Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The bond market is gradually recovering, and the repair market is expected to unfold step - by - step. The dumbbell strategy may be more advantageous, and it is recommended to focus on certificates of deposit and long - term interest - rate bonds [4][17]. - Banks have the willingness and ability to allocate bonds. The high cost - performance of the bond market explains banks' buying willingness, and banks' relatively sufficient funds support their continuous bond - allocation ability [1][7]. - Bank foreign exchange settlement does not increase bond - allocation funds but may improve bank indicators and reduce the need for certificate - of - deposit financing [4][16]. Summary by Related Content Bond Market Performance - This week, the bond market continued to recover, with most interest rates declining. The yields of 10 - year and 30 - year treasury bonds dropped by 1.3bps and 1.6bps to 1.83% and 2.29% respectively. The yields of 3 - year and 5 - year secondary capital bonds fell by 2.6bps and 2.2bps to 1.9% and 2.15% respectively. The 1 - year AAA certificate - of - deposit rate dropped by 3.00bps to 1.595%, breaking through the 1.6% mark [1][7]. Banks' Willingness to Allocate Bonds - The high cost - performance of the current bond market can explain banks' buying willingness. The comprehensive income of long - term bonds is higher than that of loans. For example, the average mortgage loan interest rate is around 3.0%, and even considering only 25% tax, the comprehensive income is still lower than the current 2.3% yield of 30 - year treasury bonds. At the same time, as banks' liability costs continue to decline, allocating long - term bonds can cover liability costs through coupon payments [1][7]. Banks' Ability to Allocate Bonds - High - frequency data since the beginning of the year shows that the pressure on banks' liability side may be limited, which supports their continuous bond - allocation ability. Banks have been net repaying certificates of deposit, with a cumulative net repayment of 1.15 trillion yuan since early December last year. The inter - bank pledged repurchase trading volume has remained above 8 trillion yuan, indicating that banks are not short of liabilities [2][10]. Source of Banks' Bond - Allocation Funds - Some people think that the increase in banks' foreign exchange settlement volume has increased the source of funds, but in fact, without the central bank's foreign exchange settlement, banks' own foreign exchange settlement will not increase the source of funds. Currently, most of the foreign exchange settlement is from enterprises or individuals to banks, which will not increase banks' funds supply but may increase their demand for funds [2][3]. - The source of banks' bond - allocation funds at the beginning of the year is mainly due to the relatively stable deposits, with no obvious outflow. As real - estate sales weaken, residents' savings may flow from real estate to deposits, increasing the supply of deposits. In addition, credit and social financing may not be very strong at the beginning of the year, which also increases the demand for bond allocation [4][16].

Important Events Review - On January 14, the China Securities Regulatory Commission approved an adjustment to the financing margin ratio for the Shanghai and Shenzhen Stock Exchanges, increasing the minimum financing margin ratio from 80% to 100% for new financing contracts. This adjustment aims to reduce leverage levels and protect investors' rights, promoting long-term market stability [2] - On January 15, the People's Bank of China introduced eight structural monetary policy measures, including a 0.25 percentage point reduction in the interest rates of various structural monetary policy tools and an expansion of the total quota for these tools by approximately 1.1 trillion yuan [2] - On January 15, the People's Bank of China released the 2025 financial statistics report, indicating that the total social financing scale increased by 35.6 trillion yuan for the year, which is 3.34 trillion yuan more than the previous year. As of the end of December, the broad money (M2) balance was 340.29 trillion yuan, reflecting an 8.5% year-on-year growth, while the narrow money (M1) balance was 115.51 trillion yuan, showing a 3.8% year-on-year increase [2]

Group 1 - The central bank's monetary policy will continue to focus on structural measures, with a reduction of 0.25 percentage points in various structural monetary policy tool rates to lower social financing costs and support key sectors [1] - There is room for interest rate cuts and reserve requirement ratio reductions, which will be used flexibly and efficiently [1] - The central bank will dynamically adjust the scale of bond purchases based on market conditions to prevent sharp market fluctuations [1] Group 2 - The Penghua Science and Technology Innovation Bond ETF (551030) is one of the first ten such ETFs, tracking the Shanghai Stock Exchange AAA-rated technology innovation corporate bond index [2] - Compared to single bond investment strategies, the ETF offers advantages such as low fees, low trading costs, high transparency, high diversification, and efficient "T+0" redemption, which helps to mitigate investment portfolio risks and improve capital efficiency [2] - Penghua Fund has established a long-term strategy for fixed income tools since the second half of 2018, actively positioning itself in various fixed income index products and aiming to become a domestic expert in fixed income indices [2]

Market Overview - The funding environment is stable and slightly loose, with the DR001 rising by 0.21 basis points to 1.270% and DR007 increasing by 1.15 basis points to 1.474% [7] - The bond market has shown signs of recovery, with major indices in the convertible bond market collectively rising, and most individual convertible bonds also increasing in value [4][14] Domestic News - The Central Political Bureau of the Communist Party of China held a meeting on January 8, emphasizing the importance of maintaining and improving the party's leadership system to ensure governance across various sectors [2] - The Ministry of Commerce reiterated China's commitment to deepening economic and trade relations with Venezuela, regardless of changes in the Venezuelan political landscape, emphasizing mutual respect and non-interference [3] International News - In the U.S., initial jobless claims rose slightly to 208,000, remaining at historically low levels, indicating that large-scale layoffs have not occurred despite some fluctuations in the data [4] - The international oil futures market saw WTI crude oil prices rise by approximately 3.2% to $57.76 per barrel, while natural gas prices fell by 4.48% to $3.406 per million British thermal units [5] Bond Market - On January 8, the People's Bank of China conducted a 7-day reverse repurchase operation of 99 billion yuan at a fixed rate of 1.40%, resulting in a net injection of funds of 99 billion yuan for the day [6] - The yield on the 10-year government bond decreased by 1.05 basis points to 1.8880%, while the 10-year policy bank bond yield fell by 1.90 basis points to 1.9750% [9] Credit Bonds - In the secondary market, two industrial bonds experienced significant price deviations, with "20 Baolong MTN001" dropping over 28% and "24 Chanrong 02" declining over 7% [10] - Several companies, including Country Garden and R&F Properties, reported overdue debt amounts, with Country Garden announcing the resumption of trading for certain bonds after completing cash repayments [11][13] Convertible Bonds - The convertible bond market maintained an upward trend, with major indices rising by approximately 0.39% on January 8, and trading volume increasing by 51.61 billion yuan compared to the previous trading day [14] - Notable individual convertible bonds included Jingzhuang Convertible Bond, which rose over 18%, and Aori Convertible Bond, which increased over 12% [15] Overseas Bond Market - U.S. Treasury yields rose across all maturities, with the 2-year yield increasing by 2 basis points to 3.49% and the 10-year yield rising by 4 basis points to 4.19% [18] - In the European bond market, the 10-year government bond yields showed mixed movements, with Germany's yield rising by 2 basis points to 2.83% while the UK's yield fell by 2 basis points [21]

Summary of Conference Call Notes Industry Overview - The notes primarily discuss the impact of new regulations on the public bond fund market and the broader debt market in China, particularly focusing on the secondary capital bonds (perpetual bonds) [2][6]. Key Points and Arguments 1. **New Regulations on Redemption Fees** - The new regulations allow individual investors to set their own redemption fee standards for index and bond funds after holding them for 7 days, a change from the previous requirement that treated them similarly to equity funds [3][4]. - Institutional investors can also set their own redemption fee standards after holding bond funds for 30 days, which is an improvement from the previous structure that imposed strict fee limits based on holding periods [3][4]. 2. **Impact on Market Liquidity** - The adjustments in redemption fee structures are expected to significantly lower short-term trading costs and enhance market liquidity [4][5]. - The new rules are anticipated to alleviate redemption pressure on public bond funds in the short term, providing a one-year transition period for existing products to comply with the new standards [5]. 3. **Stability of Public Bond Funds** - The regulations aim to enhance the stability of public bond funds by imposing high redemption fees on institutional investors who hold funds for less than 30 days, thereby reducing frequent trading disruptions [5]. - This is expected to reshape the industry ecosystem and improve the management of public bond funds [5]. 4. **Opportunities in Secondary Capital Bonds** - There are trading opportunities in secondary capital bonds due to previous sell-offs caused by preventive management, which led to significant yield adjustments [6]. - The new regulations may create favorable trading windows for these bonds as market conditions improve [6]. 5. **Overall Market Impact** - The new regulations are viewed as a positive development for the overall market, with expectations of a more relaxed funding environment around the year-end, which could drive debt market recovery [6]. - The easing of redemption fee thresholds for both individual and institutional investors is seen as a certain benefit for the debt market [6]. Other Important Considerations - The notes highlight that while the new regulations provide immediate relief, there are still concerns regarding supply pressures for ultra-long-duration bonds (10 years and above) [6]. - The anticipated influx of funds into ETFs, due to their low fees and flexible redemption options, is expected to further stimulate the ETF market [5].

Group 1: Report Industry Investment Rating - Not provided in the content Group 2: Core Viewpoints of the Report - The bond market at the end of 2025 was volatile and weak, mainly affected by year - end institutional behavior changes and strong December PMI data. The official draft of the new regulations on public fund sales is expected to have a positive impact on the bond market, and the bond market at the beginning of 2026 is likely to recover [13][16]. - In 2026 Q1, the bond market has both risks and opportunities. At the beginning of 2026, the possibility of a significant tightening of funds similar to that in early 2025 is small. Higher interest rates are beneficial for allocation - type institutions, while trading - type institutions can focus on capital interest rates and potential reserve requirement ratio and interest rate cuts [17]. - The "grand narrative" pricing and cyclical factors of gold are positive in 2026, and gold is expected to play an important role in different asset portfolios. The long - term value of the RMB is underestimated, but in the medium - term, the supporting role of macro - policies during the transformation from exogenous to endogenous growth needs to be considered [20]. - The latest PMI and EIA data in the US show increased inflationary pressure and slowed economic expansion momentum. The market's expectation of the Fed's interest rate cut has become more cautious. There are significant policy differences within the Fed, and the monetary policy path requires more data for confirmation [21]. Group 3: Summary According to Relevant Catalogs 3.1 One - Week Viewpoints - **Impact of PMI and New Fund Sales Regulations on the Bond Market**: From December 26 to 31, 2025, the yield of the 10 - year Treasury active bond rose 1.45bp from 1.8355% to 1.85%. On December 31, the release of PMI data initially suppressed the bond market sentiment, and the official draft of the new regulations on public fund sales had limited impact on the bond market that day [11][12]. - **Analysis of US Economic Data and Bond Yields**: The US December PMI initial values were all lower than expected, EIA inventory data changed, and the housing and labor markets showed mixed signals. The Fed's policy differences were significant, and the short - term interest - rate cut faced resistance [21][22][32]. 3.2 Domestic and Foreign Data Summaries - **Liquidity Tracking**: From December 29 to 31, 2025, the net investment in the open market was 117.1 billion yuan. The money market interest rates and bond yields showed certain changes [36][41]. - **Domestic and Foreign Macroeconomic Data Tracking**: Steel prices generally rose, LME non - ferrous metal futures official prices increased across the board. Overseas, the US stock and bond markets, and commodity prices also had corresponding fluctuations [59]. 3.3 Local Bond One - Week Review - **Primary Market Issuance Overview**: From December 29, 2025, to January 2, 2026, 9 local bonds were issued, with a total issuance amount of 26 billion yuan, including 11.5 billion yuan in refinancing bonds and 14.5 billion yuan in new special bonds. The net financing amount was 17.449 billion yuan, mainly invested in comprehensive projects [84]. - **Secondary Market Overview**: The local bond stock was 54.61 trillion yuan, with a trading volume of 133.992 billion yuan and a turnover rate of 0.25%. The top three provinces in terms of trading activity were Guangdong, Sichuan, and Zhejiang, and the top three active terms were 30Y, 10Y, and 20Y [97]. - **This Month's Local Bond Issuance Plan**: The issuance plans for Shandong and Zhejiang provinces from January 5 to 9, 2026, were provided [103]. 3.4 Credit Bond Market One - Week Review - **Primary Market Issuance Overview**: A total of 81 credit bonds were issued, with a total issuance of 74.42 billion yuan, a total repayment of 136.119 billion yuan, and a net financing of - 61.7 billion yuan. The net financing of urban investment bonds was - 8.818 billion yuan, and that of industrial bonds was - 52.882 billion yuan [104][105]. - **Issuance Interest Rates**: The issuance interest rates of short - term financing bonds, medium - term notes, and corporate bonds showed different degrees of change [118]. - **Secondary Market Transaction Overview**: The total trading volume of credit bonds was 242.219 billion yuan, with short - term financing bonds and medium - term notes having relatively large trading volumes [119]. - **Yield to Maturity**: The yields of short - term financing bonds, medium - term notes, corporate bonds, and urban investment bonds showed a differentiated trend [121][123][125]. - **Credit Spreads**: The credit spreads of short - term financing bonds, medium - term notes, corporate bonds, and urban investment bonds showed different degrees of change, with the credit spreads of urban investment bonds generally widening [128][131][134]. - **Grade Spreads**: The grade spreads of short - term financing bonds, medium - term notes, and corporate bonds generally widened, while those of urban investment bonds showed a differentiated trend [135][141][142]. - **Trading Activity**: The industrial sector had the largest trading volume of bonds, reaching 152.732 billion yuan. The top five most actively traded bonds in each category were listed [147]. - **Subject Rating Changes**: The subject ratings of several companies were upgraded, including Yichun Development Investment Group Co., Ltd., and Suining Tianyi Investment Group Co., Ltd. [149].

1. Report Industry Investment Rating - Not provided in the report 2. Core Viewpoints of the Report - The bond market is expected to recover after the holiday. The mild implementation of the new public - fund fee regulations and the alleviation of banks' institutional indicator pressure may increase the allocation power and drive the bond market to pick up [5][8][14]. - In January, the bond market may remain volatile under supply shocks. The increased supply of government bonds and the potential credit surge at the beginning of the year may crowd out the allocation power and increase capital demand, leading to greater capital fluctuations [5][14]. - After late January, the recovery of the bond market may be smoother. The impact of supply is rhythmic rather than trend - setting, and the overall financing demand is not strong [5][14]. - It is still believed that the 10 - year Treasury bond is expected to reach a new low in the first half of the year [5][14] 3. Summary by Relevant Contents Pre - holiday Bond Market Performance - In the last week before the holiday, the bond market weakened again, with interest - rate bonds falling and credit bonds strengthening. The yields of 10 - year and 30 - year Treasury bonds rose by 1.0bps and 4.4bps to 1.85% and 2.27% respectively, and short - end interest rates also increased. The yields of 3 - year and 5 - year AAA - second - tier capital bonds declined slightly, and the yield of 1 - year AAA certificates of deposit dropped 1.0bps to 1.63% [1][8] Factors Contributing to Post - holiday Bond Market Recovery - The new public - fund fee regulations implemented on the last day before the holiday are significantly milder than the draft for comments. It gives partial exemptions on bond - fund redemption fees, eases concerns about the new redemption rules, relieves the redemption pressure on bond funds, and helps the bond market recover [1][8][9] - In the new year, the pressure on banks' indicators eases. According to the final revised document of the Basel framework SPR31, the parallel upward shift in the bank book interest - rate shock scenario is adjusted from 250bps to 225bps, and banks will also get new indicator spaces at the beginning of the year, with the indicator pressure seasonally decreasing. This will enhance the overall allocation power and assist the bond - market recovery [2][9] Factors Causing Pressure on the January Bond Market - Supply - side factors: The issuance of government bonds will start in the new year. The 26 regions that have announced their issuance plans plan to issue 2.1 trillion yuan in the first quarter, lower than the 2.5 - trillion - yuan plan in 2025, but the issuance rhythm is more front - loaded, with 8095 billion yuan planned for January, compared with 3713 billion yuan in January 2025. Also, a 30 - year Treasury bond will be newly issued on January 14th, and a 10 - year Treasury bond will be re - issued on January 9th [2][10] - Credit factors: Credit may surge at the beginning of the year. The proportion of first - quarter credit in the whole - year credit increased from 36.2% in 2020 to 59.8% in 2025, and that of January increased from 17.0% in 2020 to 31.4% in 2025. It may rise to 35% or higher in 2026. The concentrated credit release at the beginning of the year may squeeze bank funds and reduce the allocation power to the bond market. It may also increase capital demand and cause greater short - term capital fluctuations if the central bank fails to inject enough funds [3][11] Rhythmic Nature of Supply Impact - The possible surge in January's credit and social financing is not due to an increase in financing demand. The credit - demand index in the third quarter of 2025 was 52.8%, remaining at a low level for two consecutive quarters, and current credit demand is not strong [4][13] - In 2026, fiscal expansion will be moderate, and the year - on - year increase in government bonds will be significantly lower than in 2025. The concentrated issuance in January means less issuance space later, so the impact is rhythmic rather than trend - setting, and the impact on the bond market will gradually subside after the peak in late January [4][13][14]

Core Viewpoint - The bond market weakened in the last week before the holiday, with government bond rates rising while credit bonds strengthened. The expectation is for a recovery in the bond market post-holiday due to regulatory changes and easing bank pressure [1][7]. Group 1: Market Performance - In the last week before the holiday, the 10-year and 30-year government bond rates increased by 1.0bps and 4.4bps to 1.85% and 2.27%, respectively, while short-term rates also rose [1][7]. - Credit bonds showed strength, with 3-year and 5-year AAA secondary capital bond rates slightly declining, and the 1-year AAA certificate of deposit rate decreasing by 1.0bps to 1.63% [1][7]. Group 2: Regulatory Changes - The new public fund fee regulations, which are more lenient than the draft proposal, are expected to alleviate redemption pressure and support the bond market recovery. The final version allows for certain exemptions on redemption fees for long-term holders [1][7]. Group 3: Bank Pressure and Supply - The easing of bank indicator pressures, particularly from large banks, is anticipated to enhance overall allocation strength in the bond market. The Basel framework adjustment will reduce the parallel shift limit from 250bps to 225bps, effective January 1, 2026 [2][9]. - The government bond issuance plan for the first quarter is set at 2.1 trillion, lower than the 2.5 trillion planned for the same period in 2025, but with an accelerated issuance schedule [9][10]. Group 4: Credit and Funding Dynamics - The concentration of credit issuance in January is expected to impact the bond market. The proportion of first-quarter credit issuance has increased from 36.2% in 2020 to an estimated 59.8% in 2025, with January alone potentially accounting for 35% of annual credit [10][14]. - Despite the anticipated surge in credit issuance, current credit demand remains low, indicating that the impact on the bond market may be more rhythmical rather than trend-based [14][15]. Group 5: Future Outlook - The bond market is expected to recover post-holiday, with smoother recovery anticipated after late January, despite ongoing supply pressures and increased funding demands [15]. - The expectation is that the 10-year government bond may reach new lows in the first half of the year [15].

Core Viewpoint - The bond market is experiencing a recovery due to expectations of a loose monetary environment at the end of the year, although volatility remains high and the market lacks a clear direction [1][4]. Group 1: Market Conditions - The bond market sentiment has improved, supported by a loose funding environment and year-end allocation expectations, providing short-term bullish opportunities for traders [1]. - The current bond market is characterized by significant volatility, influenced heavily by market sentiment and expectations, particularly as institutions face profit-taking pressures at year-end [1]. - The long-end government bond yields have limited upward space, with the key position for the 10-year government bond yield remaining at 1.85% [3]. Group 2: Economic Fundamentals - The domestic economy is in a wave-like operation phase, with internal momentum recovery being a slow variable, and the economic data showing a structural characteristic of "strong production, weak domestic demand" [3]. - The economic fundamentals are still in a bottoming phase, with increasing pressure on the demand side in the fourth quarter, leading to a weak short-term entity financing demand [3]. Group 3: Monetary Policy - The monetary policy remains "moderately loose," with interbank liquidity expected to maintain a balanced and loose pattern, alleviating concerns about year-end liquidity [4]. - The market anticipates an increase in the scale of central bank purchases of government bonds, as the total net injection of MLF and reverse repos decreases [4]. Group 4: Future Outlook - The bond market is expected to face significant pressure in 2026, with global economic visibility likely to improve, potentially impacting domestic bond markets negatively [5]. - The domestic economic fundamentals are expected to exert pressure on the bond market, with a low likelihood of a repeat of the inflationary trends seen in 2006 or 2017 [5]. - The macro environment's continued warming may lead to a preference for equity markets over bonds, with increasing supply of long-end bonds and limited demand from banks and insurance companies [5][6]. Group 5: Policy Framework - The fiscal policy is expected to continue its expansionary stance, emphasizing actual spending and structural improvements, with a projected slight increase in the narrow deficit ratio to 4.2% [6]. - Monetary policy tools such as reserve requirement ratio cuts and interest rate reductions remain options, with a focus on flexible and efficient implementation [6][7]. - The bond market is likely to exhibit characteristics of "top and bottom" with amplified volatility, particularly in the long-end segment, while the central bank's support for year-end liquidity will bolster the mid-short end of the bond market [7].

Report Industry Investment Rating - The investment rating for treasury bonds is "oscillation" [1] Core Viewpoints - Institutional trading behavior is stabilizing, and the bond market continues to recover. The long - end bonds rose despite the strong performance of equities and commodities this week. The market's microstructure is expected to be stable next week, and the long - end varieties are expected to outperform the short - end [2][12]. - The manufacturing PMI in December is expected to be weak, and the impact of fundamentals on the bond market is still neutral to positive, but the trading intensity of the bond market on fundamentals should not be overestimated [2][13]. - The capital market is balanced, and the long - end performance is expected to be stronger than the short - end. The curve is expected to flatten [13][14]. Summary by Directory 1. One - Week Review and Views 1.1 This Week's Trend Review - From December 22 - 28, treasury bond futures moderately recovered. On Monday, the LPR rate was not cut, and the market's expectations were disappointed. On Tuesday, the bond market strengthened significantly but weakened slightly at the end of the session. On Wednesday, the bond market fluctuated narrowly. On Thursday, short - term bonds performed strongly in the morning but declined as the stock market rose. On Friday, the bond market fluctuated moderately higher. As of December 28, the settlement prices of the main contracts of 2 - year, 5 - year, 10 - year, and 30 - year treasury bond futures were 102.546, 106.030, 108.280, and 112.850 yuan respectively, up 0.066, 0.105, 0.200, and 0.560 yuan from last weekend [1][11]. 1.2 Next Week's Views - Institutional behavior is stabilizing, and the bond market will continue to recover. The weakening of institutional trading behavior's fragility, the expected weak manufacturing PMI, and the stable capital market will drive the bond market to strengthen. The long - end varieties are expected to outperform the short - end [12][13]. 2. Weekly Observation of Interest - Rate Bonds 2.1 Primary Market - This week, 9 interest - rate bonds were issued, with a total issuance of 210.077 billion yuan and a net financing of 174.846 billion yuan, a change of - 166.050 billion yuan and + 153.932 billion yuan from last week respectively. 6 local government bonds were issued, with a total issuance of 2.037 billion yuan and a net financing of - 3.174 billion yuan, a change of - 38.000 billion yuan and - 31.248 billion yuan from last week respectively. 427 inter - bank certificates of deposit were issued, with a total issuance of 560.290 billion yuan and a net financing of - 321.910 billion yuan, a change of - 432.900 billion yuan and - 252.250 billion yuan from last week respectively [15]. 2.2 Secondary Market - Treasury bond yields showed a divergent trend. As of December 26, the yields of 2 - year, 5 - year, 10 - year, and 30 - year treasury bonds were 1.34%, 1.59%, 1.84%, and 2.22% respectively, a change of - 3.44, - 1.20, + 0.91, and - 0.10 bp from last weekend. The spreads of 10Y - 1Y and 10Y - 5Y widened, while the spread of 30Y - 10Y narrowed [20]. 3. Treasury Bond Futures 3.1 Price, Trading Volume, and Open Interest - Treasury bond futures moderately recovered. As of December 28, the settlement prices of the main contracts of 2 - year, 5 - year, 10 - year, and 30 - year treasury bond futures were 102.546, 106.030, 108.280, and 112.850 yuan respectively, up 0.066, 0.105, 0.200, and 0.560 yuan from last weekend. The trading volumes of 2 - year, 5 - year, 10 - year, and 30 - year treasury bond futures this week were 33,286, 64,319, 79,154, and 121,251 lots respectively, a change of + 97, - 2,458, - 1,225, and - 20,549 lots from last week. The open interests were 81,462, 168,368, 253,519, and 168,309 lots respectively, a change of + 4,571, + 24,377, + 18,603, and + 2,963 lots from last week [31][34]. 3.2 Basis and IRR - The basis of TL fluctuated significantly this week, while the basis of other varieties fluctuated slightly. It is expected that the basis will converge slightly next week. It is recommended to pay attention to the positive arbitrage opportunities of contracts such as TF2603 [38]. 3.3 Inter - period and Inter - variety Spreads - As of December 26, the inter - period spreads of the 2603 - 2606 contracts of 2 - year, 5 - year, 10 - year, and 30 - year treasury bond futures were - 0.044, + 0.025, - 0.020, and - 0.220 yuan respectively, a change of - 0.004, + 0.025, 0.000, and - 0.030 yuan from last weekend [42]. 4. Weekly Observation of the Capital Market - This week, the central bank conducted 422.7 billion yuan of reverse repurchase operations, with 457.5 billion yuan of reverse repurchases maturing, resulting in a net withdrawal of 34.8 billion yuan. There were also 300 billion yuan of MLF and 120 billion yuan of treasury cash fixed - term deposits maturing, and the central bank conducted 400 billion yuan of MLF operations and 210 billion yuan of treasury cash fixed - term deposit tenders. As of December 26, R007, DR007, SHIBOR overnight, and SHIBOR 1 - week were 1.53%, 1.52%, 1.26%, and 1.45% respectively, a change of + 1.16, + 8.24, - 1.53, and + 1.69 bp from last weekend. The average daily trading volume of inter - bank pledged repurchase was 8.49 trillion yuan, 3.714 billion yuan more than last week, and the overnight proportion was 88.28%, lower than last week [44][47][49]. 5. Weekly Overseas Observation - The US dollar index weakened slightly, and the yield of 10 - year US Treasury bonds declined slightly. As of December 26, the US dollar index fell 0.69% to 98.0341 from last weekend, the yield of 10 - year US Treasury bonds was 4.14%, down 2 bp from last weekend, and the spread between Chinese and US 10 - year Treasury bonds was inverted by 230.2 bp [55]. 6. Weekly Observation of High - Frequency Inflation Data - Industrial product prices rose across the board this week. As of December 26, the South China Industrial Product Index, Metal Index, and Energy and Chemical Index were 3,558.94, 6,870.35, and 1,541.90 points respectively, up 98.48, 198.29, and 44.69 points from last weekend. Agricultural product prices showed mixed trends. As of December 26, the prices of pork, 28 key vegetables, and 7 key fruits were 17.43, 5.80, and 7.95 yuan/kg respectively, a change of - 0.10, - 0.07, and + 0.27 yuan/kg from last weekend [57]. 7. Investment Suggestions - The bond market is expected to moderately recover. Unilateral strategy: The bond market is expected to continue its moderate recovery. Short - hedging strategy: Gradually exit short - hedging positions. Cash - and - carry strategy: Pay attention to the positive arbitrage strategy of TF2603. Curve strategy: The curve is expected to flatten, and investors are advised to participate in the flattening strategy with a light position [2][15][18]