Report Industry Investment Rating No relevant content provided. Report's Core View - The bond market yield is expected to challenge the previous low, but it is difficult to break through. It is recommended to stop profit when approaching the key point. Specifically, it is suggested to allocate 10-year treasury bonds around 1.65% when there is an adjustment, and stop profit appropriately when approaching the key point of 1.6%. From a static perspective, attention can be paid to the allocation value of the 20-year treasury bond yield [2][6][25]. Summary by Relevant Catalogs Bond Market Yield Expected to Challenge the Previous Low - After a long period of credit expansion, the growth rate of social financing may be gradually peaking. It is expected that the growth rate of social financing will reach the annual high of about 9.0% from July to August, and then gradually decline to about 8.3% by the end of the year. The issuance of special refinancing bonds has a significant substitution effect on new RMB loans, and there is still about 40 billion yuan of special refinancing bonds to be issued this year, and its substitution effect on credit is expected to continue for some time [6][12]. - In June this year, the central bank's support brought abundant liquidity and a decline in the short end of the bond market, which made the long-term bonds not adjust deeply, and the bond market often rushes ahead in June. Under the loose capital situation, institutions generally continue the "rushing ahead" strategy of previous years, and the inter-bank leverage ratio has been rising, reaching 108.2% as of June 17. Historical experience shows that the bond market rush - ahead market is often triggered after the cross - quarter capital pressure is released [6][18]. The Previous Low Can Be Challenged but Difficult to Break Through, and It is Recommended to Stop Profit When Approaching the Key Point - The bond market is insensitive to small changes in the fundamentals. Firstly, in the context of high - quality development, the improvement of total factor productivity has increased its contribution to economic growth, reducing the demand for financing in economic growth. Since 2020, the multiple of nominal economy supported by unit social financing has increased from about 3 times to about 4.2 times in 2024. Secondly, considering the bond market valuation, at the current relatively low absolute level, a greater valuation increase is required for the interest rate to decline, making the bond market less sensitive to general weakening of the fundamentals [6][19]. - The restart of treasury bond trading is possible, but the time is not clear, and the probability of restarting when the bond market approaches the previous low may not be high. If the central bank restarts treasury bond trading, referring to the market from December 20 to December 25 last year, the yield of 1 - year treasury bonds can break through 1% at the lowest, which may directly drive the yield of long - term bonds to break below 1.6%, deviating from the current relatively desirable bond market yield level [6][24].

Report Industry Investment Rating No relevant content provided. Core View - Last week, the release of May inflation and export data showed persistent deflationary pressure and an accelerated decline in exports. The first meeting of the China - US economic and trade consultation mechanism was held, with tariffs remaining at the level of the Geneva talks. The weakening economy supported a continued decline in bond yields, and ultra - long bonds rose slightly. The trading activity of ultra - long bonds increased slightly last week and was quite active. The term spread of ultra - long bonds narrowed, while the variety spread widened [1][11][37]. - For the 30 - year treasury bond, as of June 13, the spread between the 30 - year and 10 - year treasury bonds was 20BP, at a historically low level. Considering domestic economic data, the estimated year - on - year GDP growth rate in April was about 4.1%, down 0.8% from March but still higher than the annual economic growth target. In May, CPI was - 0.1% and PPI was - 3.1%, indicating persistent deflation risks. With the recent accelerated decline in May exports, a negative month - on - month change in domestic housing prices, and a continued decline in capital interest rates, bond market sentiment improved. It is expected that the bond market is more likely to continue rising in the short term. However, the current term spread of the 30 - year treasury bond is still low, with limited spread protection [2][12]. - For the 20 - year CDB bond, as of June 13, the spread between the 20 - year CDB bond and the 20 - year treasury bond was 4BP, at a historically extremely low level. Considering domestic economic data, the estimated year - on - year GDP growth rate in April was about 4.1%, down 0.8% from March but still higher than the annual economic growth target. In May, CPI was - 0.1% and PPI was - 3.1%, indicating persistent deflation risks. With the recent accelerated decline in May exports, a negative month - on - month change in domestic housing prices, and a continued decline in capital interest rates, bond market sentiment improved. It is expected that the bond market is more likely to continue rising in the short term. However, the current variety spread of the 20 - year CDB bond is still low, with limited spread protection [3][13]. Summary by Relevant Catalogs 1. Super - long Bond Review - Last week, due to the release of May inflation and export data showing deflationary pressure and an accelerated decline in exports, along with the China - US economic and trade consultation mechanism meeting and stable tariffs, the weak economy led to a decline in bond yields, and ultra - long bonds rose slightly. The trading activity of ultra - long bonds increased slightly and was quite active. The term spread of ultra - long bonds narrowed, and the variety spread widened [1][11]. 2. Super - long Bond Investment Outlook - **30 - year Treasury Bond**: As of June 13, the 30 - 10 - year treasury bond spread was 20BP, at a low historical level. April's economy showed resilience with an estimated GDP growth of 4.1% year - on - year, down 0.8% from March but above the annual target. May's CPI was - 0.1% and PPI was - 3.1%, with deflation risks. With export decline, negative housing price growth, and falling capital rates, the bond market is likely to rise in the short term, but the term spread protection is limited [2][12]. - **20 - year CDB Bond**: As of June 13, the 20 - year CDB - treasury bond spread was 4BP, at an extremely low historical level. April's economy showed resilience with an estimated GDP growth of 4.1% year - on - year, down 0.8% from March but above the annual target. May's CPI was - 0.1% and PPI was - 3.1%, with deflation risks. With export decline, negative housing price growth, and falling capital rates, the bond market is likely to rise in the short term, but the variety spread protection is limited [3][13]. 3. Super - long Bond Basic Overview - As of May 31, the balance of super - long bonds exceeded 21.6 trillion yuan, accounting for 14.4% of the total bond balance. Local government bonds and treasury bonds are the main varieties. By variety, treasury bonds account for 26.1%, local government bonds 67.8%, etc. By remaining term, the 30 - year variety has the highest proportion [14]. 4. Primary Market - **Weekly Issuance**: Last week (June 9 - 13, 2025), 641 billion yuan of ultra - long bonds were issued, a significant decrease compared to the previous week. By variety, local government bonds were 306 billion yuan, government - supported institutional bonds 50 billion yuan, etc. By term, 15 - year bonds were 359 billion yuan, 20 - year bonds 32 billion yuan, and 30 - year bonds 250 billion yuan [19]. - **This Week's Pending Issuance**: The announced issuance plan for this week is 1029 billion yuan, including 500 billion yuan of ultra - long treasury bonds, 449 billion yuan of ultra - long local government bonds, and 80 billion yuan of ultra - long corporate bonds [24]. 5. Secondary Market - **Trading Volume**: Last week, ultra - long bonds were actively traded, with a turnover of 8968 billion yuan, accounting for 10.9% of the total bond turnover. By variety, ultra - long treasury bonds had a turnover of 6290 billion yuan, ultra - long local bonds 2411 billion yuan, etc. The trading activity increased slightly compared to the previous week [26][27]. - **Yield**: Due to economic factors, bond yields declined last week. For treasury bonds, 15 - year, 20 - year, 30 - year, and 50 - year yields changed by - 3BP, - 4BP, - 3BP, and - 3BP respectively. Similar changes occurred in CDB bonds, local bonds, and railway bonds [37]. - **Spread Analysis**: - **Term Spread**: The term spread of ultra - long bonds narrowed last week, with an absolute low level. The 30 - 10 - year treasury bond spread was 20BP, down 2BP from the previous week, at the 4% percentile since 2010 [44]. - **Variety Spread**: The variety spread of ultra - long bonds widened last week, with an absolute low level. The 20 - year CDB - treasury bond spread was 4BP, and the 20 - year railway - treasury bond spread was 8BP, up 3BP from the previous week, at the 6% and 5% percentiles since 2010 respectively [49]. 6. 30 - year Treasury Bond Futures - Last week, the main 30 - year treasury bond futures contract TL2509 closed at 120.50 yuan, an increase of 0.60%. The total trading volume was 321,700 lots (36,864 lots), and the open interest was 124,600 lots (6,864 lots). Both trading volume and open interest increased slightly compared to the previous week [52].

1. Investment Rating of the Reported Industry There is no information provided regarding the industry investment rating in the given content. 2. Core Views of the Report - The bond market is in a stalemate and under slight pressure, with ultra - long bonds rising first and then falling. The trading activity of ultra - long bonds decreased slightly last week, but it was still quite active. The term spread of ultra - long bonds narrowed, and the variety spread showed mixed trends [1][4][11]. - For the 30 - year treasury bond, as of May 23, the spread between the 30 - year and 10 - year treasury bonds was 17BP, at a historically low level. With the weakening of policy support, the probability of a decline in bond yields is higher, but the term spread protection is limited [2][12]. - For the 20 - year CDB bond, as of May 23, the spread between the 20 - year CDB bond and the 20 - year treasury bond was 2BP, at a historically extremely low level. With the weakening of policy support, the probability of a decline in bond yields is higher, but the variety spread protection is limited [3][13]. 3. Summary According to the Directory 3.1 Weekly Review 3.1.1 Ultra - long Bond Review - Last week, important events included the release of April economic data (the domestic economy declined significantly compared to March but continued to develop positively), a 500 - billion MLF operation in May with a 10BP cut in LPR after half a year, balanced funds during the tax period, and a relatively high winning bid rate for the new 10 - year treasury bond on Friday, which put slight pressure on the bond market. Overall, the bond market was in a stalemate and under slight pressure, with ultra - long bonds rising first and then falling. The trading activity of ultra - long bonds decreased slightly but remained quite active. The term spread of ultra - long bonds narrowed, and the variety spread showed mixed trends [1][4][11]. 3.1.2 Ultra - long Bond Investment Outlook - **30 - year Treasury Bond**: As of May 23, the spread between the 30 - year and 10 - year treasury bonds was 17BP, at a historically low level. The April economic data showed resilience, with the estimated GDP growth rate of about 4.1% year - on - year, a 0.8% decline from March but still higher than the annual target. The CPI in April was - 0.1% and PPI was - 2.7%, indicating obvious deflation risks. With the recent easing of Sino - US trade frictions, investors' pessimistic expectations have dissipated. The short - term focus will return to the second - quarter domestic economic data. It is expected that with the weakening of policy support, the probability of a decline in bond yields is higher, but the term spread protection is limited [2][12]. - **20 - year CDB Bond**: As of May 23, the spread between the 20 - year CDB bond and the 20 - year treasury bond was 2BP, at a historically extremely low level. Similar to the 30 - year treasury bond situation, with the weakening of policy support, the probability of a decline in bond yields is higher, but the variety spread protection is limited [3][13]. 3.1.3 Ultra - long Bond Basic Overview - The balance of outstanding ultra - long bonds exceeded 21.1 trillion. As of April 30, the total amount of ultra - long bonds with a remaining term of more than 14 years was 21,157.7 billion (excluding asset - backed securities and project revenue notes), accounting for 14.2% of the total bond balance. Local government bonds and treasury bonds are the main varieties. By variety, treasury bonds accounted for 25.6% (5,422.3 billion), local government bonds accounted for 68.2% (14,427.6 billion), etc. By remaining term, the 30 - year variety had the highest proportion [14]. 3.2 Primary Market 3.2.1 Weekly Issuance - Last week (from May 12 to May 16, 2025), a large amount of ultra - long bonds were issued, with a total of 242.4 billion yuan. Compared with the previous week, the total issuance of ultra - long bonds increased significantly. By variety, treasury bonds accounted for 121 billion, local government bonds accounted for 106.4 billion, etc. By term, 15 - year bonds accounted for 22.9 billion, 20 - year bonds accounted for 37.2 billion, 30 - year bonds accounted for 132.2 billion, and 50 - year bonds accounted for 50 billion [19]. 3.2.2 This Week's Pending Issuance - The announced issuance plan for ultra - long bonds this week totals 111.7 billion yuan. By variety, ultra - long treasury bonds account for 0 billion, ultra - long local government bonds account for 104.9 billion, and ultra - long medium - term notes account for 6.9 billion [23]. 3.3 Secondary Market 3.3.1 Trading Volume - Last week, the trading of ultra - long bonds was quite active, with a trading volume of 861.7 billion yuan, accounting for 10.2% of the total bond trading volume. By variety, ultra - long treasury bonds accounted for 31.4% of the total treasury bond trading volume, ultra - long local bonds accounted for 49.6% of the total local bond trading volume, etc. Compared with the previous week, the trading activity of ultra - long bonds decreased slightly, with the trading volume decreasing by 43.8 billion yuan and the proportion decreasing by 0.5%. Among them, the trading volume of ultra - long treasury bonds decreased by 49.8 billion yuan, the trading volume of ultra - long local bonds increased by 3.1 billion yuan, etc. [26]. 3.3.2 Yield - Due to multiple important events last week, the bond market was in a stalemate and under slight pressure, with ultra - long bonds rising first and then falling. For treasury bonds, the yields of 15 - year, 20 - year, 30 - year, and 50 - year bonds changed by 2BP, - 1BP, 1BP, and 3BP to 1.88%, 1.98%, 1.89%, and 2.06% respectively. For CDB bonds, the yields of 15 - year, 20 - year, 30 - year, and 50 - year bonds changed by 0BP, 0BP, 1BP, and 3BP to 1.94%, 2.00%, 2.07%, and 2.30% respectively. For local bonds, the yields of 15 - year, 20 - year, and 30 - year bonds changed by 0BP, 0BP, and - 2BP to 2.08%, 2.12%, and 2.11% respectively. For railway bonds, the yields of 15 - year, 20 - year, and 30 - year bonds changed by - 3BP, - 4BP, and 0BP to 2.00%, 2.04%, and 2.13% respectively. For representative individual bonds, the yield of the 30 - year treasury bond active bond 24 Special Treasury Bond 06 changed by 1BP to 1.95%, and the yield of the 20 - year CDB bond active bond 21 CDB 20 changed by 0BP to 1.98% [33][34]. 3.3.3 Spread Analysis - **Term Spread**: Last week, the term spread of ultra - long bonds narrowed, and the absolute level was low. The spread between the 30 - year and 10 - year treasury bonds was 17BP, a change of - 3BP from the previous week, at the 1% quantile since 2010 [42]. - **Variety Spread**: Last week, the variety spread of ultra - long bonds showed mixed trends, and the absolute level was low. The spread between the 20 - year CDB bond and the treasury bond was 2BP, and the spread between the 20 - year railway bond and the treasury bond was 5BP, changing by 2BP and - 4BP respectively from the previous week, at the 4% and 2% quantiles since 2010 [46]. 3.4 30 - year Treasury Bond Futures - Last week, the main contract of the 30 - year treasury bond futures, TL2509, closed at 119.60 yuan, an increase of 0.32%. The total trading volume was 469,900 lots (a decrease of 182,500 lots), and the open interest was 129,300 lots (an increase of 6,141 lots). The trading volume decreased significantly compared with the previous week, while the open interest increased slightly [48].

Monetary Policy and Market Response - The recent interest rate cuts were lower than market expectations, with the policy rate reduced by 50 basis points, leading to a mixed response in the bond market[1][22]. - Following the cuts, overnight funding rates fell to around 1.5%, while the yields on long-term bonds like the 10-year and 30-year government bonds increased slightly to 1.63% and 1.88%, respectively[11][22]. - The central bank's focus remains on structural policies to stabilize market expectations, despite the easing of monetary policy[1][21]. Trade Relations and Economic Indicators - The U.S.-China tariff situation is expected to gradually ease, but the timeline and extent of this easing remain uncertain, with current tariffs at 145% potentially reducing to a negotiable level[3][23]. - April's export data showed a significant year-on-year increase of 8.1%, surpassing market expectations of 1.9%, indicating a potential "export rush" rather than genuine demand recovery[24][26]. - Domestic demand remains weak, contributing to a decline in industrial product prices, with the Producer Price Index (PPI) showing a year-on-year decrease of 2.7%[24][26]. Investment Strategy and Market Outlook - The bond market is currently in a waiting phase, with a preference for high-cost performance products amidst a backdrop of loose funding conditions and declining interest rates[5][27]. - Short-term bonds are expected to have more room for appreciation, while the 30-year bonds are viewed as relatively safe investments due to their current yield levels around 1.90%[5][33]. - The upcoming financial data release is critical for assessing domestic demand, with expectations for new loans around 764.4 billion yuan, similar to last year's low point[24][26].