low Probability of Monetary Authorities Tightening Liquidity: In May 2025, the 10Y Treasury bond yield was 1.67%, up about 5bp from the end of April. The long - end of the yield curve rose due to investors' concerns about the liquidity. But the probability of the monetary authorities actively tightening the liquidity is low. The spread between the 10Y Treasury bond and 7D OMO has recovered, and the uncertainty of the external environment has increased, so the monetary authorities are more concerned about the liquidity. For example, the average and volatility of DR007 in Q1 were 2.11% and 0.44% respectively, and have dropped to 1.71% and 0.10% since Q2 (as of the end of May) [1][2]. - CD Maturity and Interest Rate Relationship: CD maturity and net issuance demand are different concepts, and CD interest rates are not sensitive to maturities. From early 2020 to May 2025, the Pearson correlation coefficient between CD maturities and the monthly average of CD interest rates was - 0.30, and - 0.34 between maturities and the end - of - month values. In months with significantly rising CD maturities in recent years, the 1Y AAA - rated CD interest rate did not necessarily increase [3]. - Deposit Rate Cuts and CD Interest Rates: Deposit rate cuts do not necessarily lead to a decline in CD interest rates. For example, when state - owned large - bank deposit rates were cut in October 2024, the 1Y AAA - rated CD interest rate decreased over the following months [3]. - Expected Difference in Liquidity and Yield Curve: The short - end of the yield curve is mainly affected by monetary policy. The monetary authorities' urgency to tighten the liquidity to guide up long - bond yields has decreased, and they will not allow CD interest rates to rise significantly. There is a high probability of an expected difference in the liquidity situation. The short - end, mid - end, and long - end of the yield curve all have downward space until the end of the year, but the downward space is limited compared to last year. For example, the average of DR007 may gradually fall from 1.63% in May to about 1.5% in the next two months, and trading days with rates below 1.4% are not common [4].