Report Industry Investment Rating No relevant content provided. Core Views of the Report - The potential negative factors for the current bond market come from the fundamentals, including economic data disclosure and the progress of Sino-US negotiations. Under the consensus expectation, it is difficult to say that the bond market will reverse. Attention should be paid to the changes in bond market expectations caused by event shocks [2]. - The sentiment index of fixed-income sellers has reached a new high this year, while buyers mainly expect the market to fluctuate, and their sentiment has declined for three consecutive weeks [2]. Summary by Relevant Catalogs 1. Seller and Buyer Markets 1.1 Seller Market Sentiment Index and Interest Rate Bonds - This week, the weighted tracking index was 0.47, showing a mostly bullish view but lower than last week. The unweighted tracking index was 0.68, up 0.09 from last week. Currently, institutions generally hold a neutral-to-bullish view, with 18 bullish, 6 neutral, and 1 bearish [10]. - 72% of institutions are bullish, with keywords such as weak credit, slow economic recovery, external demand shocks, loose monetary policy, low supply pressure in July, and opportunities for a bullish flattening of the curve after the short end declines [4][10]. - 24% of institutions are neutral, with keywords such as the neutral impact of restarting treasury bonds, and potential disturbances from the stock-bond seesaw and unexpected Sino-US negotiations [4][10]. - 4% of institutions are bearish, with the view that the central bank's bond purchases are not the reason for the decline in interest rates, and the economic recovery in the second half of 2025 is expected to drive up prices and interest rates [4][10]. 1.2 Buyer Market Sentiment Index and Interest Rate Bonds - This week, the tracking sentiment index was 0.13, showing a mostly neutral view and lower than last week. Currently, institutions generally hold a neutral-to-bullish view, with 5 bullish and 18 neutral [11]. - 22% of institutions are bullish, with keywords such as loose funds and a possible quarter-on-quarter weakening of the economic fundamentals in the third quarter [11]. - 78% of institutions are neutral, with keywords such as the reduced expectation of broad credit after the second-quarter monetary policy meeting and the suppression of bond market sentiment by the equity market [11]. 1.3 Credit Bonds - Market hot topics include the recovery of wealth management scale and loose funds. The recovery of wealth management scale may further improve the demand for credit bonds, and loose funds, combined with weak fundamentals, support the overall strength of the bond market and a decline in benchmark interest rates [17]. 1.4 Convertible Bonds - This week, institutions generally hold a neutral-to-bullish view, with 8 bullish and 6 neutral [18]. - 57% of institutions are bullish, believing that with the new bond supply not accelerating significantly on the issuance side, the convertible bond market scale may gradually shrink in the second half of the year, and medium and large-cap convertible bonds among high-quality existing and newly issued bonds are worth attention [18]. - 43% of institutions are neutral, stating that there is still uncertainty about the US tariff increase, and the allocation value of convertible bonds will be better reflected after the valuation is moderately digested [18]. 2. Treasury Bond Futures Tracking 2.1 Futures Trading - Futures prices showed mixed trends. As of July 4, the prices of TS/TF/T/TL treasury bond contracts were 102.51 yuan, 106.26 yuan, 109.10 yuan, and 121.20 yuan respectively, with changes of -0.03 yuan, -0.01 yuan, +0.05 yuan, and +0.31 yuan compared to last Friday [21]. - The trading volume of treasury bond futures generally increased. As of July 4, from a 5MA perspective, the trading volumes of TS/TF/T/TL futures contracts were 640 billion yuan, 622 billion yuan, 766 billion yuan, and 988 billion yuan respectively, with changes of +3.04 billion yuan, +30.63 billion yuan, +77.98 billion yuan, and -19.99 billion yuan compared to last Friday [21]. - The trading-to-holding ratio of treasury bond futures generally increased. As of July 4, from a 5MA perspective, the trading-to-holding ratios of TS/TF/T/TL futures contracts were 0.27, 0.40, 0.38, and 0.85 respectively, with changes of +0.01, +0.03, +0.04, and -0.03 compared to last Friday [22]. 2.2 Spot Bond Trading - The turnover rate of 30-year treasury bonds decreased. On July 4, the turnover rate was 4.03%, down 3.90 percentage points from last week and up 0.61 percentage points from Monday, with an average weekly turnover rate of 4.21%. The weekly average turnover rate of interest rate bonds decreased, and the turnover rate on July 4 was 0.93%, down 0.09 percentage points from last week and up 0.28 percentage points from Monday [29]. - The turnover rate of 10-year China Development Bank bonds increased. On July 4, the turnover rate was 4.91%, up 0.45 percentage points from last week and up 1.60 percentage points from Monday [32]. 2.3 Basis Trading - The basis generally narrowed, while the net basis widened across the board. As of July 4, the basis (CTD) of TS/TF/T/TL main contracts were -0.02 yuan, 0.001 yuan, 0.14 yuan, and 0.25 yuan respectively, with changes of +0.05 yuan, +0.05 yuan, +0.16 yuan, and -0.07 yuan compared to last Friday [39]. - In terms of the net basis, the net basis of main contracts widened. As of July 4, the net basis (CTD) of TS/TF/T/TL main contracts were -0.05 yuan, -0.06 yuan, -0.11 yuan, and -0.11 yuan respectively, with changes of -0.01 yuan, -0.01 yuan, -0.07 yuan, and -0.12 yuan compared to last Friday [41]. - In terms of IRR, the IRR of T and TL main contracts increased, while the others decreased. As of July 4, the IRR (CTD) of TS/TF/T/TL main contracts were 1.65%, 1.69%, 1.89%, and 1.80% respectively, with changes of -0.20%, -0.23%, +0.03%, and +0.14% compared to last Friday [41]. 2.4 Inter-period and Inter-variety Spreads - Inter-period spreads showed mixed trends. As of July 4, the spreads between the near and far months of TS/TF/T/TL contracts were -0.12 yuan, -0.08 yuan, -0.08 yuan, and 0.13 yuan respectively, with changes of +0.01 yuan, -0.005 yuan, -0.07 yuan, and -0.01 yuan compared to last Friday [48]. - Inter-variety spreads of main futures contracts all narrowed. As of July 4, 2*TS - TF, 2*TF - T, 4*TS - T, and 3*T - TL were 98.77 yuan, 103.39 yuan, 300.92 yuan, and 206.13 yuan respectively, with changes of -0.06 yuan, -0.07 yuan, -0.19 yuan, and -0.14 yuan compared to last Friday [48].

Group 1: Manufacturing PMI - In June, China's manufacturing PMI rose to 49.7%, up from 49.5% in the previous month, indicating a slight recovery in manufacturing activity [1] - The production index increased by 0.3 percentage points to 51%, while the new orders index rose by 0.4 percentage points to 50.2%, suggesting improving demand [1] - The current PMI is primarily affected by the backlog of finished goods inventory, but as inventory is gradually digested, new order growth momentum is expected to be released further [1] Group 2: Non-Manufacturing PMI - The non-manufacturing PMI for June was 50.5%, an increase of 0.2 percentage points from the previous value [1] - The construction PMI rose by 1.8 percentage points to 52.8%, likely linked to the acceleration of "two heavy" projects and stronger policies to stabilize the real estate market [1] - The service sector PMI slightly declined by 0.1 percentage points to 50.1%, possibly due to reduced offline travel activity after holiday effects [1] Group 3: Government Debt Supply and Funding - In the first half of the year, the fiscal supply was robust, with 6.66 trillion yuan of government bonds issued, representing 51% of the annual quota [3] - Local government special bond issuance accelerated in June, with 4.4 trillion yuan of new quotas, and 48% already issued [3] - The overall issuance volume is expected to remain stable in the second half, with a projected issuance of 5.8 trillion yuan, keeping liquidity pressure manageable [3] Group 4: Future Outlook - The third quarter is expected to see a peak in local government special bond issuance, which may enhance funding for local-led projects [4] - The central bank's monetary policy tools are anticipated to support financing for "two heavy" and "two new" projects, potentially increasing infrastructure investment [4] - The economic recovery remains weak, with external demand showing marginal improvement, but internal economic momentum still requires strengthening [5]

Market Overview - The bond market experienced a warm oscillation last week, with a slight decline in long-term bond yields. The 10-year government bond futures main contract rose by 0.03%, while the 10-year bond yield fell by 0.29 basis points compared to the previous week [2][3] - The yield curve has steepened further, driven by a combination of factors including a loosening of the funding environment and a reduction in government bond issuance [1][3] Secondary Market - On July 1, the bond market was supported by a loosening funding environment and a reduction in government bond issuance, leading to a general decline in yields. The 10-year bond yield decreased by 0.36 basis points [4] - On July 2, the market continued to strengthen due to the increasingly loose funding environment, with the 10-year bond yield falling by 0.37 basis points [4] - On July 3, the bond market remained warm, with most yields declining, although the 10-year bond yield increased slightly by 0.11 basis points [4] - On July 4, short-term bonds continued to perform well due to the ongoing loose funding environment, while long-term bonds weakened slightly due to the stock-bond effect, with the 10-year bond yield rising by 0.26 basis points [4] Primary Market - A total of 47 bonds were issued last week, a decrease of 130 bonds from the previous week, with an issuance volume of 513.2 billion, down by 354.4 billion. The net financing amount was 376.6 billion, a significant decrease of 404.1 billion [11][12] - Government bonds, policy bank bonds, and local government bonds saw varying issuance trends, with government bonds and policy bank bonds increasing while local government bonds saw a significant decrease [11][12] Economic Indicators - The macroeconomic sentiment continued to improve in June, with the manufacturing PMI rising to 49.7%, an increase of 0.2 percentage points from May. The non-manufacturing business activity index rose to 50.5%, also up by 0.2 percentage points [13] - The service sector PMI decreased slightly to 50.1%, reflecting seasonal trends, while the composite PMI output index rose to 50.7%, indicating ongoing expansion [13] Liquidity Observation - The central bank conducted a net withdrawal of 1375.3 billion in the open market last week, indicating a tightening of liquidity despite the overall loose funding environment [24]

债市周一（7日）偏弱整理，期现券波动都不大，国债期货主力全天多数在平盘附近整理，银行间现券 收益率振幅基本在0.5BP以内；公开市场单日净回笼2250亿元，资金利率仍普遍延续下行。 机构认为，随着7月税期走款、MLF回笼、政府债缴款规模提升，资金面波动可能加大，需要关注央行 公开市场投放情况。若短久期国债单期供给规模大幅下行，大行一级市场存在配置缺口，其在二级市场 买入短债力量有望增强，进而推动短端利率下行。 【行情跟踪】 国债期货收盘多数下跌，30年期主力合约跌0.04%报121.150，10年期主力合约持平于109.105，5年期主 力合约跌0.02%报106.225，2年期主力合约跌0.01%报102.502。 银行间主要利率债收益率走势小幅分化，截至发稿时，30年期"25超长特别国债02"收益率上行0.05BP至 1.852%，10年期"25国开10"收益率下行0.18BP至1.7157%，10年期"25附息国债11"收益率上行0.02BP至 1.6412%。 中证转债指数收盘下跌0.19%，报446.59点，成交金额644.01亿元。精装转债、电化转债、楚江转债、 松霖转债、振华转债跌幅居前，分别跌 ...

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The capital market is expected to enter a relatively comfortable range in July, supported by seasonal patterns and the central bank's supportive attitude. However, there are still some disturbances in July, and attention should be paid to the periodic pressure on the capital market [2][17][20] - Next week, the pressure of maturing certificates of deposit and the net payment scale of government bonds will increase, but the capital market at the beginning of the month is expected to remain balanced and loose. With the central bank's support, the capital price may continue to run at a relatively low level [3][27] 3. Summary by Relevant Catalogs 3.1 1. 1.3% Overnight Rate Sustainability - The central bank's large - scale injection supported the cross - quarter capital market, with seasonal increases in capital prices and overall stability. After the cross - quarter period, the central bank's large - scale net withdrawal did not change the loosening trend of the capital market, and the lending of large banks rebounded rapidly, leading to a decline in capital and certificate of deposit prices [1][12] - In July, the capital market may enter a comfortable range, but there are disturbances such as tax payments and MLF withdrawals in the middle of the month, and attention should be paid to the central bank's injection [2][20][25] 3.2 2. Open Market: Next Week's Maturity Pressure Declines - From June 30 to July 4, the net reverse repurchase investment in the open market was - 13753 billion yuan. From July 7 to July 11, 6522 billion yuan of reverse repurchases will mature [4][32][33] 3.3 3. Government Bonds: Local Bond Issuance Exceeds 2000 Billion Yuan Next Week - This week, the net payment of government bonds was 341 billion yuan. Next week, government bond issuance will drop to 2020 billion yuan, with no treasury bond issuance and 2020 billion yuan of local bond issuance. The net payment of treasury bonds is 1599 billion yuan, and that of local bonds is 1112 billion yuan [38] 3.4 4. Excess Reserve Tracking Forecast - It is predicted that the excess reserve ratio in July 2025 will be about 0.85%, a month - on - month decrease of about 0.3 pct and a year - on - year decrease of 0.64 pct [43] 3.5 5. Money Market: This Week's Capital Interest Rates Declined - Compared with June 27, DR001, DR007, R001, and R007 decreased by 5.43BP, 27.46BP, 9.94BP, and 43.2BP respectively to 1.31%, 1.42%, 1.36%, and 1.49% [6][46] - The overnight and 7 - day SHIBOR rates decreased by 1.34BP and 9.32BP respectively to 1.37% and 1.63%. The overnight and 7 - day CNH HIBOR rates decreased by 5.91BP and 9.56BP respectively to 1.76% and 1.81% [51] 3.6 6. Interbank Certificates of Deposit 6.1 Primary Market: This Week's Certificate of Deposit Issuance Scale Continued to Decline - From June 30 to July 4, the total issuance of inter - bank certificates of deposit was 2429 billion yuan, with a net financing of - 339 billion yuan. Compared with last week, the issuance scale decreased, and the net financing increased [69] - By issuer, joint - stock banks had the highest issuance scale, and city commercial banks had the highest net financing. By term, 1 - year certificates of deposit had the highest issuance scale and net financing [69] - Next week, the maturity scale of inter - bank certificates of deposit will be 5213 billion yuan, an increase from this week [70][80] 6.2 Secondary Market: Yields Broke Through the Previous Low - This week, the secondary yields of certificates of deposit continued to decline, breaking through the previous low and mostly operating in the range of 1.5% - 1.6% [95] - The yields of certificates of deposit of all terms and grades decreased. The relative value of certificates of deposit changed compared with last week [95][101]

Report Industry Investment Rating No investment rating for the industry is provided in the report. Core View of the Report The bond market is currently in a period of limited fundamental data and policy calm, lacking a clear main line. The liquidity situation is the key variable affecting the bond market. With loose liquidity at the beginning of the month, the bond market is expected to oscillate strongly. However, the current interest rate curve is relatively flat, and the downward space for long - term interest rates can only be opened after a further decline in short - term interest rates [23]. Summary by Relevant Catalogs 1. Important Event Review - **PMI Data**: In June, the manufacturing PMI, non - manufacturing business activity index, and composite PMI output index were 49.7%, 50.5%, and 50.7% respectively. The manufacturing production index rose 0.3 percentage points to 51.0%, and the new order index rose 0.4 percentage points to 50.2%. The new export order index rose 0.2 percentage points to 47.7%. The contraction of raw material purchase prices and ex - factory price indices slowed down. The destocking pace of raw materials and finished products slowed down. In non - manufacturing, the construction business activity index rose 1.8 percentage points to 52.8%, while the service business activity index dropped 0.1 percentage points to 50.1%. Considering the influence of high - temperature and typhoon weather, the manufacturing industry may face seasonal decline in economic prosperity [9]. 2. Funding Price - **Post - Quarter Funding Eased**: From June 27 to July 3, the central bank net - withdrew over 50 billion yuan in the open market. After the quarter, the funding situation returned to a loose state. DR007 fell below 1.50%, and R007 dropped to around 1.52%, both lower than the levels in the first half of June. The yield of 1 - year inter - bank certificates of deposit also dropped significantly, reaching a new low of around 1.61% [10]. 3. Primary Market - **Slower Issuance at the Beginning of the Quarter**: From June 27 to July 3, 56 interest - rate bonds were issued in the primary market, with a total issuance amount of 335 billion yuan and a net financing amount of 202.1 billion yuan. The scale of newly - added local special bonds increased significantly at the end of June, possibly due to quarterly or semi - annual issuance progress requirements, and decreased significantly at the beginning of July [15]. 4. Secondary Market - **Strong Oscillation and Steeper Curve**: From June 27 to July 3, the yields of all - term treasury bonds declined, with relatively larger declines in medium - and short - term treasury bond yields, mainly driven by loose funding. The bond market had limited incremental information, and the interest rate oscillation range was small. In this market situation, investors pursued spreads such as those between new and old bonds [16]. 5. Market Outlook - **Fundamentals**: Recent incremental information mainly focuses on changes in the trade environment, such as the indirect impact of trade agreements between the US and other countries on China [21]. - **Policy**: At the central level, the Sixth Meeting of the Central Financial and Economic Commission on July 1 discussed issues such as promoting the construction of a unified national market and high - quality development of the marine economy, which is helpful for improving the current low - inflation situation. In terms of monetary policy, compared with the first - quarter meeting, the second - quarter meeting communiqué had three main changes. The possibility of introducing incremental policies in July is limited, and the monetary policy mainly focuses on "implementing existing policies + flexible adjustment", with attention on open - market operations [22]. - **Funding**: Liquidity remains the key variable affecting the bond market. Liquidity is mainly loose at the beginning of the month, and the main point of contention is whether the central bank will buy short - term treasury bonds in the open market [22].

Core Insights - The article emphasizes that without novelty and expectation differences, there will be no explosive growth in the market [1] Group 1: Market Conditions - The central bank conducted a 572 billion yuan 7-day reverse repurchase operation, with 5,093 billion yuan of reverse repos maturing today, resulting in a net withdrawal of 4,521 billion yuan [3] - The interbank funding environment remains balanced and loose, with DR001 around 1.32% and DR007 around 1.47% [4] - The Caixin Services PMI for June dropped to 50.6, the lowest since October 2024, indicating a weakening in the services sector [5] Group 2: Economic Indicators - The 10-year government bond yield fluctuated around 1.639%, with a slight decrease to 1.635% during the day [5][6] - The article notes that 78% of U.S. weapon systems rely on critical minerals from China, highlighting the interdependence in U.S.-China relations [6]

Group 1: Market Overview - The bond market continued its warm trend on July 3, with short-term bonds remaining strong and long-term bonds showing slight consolidation [1][2] - The main contracts for government bond futures mostly closed higher, with the 30-year contract down 0.02% at 121.130, while the 10-year contract remained flat at 109.105 [2] - The interbank short-term bond yields decreased by approximately 0.5 basis points, while long-term bonds remained stable [1][5] Group 2: Fund Flows - The central bank conducted a net withdrawal of 452.1 billion yuan in the open market on July 3, with a slight decline in funding rates at the beginning of the month [1][5] - The Shibor short-term rates collectively decreased, with the overnight rate down 5.0 basis points to 1.315%, marking a new low since December 2024 [5] Group 3: Institutional Insights - CITIC Securities noted that the traditional "loan-based" profit model of Chinese banks is facing restructuring due to slowing economic growth and tightening credit demand, leading to increased bond purchases by smaller banks [7] - Changjiang Fixed Income suggested that the central bank's liquidity support is expected to continue, but the space for further easing may be limited as interbank bond market leverage rises above 108% [7] - CITIC Jiantou recommended viewing convertible bonds as tools to capture upward momentum in the equity market, while cautioning that their valuation is currently high [6]

Core Insights - Since March, the central bank has actively responded to short-term situations, implementing precise measures to maintain a balanced and loose liquidity environment. Although the probability of further rate cuts or reserve requirement ratio reductions in the short term is low, the central bank is expected to utilize appropriate tools if necessary to ensure stable liquidity. The bond market is likely to return to an upward trend, and investors are encouraged to seize the buying opportunity in July and August [1][5][24]. July Monetary Policy and Liquidity Outlook - July is a significant month for tax payments, which will increase liquidity disturbances [15]. - Approximately 2.8 trillion yuan of certificates of deposit will mature in July, primarily consisting of one-year and three-month maturities. In the context of a slowing deposit absorption pace, banks are likely to have strong motivation to replenish the certificate of deposit gap [17]. - The issuance scale of government bonds in July is slightly lower than in June, with net financing around 1.4 trillion yuan. Additionally, nearly 200 billion yuan of special refinancing bonds have yet to be issued [20]. - There will be 1.2 trillion yuan of reverse repos and 300 billion yuan of Medium-term Lending Facility (MLF) maturing in July, with the scale being higher than in June. Investors are closely watching whether the central bank will initiate bond buying and change the announcement method [22]. Central Bank Operations - The central bank has been actively addressing different monthly demands since March, maintaining a balanced and loose liquidity stance. The policy toolbox has become "multi-term and flexible," allowing for timely decisions based on market needs [11][22]. - The market is currently focused on whether the central bank will restart bond buying. This ongoing speculation has influenced market trends, with investors closely monitoring indicators that reflect market liquidity and central bank intentions [24].

Market Performance - The majority of government bond futures closed higher, with the 30-year main contract rising by 0.28% to 120.740, the 10-year main contract up by 0.10% to 109.005, the 5-year main contract increasing by 0.06% to 106.205, and the 2-year main contract down by 0.01% to 102.488 [1] - The yields on major interbank bonds mostly declined, with the 30-year government bond yield down by 0.9 basis points to 1.8520%, the 10-year policy bank bond yield down by 0.85 basis points to 1.7175%, the 10-year government bond yield down by 0.25 basis points to 1.6435%, and the 2-year government bond yield up by 0.1 basis points to 1.3660% [1] Funding Conditions - The central bank announced a fixed-rate reverse repurchase operation of 131 billion yuan for 7 days at an interest rate of 1.40%, with a total bid amount of 131 billion yuan and a successful bid amount of 131 billion yuan [2] - On the same day, 406.5 billion yuan of reverse repos matured, resulting in a net withdrawal of 275.5 billion yuan [2] - After the month-end, the funding conditions for banks have returned to a loose state, with overnight pledged repo rates dropping over 14 basis points to 1.36%, and seven-day pledged repo rates declining over 37 basis points [2] Operational Suggestions - As the funding conditions turn loose at the beginning of the month, the overall bond market has rebounded, but there is currently a lack of momentum to break previous highs [3] - Key points to monitor include whether funding rates can further decline, the subsequent fundamental conditions, and whether the central bank will announce government bond trading situations [3] - For government bond futures strategy, it is suggested to appropriately allocate long positions during adjustments, take profit near previous highs, and pay attention to economic data and funding trends [3]