1. Report Title and Industry - Title: "The Pricing Power of the Economic Fundamentals on the Bond Market is Increasing Marginally - Commentary on August Economic Data" [1][5] - Industry: Fixed Income 2. Report Key Points - **Overall Economic Situation in August 2025**: The economic data in August 2025 was generally weak. The year - on - year growth rates of industrial added value, social retail sales, and fixed - asset investment declined. The slowdown in production was mainly due to the drag from exports and downstream consumption [2][5]. - **Production End**: Affected by the decline in exports and downstream consumption, the year - on - year growth rate of the added value of large - scale industries in August decreased by 0.5 pct to 5.2%. The year - on - year growth rates of sub - items in electricity, heat, gas, and water, and manufacturing decreased by 0.9 and 0.5 pct to 2.4% and 5.7% respectively. The year - on - year growth rate of the service production index continued to decline by 0.2 pct to 5.6%, and the year - on - year growth rate of export delivery value turned negative to - 0.4% [5][7]. - **Investment End**: The year - on - year growth rates of fixed - asset investment and private investment continued to decline. The estimated year - on - year growth rate of the completed fixed - asset investment in August decreased by 1.1 pct to - 6.3%. The investment growth rates in the three major fields all slowed down. The year - on - year growth rates of manufacturing, infrastructure, and real estate sub - items in August decreased by 1.0, 4.5, and 2.4 pct to - 1.3%, - 6.4%, and - 19.4% respectively [7]. - **Real Estate**: There were differences among financing, investment, and sales. The year - on - year decline in the funds available to real estate development enterprises narrowed by 2.8 pct to - 12.5%, but the year - on - year declines in development investment, commercial housing sales volume, and sales area widened. The year - on - year growth rates of commercial housing sales area and sales volume decreased by 2.6 and 0.7 pct to - 11.0% and - 14.8% respectively. The situation of selling commercial housing by sacrificing price for volume may still continue [7]. - **Manufacturing**: The investment growth rates of most equipment manufacturing industries declined significantly. Among them, the year - on - year growth rates of transportation equipment, special equipment, and automobiles decreased by 36, 13, and 8 pct to 9%, - 16%, and 11% respectively. The year - on - year declines in investment in industries such as chemicals, non - ferrous metals, and pharmaceuticals narrowed but were still in negative growth [7]. - **Consumption End**: Consumption was lower than expected, mainly affected by the decline in durable goods consumption. Urban consumption was weaker than rural consumption. The year - on - year growth rates of total social retail sales and social retail sales of units above the designated size decreased by 0.3 and 0.4 pct to 3.4% and 2.4% respectively. The year - on - year growth rates of commodity retail sales and commodity retail sales of units above the designated size both decreased by 0.4 pct to 3.6% and 2.6% respectively. Catering revenue and catering revenue of units above the designated size recovered under the boost of summer cultural and tourism [7]. - **Bond Market**: The bond market had a repair market around the release of economic data on September 15. The yield of the active 10 - year treasury bond once dropped to 1.785%. The supply and demand sides of the economic fundamentals in August were under pressure. Considering the high base in the fourth quarter of last year, the year - on - year economic readings in the fourth quarter of this year are expected to face pressure, and the pricing power of the economic fundamentals on the bond market is increasing marginally [7]. 3. Core View The economic data in August 2025 was generally weak, with production, investment, and consumption all under pressure. The bond market had a repair market around the release of economic data. Considering the high base in the fourth quarter of last year, the year - on - year economic readings in the fourth quarter of this year are expected to face pressure, and the pricing power of the economic fundamentals on the bond market is increasing marginally [2][7].

Market Overview - The bond market continued to recover on September 17, with all major government bond futures closing higher, and interbank bond yields declining in the afternoon [1][2] - The People's Bank of China (PBOC) conducted a net injection of 114.5 billion yuan in the open market, while short-term funding rates rose across the board due to tax payment impacts [1][5] Government Bonds - The closing prices for government bond futures were as follows: 30-year main contract up 0.31% at 115.880, 10-year main contract up 0.13% at 108.155, 5-year main contract up 0.10% at 105.890, and 2-year main contract up 0.04% at 102.456 [2] - The yields on major interbank bonds decreased, with the 10-year China Development Bank bond yield down 1 basis point to 1.911%, and the 10-year government bond yield down 1.5 basis points to 1.765% [2] International Bond Markets - In North America, U.S. Treasury yields fell across the board, with the 2-year yield down 3.15 basis points to 3.495% and the 10-year yield down 0.58 basis points to 4.028% [3] - In Asia, Japanese bond yields mostly declined, with the 10-year yield down 1.1 basis points to 1.594% [3] - In the Eurozone, yields on 10-year bonds increased slightly, with French bonds up 1 basis point to 3.486% and German bonds up 0.2 basis points to 2.691% [3] Primary Market - The Ministry of Finance reported weighted average yields for newly issued government bonds: 28-day at 1.1295%, 91-day at 1.2514%, and 20-year at 2.1616%, with bid-to-cover ratios of 3.49, 3.27, and 5.71 respectively [4] Funding Conditions - The PBOC conducted a 7-day reverse repo operation with a total of 418.5 billion yuan at a rate of 1.40%, resulting in a net injection of 114.5 billion yuan after accounting for maturing repos [5] - Short-term Shibor rates rose, with the overnight rate up 4.6 basis points to 1.483% and the 7-day rate up 4.4 basis points to 1.519% [5] Institutional Perspectives - Huatai Securities noted that economic data from August showed continued convergence, with external demand stronger than internal demand, suggesting a potential stabilization in the bond market [7] - CITIC Securities indicated that while August economic data was stable, pressures remain, and the bond market's response to fundamental factors is currently muted [7] - Guosheng Securities highlighted that economic data indicates a further slowdown in supply and demand, suggesting that the bond market may experience fluctuations but is gradually returning to fundamentals [7]

Core Viewpoint - The economic data for August 2025 indicates a slowdown in industrial production, a decline in fixed asset investment, and weaker-than-expected retail sales growth, reflecting the impact of "anti-involution" policies on the actual economy [4][5][6][7]. Industrial Production - The industrial added value for large-scale enterprises grew by 5.2% year-on-year in August, a decrease of 0.5 percentage points from July, marking two consecutive months of declining growth [4][5]. - Month-on-month, the industrial added value increased by 0.37% in August, lower than the growth rates in the same months of 2023 and 2024 [5]. Fixed Asset Investment - The cumulative year-on-year growth rate of fixed asset investment continued to decline, with August showing a significant drop in infrastructure investment [6]. - Real estate investment remains weak, while manufacturing and infrastructure investments have also retreated from their high levels earlier in the year, with negative year-on-year growth for two consecutive months [6]. Retail Sales - The total retail sales of consumer goods increased by 3.4% year-on-year in August, with a month-on-month growth rate of 0.17%, indicating a slight recovery but still below seasonal expectations [7]. - The month-on-month growth rate in August was lower than the corresponding rates in 2023 and 2024, suggesting a weaker consumer spending environment [7]. Bond Market Outlook - In the bond market, there has been a noticeable divergence in government bond yields since August, with short-term yields remaining stable while long-term yields have increased significantly [8]. - The current liquidity is relatively ample, and the bond market is expected to perform well, with the 10-year government bond yield estimated to stabilize around 1.7% [8][9]. - Convertible bonds have not outperformed their underlying stocks since August 25, and while they remain a relatively high-quality asset, their current valuation levels are elevated, necessitating a more strategic approach [9].

Group 1: Economic Overview - In August, fixed asset investment cumulative year-on-year growth rate continued to decline, with significant decrease in infrastructure investment [4] - Industrial production slowed down in August, and social consumption growth was weaker than seasonal trends [4] - The current funding environment is relatively loose, but the fundamentals need improvement; the bond market is becoming more attractive with a projected 10Y government bond yield central fluctuation at 1.7% [4] Group 2: Real Estate and Construction - In August, the decline in new house prices across major cities continued to narrow, indicating a stabilization trend [5] - The National Development and Reform Commission signed multiple cooperation documents related to the "Belt and Road" initiative with several countries [5] Group 3: Company Updates - China Resources Land (1109.HK) reported a contract sales amount of 13.2 billion yuan in August, a year-on-year decrease of 13.2%, with a total of 136.8 billion yuan for the first eight months, down 12.0% year-on-year [6] - Aolaide (688378.SH) signed a strategic cooperation framework agreement with BOE Technology Group, establishing a partnership for comprehensive collaboration in equipment and materials [6] - Tuobang Co., Ltd. (002139.SZ) continues to see revenue growth and has a broad growth space, leveraging its technology matrix in various sectors including smart control solutions and digital energy [6]

Economic Indicators - August CPI decreased by 0.4% year-on-year, while PPI fell by 2.9% year-on-year[15] - August manufacturing PMI stood at 49.4, indicating a slight contraction in the manufacturing sector[14] - Exports in August grew by 4.4% year-on-year, down from 7.2% in the previous month[15] Market Trends - Social financing growth rate has declined for the first time since October last year, indicating weak overall demand[1] - The 10-year government bond yield briefly exceeded 1.8%, suggesting a potential buying opportunity[1] - The bond market is expected to benefit from continued monetary easing as the economic fundamentals remain under pressure[1] Policy Developments - The government is expected to implement new policies to support the bond market, including early issuance of local government debt limits for 2026[21] - The State Council has approved the establishment of a national-level nature reserve, reflecting ongoing environmental policy initiatives[9] External Environment - The U.S. and Europe are discussing new sanctions against Russia, which may introduce uncertainties in external demand[1] - Global central banks' gold reserves have surpassed U.S. Treasury holdings, indicating a shift in reserve asset preferences[18]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints - On Tuesday, Treasury bond spot yields strengthened collectively, with 1 - 7Y maturity yields down about 1.50 - 2.50bp, and 10Y, 30Y maturity yields down about 1bp to 1.78%, 2.08% respectively. Treasury bond futures also strengthened collectively, with the TS, TF, T, TL main contracts rising 0.04%, 0.13%, 0.15%, 0.00% respectively. The weighted average rate of DR007 rebounded slightly to fluctuate around 1.50%. [2] - In the domestic fundamental aspect, in August, the growth rates of industrial added - value and social retail sales slowed down, the scale of fixed - asset investment continued to shrink, and the unemployment rate rose seasonally. In terms of financial data, in August, China's social financing growth rate declined slightly, the support of government bonds for social financing weakened, new loans turned from negative to positive, but the credit growth rate continued to weaken, and overall demand remained weak; the M1 - M2 gap narrowed, and the marginal improvement of capital activation degree. [2] - Overseas, the US labor market slowed down significantly, the inflation level rose moderately, and the expectation of the Fed's interest rate cut in September was firm. The market has priced in the expectation of three interest rate cuts this year. Recently, the bond market has been oscillating at the bottom under the influence of policy signals such as anti - involution and the reform of bond fund redemption fees. The market is sensitive to negative news, and the overall repair momentum is weak. In the context of the weak recovery of the fundamentals, the possibility of a trend decline in the bond market is low, and the yield is expected to remain in a high - level oscillation pattern. [2] - Strategically, it is recommended to observe the adjustment rhythm of Treasury bond futures in the short term, and participate in band operations after the market stabilizes; at the same time, pay attention to the term spread trading opportunities brought by the steepening of the yield curve. [2] 3. Summary by Relevant Catalogs 3.1 Futures Market - **Closing Prices and Volume Changes**: The closing prices of T, TF, TS, TL main contracts were 108.000 (up 0.15%), 105.795 (up 0.13%), 102.414 (up 0.04%), 115.480 (unchanged) respectively. The trading volumes of T, TF, TS, TL main contracts increased by 44141, 35801, 19618, 66446 respectively. [2] - **Futures Spreads**: Some spreads changed, such as the TL2512 - 2603 spread increased by 0.03 to 0.34, the T12 - TL12 spread increased by 0.11 to - 7.48, etc. [2] - **Futures Positions**: The positions of T, TF, TS, TL main contracts all increased, and the net short positions of the top 20 in each contract also increased. [2] 3.2 Bond Market - **CTD Bonds**: The net prices of some CTD bonds such as 220017.IB, 220019.IB, etc. increased. [2] - **Active Bonds**: The yields of 1 - year active bonds decreased by 0.25bp to 1.3975%, while the yields of 3 - year remained unchanged, and the yields of 5 - year, 7 - year, and 10 - year increased by 0.75bp, 0.50bp, 1.05bp respectively. [2] 3.3 Interest Rates - **Short - term Interest Rates**: The silver - pledged overnight, Shibor overnight, silver - pledged 7 - day, Shibor 7 - day, silver - pledged 14 - day, and Shibor 14 - day interest rates all increased. [2] - **LPR Rates**: The 1 - year and 5 - year LPR rates remained unchanged. [2] 3.4 Market News - **Domestic Economic Data**: On September 15, the National Bureau of Statistics released data showing that in August, the national industrial added - value above designated size increased by 5.2% year - on - year and 0.37% month - on - month. Social consumer goods retail sales increased by 3.4% year - on - year and 0.17% month - on - month. Fixed - asset investment (excluding rural households) decreased by 0.20% month - on - month. The national urban survey unemployment rate was 5.3%, up 0.1 percentage point from the previous month and the same as the same month last year. [2] - **Sino - US Talks**: From September 14th to 15th, Chinese and US economic and trade leaders held talks in Madrid, reaching a basic framework consensus on issues such as properly resolving the TikTok - related issue, reducing investment barriers, and promoting relevant economic and trade cooperation. [2] - **Housing Prices**: In August 2025, in 70 large and medium - sized cities, the prices of commercial residential buildings in all tiers decreased month - on - month, and the year - on - year decline generally continued to narrow. [2] 3.5 Key Events to Watch - September 16, 20:30, US August retail sales month - on - month rate. - September 18, 02:00, the Fed FOMC announces the interest rate decision and economic outlook summary. [3]

Group 1 - The report indicates that in August 2025, the cumulative year-on-year growth rate of social retail sales was 4.64%, a decrease of 0.16 percentage points compared to July 2025, with the restaurant sector showing a growth rate of 3.60%, down 0.20 percentage points [1][2][18] - The cumulative year-on-year growth rate of industrial added value in August 2025 was 6.2%, down 0.1 percentage points from July, with traditional industries related to real estate, such as glass, cement, and crude steel, experiencing accelerated contraction [2][3][6] - Fixed asset investment in August 2025 showed a cumulative year-on-year growth rate of 0.5%, a decline of 1.1 percentage points from July, with real estate investment down 12.9% year-on-year [2][6][12] Group 2 - Inflation remains weak, with the Consumer Price Index (CPI) in August 2025 showing a year-on-year decline of 0.4 percentage points to -0.4%, primarily due to the drag from food prices, while core CPI increased to 0.9% [2][3][31] - The report highlights that the bond market is under pressure, with the current environment suggesting a phase of risk acceleration, and that the market may not have a favorable opportunity for long positions at this time [2][14][27] - The report notes that the real estate sector requires incremental policy support to stabilize, as recent trends show a downward adjustment in housing prices in first-tier cities [2][6][12]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The bond market is in a weak recovery, with all Treasury bond futures closing higher. The bond market is oscillating between the expectations of stable growth and monetary easing. In the short - term, attention should be paid to the policy signals at the end of the month [1][3]. - The stock market's strong performance boosts risk appetite, which suppresses the bond market. Meanwhile, the increasing expectation of the Fed's interest - rate cut and rising global trade uncertainties add to the uncertainty of foreign capital inflows [3]. 3. Summary According to the Directory I. Interest Rate Pricing Tracking Indicators - **Price Indicators**: China's CPI (monthly) has a 0.00% month - on - month change and a - 0.40% year - on - year change; China's PPI (monthly) has a 0.00% month - on - month change and a - 2.90% year - on - year change [9]. - **Monthly Economic Indicators**: The social financing scale is 433.66 trillion yuan, with a month - on - month increase of 2.40 trillion yuan (+0.56%); M2 year - on - year growth is 8.80% with no month - on - month change; the manufacturing PMI is 49.40%, with a month - on - month increase of 0.10% (+0.20%) [10]. - **Daily Economic Indicators**: The US dollar index is 97.32, with a month - on - month decrease of 0.29 (-0.30%); the offshore US dollar to RMB exchange rate is 7.1213, with a month - on - month increase of 0.005 (+0.07%); SHIBOR 7 - day is 1.47, with a month - on - month increase of 0.01 (+0.68%); DR007 is 1.48, with a month - on - month increase of 0.03 (+1.76%); R007 is 1.51, with a month - on - month decrease of 0.05 (-3.26%); the 3 - month inter - bank certificate of deposit (AAA) is 1.57, with a month - on - month increase of 0.01 (+0.40%); the AA - AAA credit spread (1Y) is 0.08, with a month - on - month increase of 0.00 (+0.40%) [11]. II. Overview of the Treasury Bond and Treasury Bond Futures Market - Multiple figures are presented, including the closing price trend of the main continuous contracts of Treasury bond futures, the price change rates of various Treasury bond futures varieties, the precipitation of funds in various Treasury bond futures varieties, the proportion of open interest in various Treasury bond futures varieties, the net open interest proportion of the top 20 in various Treasury bond futures varieties, the long - short open interest ratio of the top 20 in various Treasury bond futures varieties, the spread between China Development Bank bonds and Treasury bonds, and the issuance of Treasury bonds [14][15][18][24]. III. Overview of the Money Market Liquidity - Figures show the trading statistics of inter - bank pledged repurchase and the issuance of local government bonds [27]. IV. Spread Overview - Figures display the inter - delivery spread trend of various Treasury bond futures varieties and the term spread of cash bonds and cross - variety spreads of futures [31][36][37]. V. Two - Year Treasury Bond Futures - Figures show the implied interest rate of the main contract of two - year Treasury bond futures and the Treasury bond yield to maturity, the IRR of the TS main contract and the funding rate, the three - year basis trend of the TS main contract, and the three - year net basis trend of the TS main contract [39][40][48]. VI. Five - Year Treasury Bond Futures - Figures show the implied interest rate of the main contract of five - year Treasury bond futures and the Treasury bond yield to maturity, the IRR of the TF main contract and the funding rate, the three - year basis trend of the TF main contract, and the three - year net basis trend of the TF main contract [50][54]. VII. Ten - Year Treasury Bond Futures - Figures show the implied yield of the main contract of ten - year Treasury bond futures and the Treasury bond yield to maturity, the IRR of the T main contract and the funding rate, the three - year basis trend of the T main contract, and the three - year net basis trend of the T main contract [57][59]. VIII. Thirty - Year Treasury Bond Futures - Figures show the implied yield of the main contract of thirty - year Treasury bond futures and the Treasury bond yield to maturity, the IRR of the TL main contract and the funding rate, the three - year basis trend of the TL main contract, and the three - year net basis trend of the TL main contract [64][70]. 4. Strategies - **Unilateral Strategy**: As the repurchase rate rises, the price of Treasury bond futures oscillates [4]. - **Arbitrage Strategy**: Pay attention to the decline of the 2512 basis [4]. - **Hedging Strategy**: There is medium - term adjustment pressure, and short - position holders can use far - month contracts for appropriate hedging [4].

Core Viewpoint - The article emphasizes the importance of abandoning personal predictions and biases in favor of strictly adhering to technical rules and trading systems in investment transactions [1] Economic Data and Market Performance - August economic data fell below expectations, leading to a slight decline in the stock market [6] - The 10-year government bond yield fluctuated around 1.79% and later dropped to 1.786% before rising to 1.8% [6] - The U.S. Treasury Secretary indicated progress in technical details in discussions with China, which may influence market sentiment [6] Monetary Policy and Liquidity - The central bank conducted a 280 billion yuan 7-day reverse repurchase operation, with a net withdrawal of 31.5 billion yuan due to maturing reverse repos and treasury cash deposits [4] - The funding environment remains balanced and slightly loose, with the DR001 rate around 1.41% and DR007 at approximately 1.48% [5] Market Sentiment and Reactions - The bond market experienced volatility, with a notable sell-off towards the end of the trading day, attributed to concerns over "involution" and a loss of trust among investors [7] - The article draws a parallel between the bond market's current sentiment and a restaurant's brand image collapse, highlighting the fragility of investor confidence [7] Interest Rates and Bond Yields - The article provides detailed interest rates for various government bonds, indicating a range of yields from 1.3975% for 1-year bonds to 2.0940% for ultra-long bonds [10] - The yield on AAA-rated bonds shows a slight increase, with 1-year bonds at 1.6100% and 5-year bonds at 2.3300% [10]

Group 1: Summary of the Core View - The current economic readings are rather dull, with the overall production growth slowing down in August. The single - month economic data is prone to fluctuations, but the internal economic momentum continues to recover [4][5][7] - The contradiction in current asset pricing does not lie in the fundamentals. The "stock - strong, bond - weak" situation is the result of institutional re - allocation of stock and bond assets, and single - month data fluctuations will not change the current risk - preference environment or the expected direction of institutional asset re - allocation [6] - When dealing with the bond market, one should adopt a trading - based approach, focus on the opportunities of structural term spreads and variety spreads, as the bond market remains a "weak asset" and single - month economic data is unlikely to change the trend [9] Group 2: Industry Data Analysis Industrial Industry - In the upstream of the industrial industry, the production of non - ferrous metal processing, non - metallic products, and chemical raw material products has accelerated year - on - year. In the mid - and downstream equipment and consumer goods manufacturing, the output growth of the pharmaceutical and special equipment production has accelerated. The growth rate of industrial added value in other industries has declined compared with last month [4] - In August, the industrial added value increased by 5.2% year - on - year, with a growth rate 0.5 percentage points lower than that of last month. Among the three major sectors, the production growth rate of the mining industry has rebounded, while the year - on - year growth rates of the manufacturing and the production and supply of electricity, heat, gas, and water have declined [7] Service Industry - The growth rate of service industry production has slowed down. In August, the service industry production index increased by 5.6% year - on - year, with a growth rate 0.2 percentage points lower than that of last month. The prosperity of producer services such as information technology, finance, and leasing is higher than the overall service industry [4] Investment - The growth rate of fixed - asset investment has slowed down. In August, the completed amount of fixed - asset investment decreased by 7.15% year - on - year, 1.81 percentage points lower than that of last month. Among them, real estate, infrastructure, and manufacturing investments decreased by 19.5%, 6.4%, and 1.3% year - on - year respectively [8] - Real estate sales and investment continue to bottom out, with the decline in sales prices narrowing. In August, the sales volume and sales area of commercial housing decreased by 14% and 10.6% year - on - year respectively. The real estate new construction area and completion area decreased by 20.3% and 21.4% year - on - year respectively [8] Consumption - In terms of consumption, catering consumption is recovering, while commodity consumption has slowed down, which may be affected by the "national subsidy" rhythm adjustment in some provinces. In August, the total retail sales of consumer goods increased by 3.4% year - on - year, with a growth rate 0.3 percentage points lower than that of last month [8] - Among commodity consumption, the year - on - year growth rates of gold and silver jewelry, household appliances, and communication equipment have changed significantly compared with last month. The sales volume of gold and silver jewelry may be related to the rapid rise in precious metal prices, while the slowdown of household appliances and communication equipment may be affected by the "national subsidy" rhythm adjustment after the "618" promotion [8] Group 3: Impact of Economic Data - After the release of economic data, bond yields first declined and then rose. The bond market has experienced an oversold rebound recently. After the release of economic data, the long - term bond yields rebounded, but then rose again [7] - Single - month economic data is affected by policy rhythm changes and structural transformation, and its fluctuations are unlikely to change the overall trend. Although the overall economic data in August is not outstanding, the internal economic momentum continues to recover [5][6]