1. Report Industry Investment Rating No information about the report industry investment rating is provided in the content. 2. Core Viewpoints of the Report - From July 7 to July 11, 2025, the central bank conducted a net withdrawal of funds through 7 - day reverse repurchase operations. The liquidity remained relatively loose but showed a marginal and slight tightening trend during the week. From July 7 to July 13, the net payment of government bonds increased, most of the yields to maturity of inter - bank certificates of deposit (NCDs) rose, and the leverage ratio in the inter - bank bond market decreased. From July 14 to July 20, the expected net payment of government bonds is 405.83 billion yuan, and the maturity volume of NCDs is about 802.8 billion yuan [2]. 3. Summary by Relevant Catalogs 3.1 Funds - **Central Bank Operations**: From July 7 to July 11, 2025, the central bank's reverse repurchase operations involved a release of 425.7 billion yuan and a withdrawal of 652.2 billion yuan, resulting in a net withdrawal of 226.5 billion yuan. From July 14 to July 18, 425.7 billion yuan of open - market reverse repurchases will mature. On July 15, 100 billion yuan of Medium - term Lending Facility (MLF) will mature, and considering the tax - payment deadline on the same day and subsequent tax - payment outflows, the central bank may conduct outright reverse repurchase operations [5]. - **Fund Rate Performance**: From July 7 to July 11, 2025, the average values of DR001 and R001 were 1.32% and 1.38% respectively, down 5.1 basis points and 19.9 basis points compared to June 30 - July 4. The average values of DR007 and R007 were 1.47% and 1.51% respectively, down 9.7 basis points and 13.2 basis points compared to June 30 - July 4. The significant decline in the weekly average of fund rates was mainly due to the cross - quarter effect in the previous week. Since July, the funds have been generally stable and loose, but in mid - July, affected by the upcoming tax - payment outflows, the fund rates increased slightly. On July 11, DR001 was 1.34%, about 3 basis points higher than on July 7 [6]. - **Government Bond Net Payment**: From July 7 to July 13, 2025, the net payment of government bonds was about 251.1 billion yuan, an increase of about 217 billion yuan compared to June 30 - July 6. Among them, the net financing of treasury bonds was about 139.9 billion yuan, and that of local government bonds was about 111.2 billion yuan. From July 14 to July 20, the expected net payment of government bonds is 405.83 billion yuan, including about 276.05 billion yuan of net treasury bond financing and about 129.78 billion yuan of net local government bond financing [7]. 3.2 Inter - bank Certificates of Deposit (NCDs) - **Yield to Maturity**: As of July 11, 2025, the yields to maturity of 1 - month, 3 - month, and 1 - year NCDs were 1.5195%, 1.5600%, and 1.6303% respectively, up 2, 3, and 4 basis points compared to July 4, 2025. During the week, as the funds tightened marginally, the primary issuance price of NCDs increased, and the secondary yields rose [8]. - **Net Financing and Issuance Rate**: From July 7 to July 13, 2025, the net financing of NCDs was about - 8.34 billion yuan, compared with about - 0.28 billion yuan from June 29 to July 6. From July 14 to July 20, the expected maturity repayment of NCDs is 802.8 billion yuan, with an increased roll - over pressure compared to the previous week. On July 11, 2025, the issuance rates of 1 - year NCDs for state - owned large - scale banks and joint - stock banks were 1.62% and 1.63% respectively, up from 1.59% on July 4 [8]. 3.3 Institutional Behavior - **Leverage Ratio in the Inter - bank Bond Market**: From July 7 to July 11, 2025, the average calculated leverage ratio in the inter - bank bond market was 108.18%, compared with 108.53% from June 30 to July 4. On July 11 and July 4, the calculated leverage ratios in the inter - bank bond market were about 107.86% and 108.58% respectively [9].

1. Report Industry Investment Rating No information provided in the content about the report industry investment rating. 2. Core Views of the Report - The trend of loose funds is strong, and there is no need to worry about short - term liquidity, but there may be sporadic disturbances at times such as tax payment periods [1]. - In the past week, the trading volume of trading desks was high, and the sentiment of funds to extend duration remained strong. The duration of medium - and long - term bond funds reached a new high this year, and there was a trend of extending duration in credit bonds, secondary bonds, and interest - rate bonds. In the future, the short - term market is driven by trading desks, so it is necessary to closely monitor the ebb and flow of buying in ultra - long non - active interest - rate bonds and long - term credit bonds [2]. 3. Summary by Relevant Catalogs 3.1 Liquidity Tracking 3.1.1 Central Bank Operations - In the past week (6/30 - 7/4), the central bank's open - market operations resulted in a net liquidity withdrawal of 13753 billion yuan. As of 7/4, the central bank's reverse - repurchase balance was 6522 billion yuan, significantly lower than on 6/30 but still higher than the seasonal level in previous years. In the next week (7/7 - 7/11), 6522 billion yuan of reverse - repurchases will mature, with the maturity pressure distributed as Monday > Tuesday > Wednesday > Thursday > Friday [9]. - In July, a total of 1.5 trillion yuan of MLF and outright reverse - repurchases will mature, including 3000 billion yuan of MLF, 7000 billion yuan of 3 - month outright reverse - repurchases, and 5000 billion yuan of 6 - month outright reverse - repurchases [10]. 3.1.2 Government Bond Issuance - In the past week, the net payment of government bonds was 341 billion yuan, with a net payment of - 401 billion yuan for treasury bonds and 742 billion yuan for local bonds. In the next week, the expected net payment of government bonds is 2511 billion yuan, with 1399 billion yuan for treasury bonds and 1112 billion yuan for local bonds. The net payment pressure is relatively large on Monday, about 2174 billion yuan, and relatively small from Tuesday to Friday [14]. - As of 7/4, the net financing progress of treasury bonds is 53.8%, with a remaining net financing space of 3.08 trillion yuan in 2025; the issuance progress of new local bonds is 50.3%, with a remaining issuance space of 2.58 trillion yuan; the issuance progress of refinancing special bonds is 89.8%, with a remaining issuance space of 204.1 billion yuan. The supply of government bonds is slow in July, and the issuance pressure is large in August and September in the third quarter [16][18]. 3.1.3 Bill Market - In the past week, the bill interest rates showed a divergent trend. The 3 - month direct - discount and transfer - discount interest rates of state - owned and joint - stock banks increased, while the 6 - month rates decreased. Seasonally, the current bill interest rates are still significantly weaker than the seasonal level, indicating that the recovery of credit demand is still slow [24]. 3.1.4 Fund Review - After the quarter - end, funds became significantly looser. From 7/2 - 7/4, the fund sentiment index stabilized in the range of 45 - 50. Most fund interest rates declined, and the fund prices moved closer to the policy interest rates. The term and market stratifications mostly converged [26][28][29]. - In the past week, the total trading volumes of DR/R/GC were 12.10 trillion yuan, 37.99 trillion yuan, and 107.87 million lots respectively. The trading volumes of DR001/R001/GC001 were 11.64 trillion yuan, 34.05 trillion yuan, and 93.67 million lots respectively. On 7/4, the overnight trading volume ratios were 97%, 91%, and 89% respectively, all higher than on 6/27 [35]. - The net lending of the banking system was basically stable, and the net lending of large - scale banks increased. The net borrowing demand of core non - banking institutions decreased slightly. In terms of maturity, large - scale banks mainly lent overnight funds, while funds and securities firms mainly borrowed overnight funds, and insurance and other products mainly borrowed 7 - day funds [39]. 3.1.5 Inter - bank Certificates of Deposit - In the past week (6/30 - 7/6), the total issuance of certificates of deposit was 243.7 billion yuan, with a net financing of - 2.08 billion yuan. The issuance scale decreased compared with the previous week, but the net financing scale increased. By entity, the issuance scale of inter - bank certificates of deposit was ranked as joint - stock banks > state - owned banks > city commercial banks > rural commercial banks. By maturity, the weighted issuance maturity increased significantly [46]. - In the past week, the issuance prices of certificates of deposit of joint - stock banks at various maturities decreased significantly. On 7/4, the yield to maturity of 1 - year AAA certificates of deposit was 1.5929%, down 4.21bps from 6/27. In the next three weeks, 510.5 billion yuan (7/7 - 7/13), 802.8 billion yuan (7/14 - 7/20), 1076.5 billion yuan (7/21 - 7/27), and 376.7 billion yuan (7/23 - 8/3) will mature respectively. The maturity pressure is large in late July [48][52]. 3.2 Institutional Behavior Tracking 3.2.1 Secondary Transactions - The funds' demand for credit bonds is stronger than that for interest - rate bonds, and the trend of extending the duration of credit bonds is obvious [56]. 3.2.2 Institutional Duration - On 7/4, the median of the 10 - day moving average of the duration of medium - and long - term bond funds was 3.96 years, further increasing compared with 6/27 (3.91 years). The 5 - day moving average of the trading duration of urban investment bonds, secondary bonds increased, while that of industrial bonds decreased [57][61]. 3.2.3 Institutional Leverage - In the past week, the calculated bond - market leverage ratio was 107.96%, slightly higher than the previous week (107.93%), and the upward trend slowed down [63].

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report The report analyzes the bond custody volume data in May 2025, indicating that the month - on - month increase in the total bond custody volume has widened, with different trends in various bond types and significant differences in the custody volume changes of different institutions. The bond market leverage ratio has slightly increased [1][22]. 3. Summary by Directory 3.1 Bond Custody Volume and Structure - The total bond custody volume has a wider month - on - month increase. As of the end of May 2025, the total bond custody volume of CCDC and SHCH was 169.99 trillion yuan, with a net month - on - month increase of 2.16 trillion yuan, 0.56 trillion yuan more than that at the end of April [10]. - The total credit bond custody volume slightly decreased, while the custody volumes of other bonds all increased month - on - month. In May 2025, the interest - rate bond custody volume was 115.73 trillion yuan, accounting for 68.08% of the inter - bank bond market custody volume, with a net increase of 1.70 trillion yuan; the credit bond custody volume was 18.35 trillion yuan, accounting for 10.79%, with a slight month - on - month decrease of 5254 million yuan; the non - policy financial bond custody volume was 12.17 trillion yuan, accounting for 7.16%, with a net increase of 0.22 trillion yuan; the inter - bank certificate of deposit (NCD) custody volume was 21.83 trillion yuan, accounting for 12.84%, with a net increase of 0.27 trillion yuan [10]. 3.2 Bond Holder Structure and Changes 3.2.1 Month - on - Month Changes in Custody Volume by Institution - Policy banks continued to increase their holdings of NCDs and major credit products while continuously reducing their holdings of major interest - rate products. - Commercial banks continued to increase their holdings of major interest - rate products while reducing their holdings of NCDs and major credit products. - Credit unions and non - legal entity products comprehensively increased their holdings of major bond types. - Insurance institutions increased their holdings of major interest - rate products and major credit products while continuously reducing their holdings of NCDs. - Securities companies and overseas institutions comprehensively reduced their holdings of major bond types [22]. 3.2.2 Month - on - Month Changes in Custody Volume by Bond Type - The custody volume of treasury bonds continued to increase month - on - month, with commercial banks continuously increasing their holdings and policy banks continuously reducing their holdings. - The custody volume of local government bonds continued to increase month - on - month, with commercial banks continuously increasing their holdings and policy banks continuously reducing their holdings. - The custody volume of policy financial bonds changed to an increase, with commercial banks being the main buyers. - The custody volume of NCDs continued to increase month - on - month, with non - legal entity products continuously increasing their holdings and commercial banks continuously reducing their holdings. - The custody volume of enterprise bonds continued to decrease month - on - month, and all institutions reduced their holdings. - The custody volume of medium - term notes continued to increase month - on - month, with non - legal entity products significantly increasing their holdings and commercial banks changing to reducing their holdings. - The custody volume of short - term commercial paper and super short - term commercial paper changed to a decrease, with non - legal entity products being the main sellers. - The custody volume of privately placed bonds continued to decrease month - on - month, with commercial banks being the main sellers [24]. 3.2.3 Holder Structure of Major Bond Types - As of the end of May 2025, the holder structure of treasury bonds: commercial banks accounted for 67.72%, overseas institutions 6.11%, policy banks 10.97%, non - legal entity products 8.38%, securities companies 3.10%, insurance institutions 2.56%, and credit unions 1.16% [29]. - The holder structure of policy financial bonds: commercial banks accounted for 54.39%, non - legal entity products 32.12%, overseas institutions 3.32%, credit unions 3.23%, insurance institutions 2.10%, securities companies 1.01%, and policy banks 3.83% [31]. - The holder structure of local government bonds: commercial banks accounted for 75.11%, non - legal entity products 9.07%, policy banks 9.50%, insurance institutions 4.82%, securities companies 0.93%, credit unions 0.55%, and overseas institutions 0.02% [35]. - The holder structure of enterprise bonds: non - legal entity products accounted for 53.61%, commercial banks 32.85%, securities companies 9.09%, insurance institutions 3.29%, policy banks 0.74%, credit unions 0.33%, and overseas institutions 0.09% [37]. - The holder structure of medium - term notes: non - legal entity products accounted for 62.74%, commercial banks 20.49%, nominal holder accounts (domestic) 7.16%, policy banks 4.85%, securities companies 4.32%, others 0.24%, credit unions 0.17%, overseas institutions 0.01%, and insurance institutions 0.00% [41]. - The holder structure of privately placed bonds: non - legal entity products accounted for 59.37%, commercial banks 25.05%, policy banks 1.35%, credit unions 2.10%, others 3.26%, nominal holder accounts (domestic) 2.01%, securities companies 1.18%, overseas institutions 5.60%, and insurance institutions 0.09% [44]. - The holder structure of NCDs: non - legal entity products accounted for 64.77%, commercial banks 28.59%, nominal holder accounts (domestic) 3.32%, securities companies 0.81%, policy banks 1.39%, others 0.25%, insurance institutions 0.09%, credit unions 0.05%, and overseas institutions 0.74% [46]. 3.3 Observation of Bond Market Leverage Ratio As of the end of May 2025, the estimated balance of repurchase - to - be - bought under pledged repurchase was 107,343.28 billion yuan, with a month - on - month increase of 1,870.36 billion yuan. The leverage ratio was 106.74%, with a month - on - month increase of 0.03 percentage points and a year - on - year decrease of 0.05 percentage points [47].

Group 1 - The total amount of bonds under custody has slightly increased, reaching 167.82 trillion yuan as of the end of April 2025, with a net increase of 1.61 trillion yuan compared to the previous month [3] - The structure of bond custody shows that interest rate bonds account for 67.95% of the total, with a net increase of 0.99 trillion yuan, while credit bonds and financial bonds also saw slight increases [3] - The bond holding structure indicates that most institutions, except for policy banks, have increased their bond holdings, with commercial banks continuing to increase their holdings of major interest rate products and credit products [4] Group 2 - The custody of government bonds has continued to increase, while policy banks have significantly reduced their holdings, and commercial banks have increased theirs [6] - The custody of local government bonds has also seen an increase, with policy banks reducing their holdings and commercial banks increasing theirs [6] - The leverage ratio in the bond market has decreased, with the estimated balance of repurchase agreements at 10.55 trillion yuan, down by 1.78 trillion yuan, resulting in a leverage ratio of 106.71% [7]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Since 2021, the logic of the "asset shortage" in the bond market is not applicable this year. Instead, the bond market presents a "liability shortage." The liability gap and structure are the main lines of bond market trading this year [2][5][12]. - The bond market is unlikely to rise trend - wise. Only continuous negative carry can drive the trend - wise correction of long - term interest rates. The probability of a tightening of capital prices in the second quarter is not high, and the market interest rate is expected to fluctuate in the range of 1.5% - 1.6% [2][8][22]. - The bond market has no obvious odds recently. A 10bp positive carry can boost the inter - bank bond market leverage ratio by about 0.1 - 0.2 percentage points. The current positive carry amplitude is insufficient, restricting the market's enthusiasm for leveraging [2][8][30]. - It is recommended to allocate when the 10 - year Treasury bond yield is above 1.65% and the 30 - year Treasury bond yield is above 1.9%. Institutions with stable liabilities can appropriately focus on the coupon opportunities of credit bonds with a term of more than 3 years [2][8][34]. 3. Summary by Related Catalogs 3.1 From "Asset Shortage" to "Liability Shortage", Bond Market Volatility - Before 2024, the "asset shortage" was the main line of the bond market. Due to the downward pressure on the real estate industry and the establishment of the regulatory red line for local implicit debt, credit expansion was constrained. Since this year, with the adjustment of the social financing structure and the relative stability of credit, the "asset shortage" is no longer the main contradiction. The supply of government bonds has increased, and the social financing growth rate has rebounded to 8.7% in April [5][12]. - While the asset supply has increased, the bond market faces a "liability shortage." The central bank's attitude is not the only source of liability pressure. Currently, the market style is more trading - oriented, lacking stable - liability configuration forces. Insurance's premium income growth has declined significantly this year, and its trading attribute has increased; wealth management is undergoing rectification, reducing the allocation of less - liquid credit bonds; public funds have a strong wait - and - see sentiment [8][19]. 3.2 Difficulty in Trend - wise Market, Focus on Curve Trading Opportunities - The bond market is difficult to rise trend - wise. In a relatively stable fundamental situation, only continuous negative carry can drive the trend - wise correction of long - term interest rates. The current fundamental situation is relatively stable, but the real interest rate is high, and there is still uncertainty in the fundamental recovery. The probability of a tightening of capital prices in the second quarter is not high [8][22]. - The bond market has no obvious odds recently. Although the bond market has returned to the positive carry range, the amplitude is insufficient, restricting the market's enthusiasm for leveraging. A 10bp increase in carry can increase the inter - bank bond market leverage ratio by 0.14 and 0.21 percentage points respectively. Since May, the average monthly inter - bank bond market leverage ratio has increased by about 0.2 percentage points compared with April [8][30]. - Before the bond market shows sufficient odds, it is difficult to have a trend - wise market. It is expected that the 10 - year Treasury bond yield will fluctuate around 1.6% - 1.7%. It is recommended to capture trading opportunities along the yield curve. Institutions with stable liabilities can focus on the coupon opportunities of credit bonds with a term of more than 3 years [8][34].

1. Report Industry Investment Rating No information provided on the industry investment rating in the report. 2. Core Viewpoints of the Report - In April 2025, the total bond custody scale increased by 160.77 billion yuan month - on - month, a significant decrease of 104.79 billion yuan compared to March, mainly due to the sharp contraction of net financing of various interest - rate bonds and inter - bank certificates of deposit (NCDs). The custody stocks of credit bonds and commercial bank bonds turned upward month - on - month [3][6]. - In April, under the influence of the continued escalation of Sino - US trade frictions in the first half of the month, the bond market strengthened significantly. After the middle of the month, as the trade war tension eased, the bond market returned to a volatile state. Overall, the yield curve showed a bull - flattening trend. Institutional behavior still featured strong demand from trading desks and weak demand from allocation desks, but there were differences compared to March [3][8]. - In April, the repurchase balance continued to rise, and the bond market leverage ratio increased by 0.2 percentage points to 107.1% month - on - month, but it was still significantly lower than the level before January this year. The leverage ratio of commercial banks decreased, while that of non - bank institutions increased but remained at a historically low level [3][43]. 3. Summary by Relevant Catalogs 3.1同业存单与利率债净融资明显下滑 4 月债券托管增量大幅收缩 - In April, the net financing of NCDs and interest - rate bonds declined significantly, leading to a sharp contraction in the bond custody increment. The custody increments of various interest - rate bonds and NCDs decreased month - on - month. The custody stocks of credit bonds and commercial bank bonds turned upward month - on - month [6]. - Specifically, for interest - rate bonds, the custody increment of treasury bonds decreased to 26.6 billion yuan, local government bonds to 70.69 billion yuan, and policy - bank bonds to 1.32 billion yuan. For credit bonds, the custody increment of medium - term notes (MTNs) increased to 11 billion yuan, and short - term commercial papers (CPs) increased from a decrease of 2.78 billion yuan in March to an increase of 3.36 billion yuan. The custody scales of enterprise bonds and private placement notes (PPNs) continued to decline. The custody increment of NCDs decreased significantly to 37.79 billion yuan, while that of commercial bank bonds turned from a decrease of 0.53 billion yuan to an increase of 18.89 billion yuan [6]. 3.2 4 月交易盘继续增持利率债 保险公司减持金融债券 - In April, influenced by the significant decline in NCD rates, the allocation demand for NCDs from broad - based funds, securities companies, and other institutions decreased, while the trading desks' willingness to increase holdings of interest - rate bonds continued to strengthen. The insurance institutions' willingness to increase holdings weakened, especially the significant increase in the reduction of holdings of financial bonds on the Shanghai Clearing House, possibly due to some institutions realizing floating profits in anticipation of subsequent accounting standard adjustments [3][8]. - **Broad - based funds**: The custody increment decreased significantly to 115.56 billion yuan, mainly due to the sharp decline in the increase of NCD holdings. The increase in holdings of local government bonds, policy - bank bonds decreased, while that of financial bonds on the Shanghai Clearing House, treasury bonds, and CPs increased. The reduction of holdings of commercial bank bonds decreased [14]. - **Securities companies**: The bond custody increment increased slightly to 11.24 billion yuan, remaining at a historically high level. They turned to reduce holdings of NCDs and MTNs, but the increase in holdings of treasury bonds reached a record high, and the increase in holdings of policy - bank bonds and financial bonds on the Shanghai Clearing House also rose [20]. - **Insurance companies**: The bond custody increment decreased significantly to 0.99 billion yuan. They turned to reduce holdings of financial bonds on the Shanghai Clearing House, treasury bonds, NCDs, and policy - bank bonds, and the increase in holdings of local government bonds decreased [23]. - **Overseas institutions**: The bond custody increment decreased to 9.54 billion yuan. The increase in holdings of NCDs dropped significantly from a historical high, but they turned to increase holdings of policy - bank bonds and financial bonds on the Shanghai Clearing House, and the increase in holdings of treasury bonds increased slightly [28]. - **Other institutions**: The bond custody volume decreased by 74.29 billion yuan month - on - month, reaching a historical high. This was mainly affected by the central bank's shift from a net investment of 10 billion yuan in repurchase in March to a net withdrawal of 50 billion yuan in April. They turned to reduce holdings of local government bonds and increased the reduction of holdings of treasury bonds, but turned to increase holdings of NCDs and MTNs [31]. - **Commercial banks**: The bond custody increment increased to 77.06 billion yuan, affected by the return of some repurchase underlying assets to commercial banks after the net withdrawal of repurchase in April. If the impact of repurchase is excluded, the scale of bond - buying decreased. The reduction of holdings of policy - bank bonds and NCDs increased, and the increase in holdings of treasury bonds decreased [35]. - **Credit unions**: The bond custody volume turned from a decrease of 1.9 billion yuan in March to an increase of 0.05 billion yuan in April, mainly due to the shift to increase holdings of NCDs, but they turned to reduce holdings of treasury bonds and policy - bank bonds [39]. 3.3 4 月非银杠杆率继续回升 但仍处于历史低位附近 - In April, the repurchase balance continued to rise, and the bond market leverage ratio increased by 0.2 percentage points to 107.1% month - on - month, still significantly lower than the level before January this year. The leverage ratio of commercial banks decreased by 0.2 percentage points to 103.1%, reaching a historically second - lowest level. The leverage ratio of non - bank institutions increased by 0.9 percentage points to 116.8%, remaining near the low point since 2022 [43]. - Among non - bank institutions, the leverage ratio of securities companies increased significantly by 13.4 percentage points to 214.1%, returning to a neutral level. The leverage ratio of insurance and non - legal person products increased by 0.6 percentage points to 113.4%, remaining near a recent low. In broad - based funds, the repurchase balances of money market funds and non - money products of fund companies increased significantly, but their absolute values were still low. The repurchase balances of insurance companies and other products increased, approaching the historical high in December last year, while that of wealth management products slightly declined, remaining near a historical low [43].

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report The report analyzes the bond custody data for April 2025, indicating that the total bond custody increased less month - on - month. All types of bonds saw a net increase in custody. Except for policy banks which significantly reduced their bond custody, other major bond market institutions increased their holdings. The bond market leverage ratio decreased month - on - month [1][2]. 3. Summary by Related Catalogs 3.1 Bond Custody Total and Structure - The total bond custody increased less month - on - month. As of the end of April 2025, the total bond custody of CCDC and SHCH was 167.82 trillion yuan, with a net increase of 1.61 trillion yuan month - on - month, 1.05 trillion yuan less than the month - on - month increase in March [1][11]. - All types of bonds had a net increase in custody. Interest - rate bonds had a custody of 114.03 trillion yuan, accounting for 67.95% of the inter - bank bond market custody, with a net increase of 0.99 trillion yuan; credit bonds had a custody of 18.35 trillion yuan, accounting for 10.94%, with a net increase of 0.07 trillion yuan; non - policy financial bonds had a custody of 11.95 trillion yuan, accounting for 7.12%, with a net increase of 0.18 trillion yuan; and inter - bank certificates of deposit had a custody of 21.56 trillion yuan, accounting for 12.85%, with a net increase of 0.38 trillion yuan [1][11]. 3.2 Bond Holder Structure and Changes 3.2.1 Changes in Custody by Institution Month - on - Month - Policy banks increased their holdings of inter - bank certificates of deposit and major credit products while significantly reducing their holdings of major interest - rate products. - Commercial banks continuously increased their holdings of major interest - rate products and credit products while continuously reducing their holdings of inter - bank certificates of deposit. - Credit unions increased their holdings of inter - bank certificates of deposit and reduced their holdings of major interest - rate products and credit products. - Insurance institutions and securities companies continuously increased their holdings of major interest - rate products and reduced their holdings of inter - bank certificates of deposit and major credit products. - Non - legal person products and overseas institutions showed comprehensive increases in holdings [2][25]. 3.2.2 Changes in Custody by Bond Type Month - on - Month - Treasury bond custody continued to increase month - on - month. Policy banks continuously reduced their holdings, while commercial banks continuously increased their holdings. - Local government bond custody continued to increase month - on - month. Policy banks significantly reduced their holdings, while commercial banks continuously increased their holdings. - Policy - financial bond custody changed to a reduction this month, with commercial banks being the main reduction entity. - Inter - bank certificate of deposit custody continued to increase month - on - month. Non - legal person products continuously increased their holdings, while commercial banks continuously reduced their holdings. - Corporate bond custody continued to decrease month - on - month, and all institutions showed a reduction in holdings. - Medium - term note custody continued to increase month - on - month. Commercial banks continuously increased their holdings, while securities companies changed to a reduction in holdings. - Short - term financing and ultra - short - term financing custody changed to an increase this month, with non - legal person products being the main increase entity. - Non - publicly - oriented debt instrument custody continued to decrease month - on - month, with non - legal person products being the main reduction entity [3][27][28]. 3.2.3 Holder Structure of Major Bond Types - Treasury bonds: Commercial banks accounted for 66.78%, overseas institutions 6.27%, policy banks 11.40%, non - legal person products 8.54%, securities companies 3.29%, insurance institutions 2.59%, and credit unions 1.12% [33]. - Policy - financial bonds: Commercial banks accounted for 53.86%, non - legal person products 32.42%, overseas institutions 3.39%, credit unions 3.18%, insurance institutions 2.13%, securities companies 1.08%, and policy banks 3.94% [36]. - Local government bonds: Commercial banks accounted for 74.70%, non - legal person products 8.85%, policy banks 9.99%, insurance institutions 4.89%, securities companies 1.01%, credit unions 0.55%, and overseas institutions 0.02% [39]. - Corporate bonds: Non - legal person products accounted for 53.53%, commercial banks 33.04%, securities companies 8.98%, insurance institutions 3.27%, policy banks 0.75%, credit unions 0.35%, and overseas institutions 0.09% [41]. - Medium - term notes: Non - legal person products accounted for 61.79%, commercial banks 23.71%, securities companies 5.50%, nominal holder accounts (domestic) 3.06%, policy banks 2.50%, insurance institutions 2.40%, overseas institutions 0.30%, others 0.48%, and credit unions 0.27% [42]. - Short - term financing and ultra - short - term financing: Non - legal person products accounted for 62.52%, commercial banks 21.02%, nominal holder accounts (domestic) 6.74%, policy banks 4.84%, securities companies 4.45%, others 0.24%, credit unions 0.18%, overseas institutions 0.01%, and insurance institutions 0.00% [45]. - Non - publicly - oriented debt instruments: Non - legal person products accounted for 57.91%, commercial banks 26.11%, policy banks 1.28%, credit unions 2.08%, others 3.32%, nominal holder accounts (domestic) 1.93%, securities companies 1.26%, overseas institutions 6.01%, and insurance institutions 0.11% [47]. - Inter - bank certificates of deposit: Non - legal person products accounted for 64.69%, commercial banks 27.84%, nominal holder accounts (domestic) 3.31%, securities companies 0.84%, policy banks 2.05%, others 0.20%, insurance institutions 0.08%, credit unions 0.05%, and overseas institutions 0.94% [49]. 3.3 Observation of Bond Market Leverage Ratio - The balance of bonds to be repurchased decreased seasonally, and the bond market leverage ratio decreased month - on - month. As of the end of April 2025, the estimated balance of repurchase - pledged repos was 105,472.92 billion yuan, a decrease of 1,780.97 billion yuan month - on - month. The leverage ratio was 106.71%, a decrease of 0.19 percentage points month - on - month and 0.58 percentage points year - on - year [4][50].

Core Viewpoint - The recent interest rate cuts have positively impacted short and medium-term bonds, leading to a notable decline in rates, while long-term bonds are experiencing a "buying expectation, selling reality" scenario [1][2]. Group 1: Market Reactions - Following the "double cut" (interest rate and reserve requirement ratio), the 1-year government bond yield fell to 1.40%, while long-term bonds showed mixed performance due to market dynamics [2]. - The average yield of long-term bond funds slightly outperformed that of short-term bond funds, with yields at 0.13% and 0.10% respectively, indicating a growing interest in short-term assets [4]. Group 2: Key Players in the Market - Major buyers of short-term bonds include rural commercial banks and foreign investors, with net purchases exceeding 10 billion yuan for bonds with maturities of one year or less [2]. - Non-bank institutions have also been active in the secondary market, significantly increasing their purchases of certificates of deposit, with eight out of twelve types of institutions net buying [2][3]. Group 3: Fund Performance - The performance of various bond funds showed minimal yield differences, with top-performing long-term funds yielding around 0.299% and short-term funds yielding around 0.253% [6][7]. - The overall leverage ratio in the bond market has remained low, with a slight increase to 106.70%, while fund leverage has seen a rebound, indicating a shift in investment strategies [3]. Group 4: Future Outlook - The bond market is expected to remain in a volatile state, with the potential for further rate declines, although the pace may not be smooth [5]. - The market is currently in a phase where the effects of previous policy stimuli are diminishing, and economic fundamentals are showing signs of weakening, suggesting a cautious approach moving forward [4][5].

1. Report Industry Investment Rating There is no information provided regarding the industry investment rating in the report. 2. Core Viewpoints of the Report - After the double - rate cut, the short - end of the bond market declined by 5bp. The mid - short end of the bond market showed a significant decline, with the 1Y Treasury bond yield dropping to 1.40%. The long - end was volatile, and the yield curve steepened slightly. The focus in the future may be on the buying power of large banks and the amount of funds lent out [2][11]. - Small and medium - sized banks + foreign capital, money market funds, and mutual funds were the main driving forces for the decline in the yields of Treasury bonds, China Development Bank bonds, credit bonds, and certificates of deposit this week [3][11]. - The bond market leverage ratio continued to fluctuate at a low level, rising to 106.70% overall. However, mutual funds increased leverage, and the long - and medium - term bond fund duration decreased overall. Currently, non - bank institutions may prefer leverage strategies and maintain a neutral attitude towards duration [3][12]. 3. Summary by Relevant Catalogs 3.1 This Week's Institutional Behavior Review - In terms of interest - rate bonds, rural commercial banks and foreign capital were the main driving forces for short - term Treasury bonds, with a net purchase of over 10 billion yuan of Treasury bonds under 1Y this week. Rural commercial banks adopted a barbell - shaped allocation. Money market funds were the main force for increasing the allocation of policy - financial bonds, and insurance institutions continued to increase their allocation of local bonds in the secondary market [2][11]. - In terms of credit bonds and certificates of deposit, non - bank institutions bought a large number of certificates of deposit in the secondary market, with 8 out of 12 types of institutions having net purchases. Mutual funds increased their allocation of 1 - 3Y medium - term notes and increased their buying of Tier 2 capital bonds, with the buying volume of other types of bonds approaching 50 billion yuan this week [3][11]. 3.2 Bond Market Yield Curve and Term Spread 3.2.1 Yield Curve - Treasury bond yields generally declined. The 1Y yield decreased by 4bp, the 3Y by 1bp, the 5Y by 2bp, the 7Y by 1bp, while the 10Y, 15Y, and 30Y yields increased by 1bp, 1bp, and 2bp respectively. In terms of quantiles, the 1Y dropped to the 10% quantile, the 3Y remained at the 6% quantile, etc. [13]. - China Development Bank bond yields also generally declined. The 1Y yield decreased by 9bp, the 3Y by 5bp, the 5Y by 2bp, the 7Y by 3bp, while the 10Y, 15Y, and 30Y yields increased by 1bp, 1bp, and 2bp respectively. In terms of quantiles, the 1Y dropped to the 5% quantile, the 3Y to the 3% quantile, etc. [13]. 3.2.2 Term Spread - For Treasury bonds, the interest - rate spread showed a differentiated trend, and the term spread widened overall. The 1Y - DR001 spread inverted more deeply by 3bp, while the 1Y - DR007 spread inverted less deeply by 13bp. Other term spreads also had different changes in widening or narrowing [15]. - For China Development Bank bonds, the interest - rate spread inversion eased, and the term spread widened overall. The 1Y - DR001 spread inverted less deeply by 20bp, and the 1Y - DR007 spread inverted less deeply by 17bp. Other term spreads also had corresponding changes [16]. 3.3 Bond Market Leverage and Funding Situation 3.3.1 Leverage Ratio - From May 6th to May 9th, 2025, the leverage ratio first increased and then decreased during the week. As of May 9th, the leverage ratio was about 106.70%, up 0.03pct from last Friday and down 0.13pct from Monday [19]. 3.3.2 Average Daily Turnover of Pledged Repurchase - The average daily turnover of pledged repurchase increased compared with last week. From May 6th to May 9th, the average daily turnover of pledged repurchase was about 6.8 trillion yuan, an increase of 2.1 trillion yuan compared with last week. The average overnight proportion was 85.79% [26][27]. 3.3.3 Funding Situation - From May 6th to May 9th, the lending of bank - based funds continued to increase. The net lending of large banks and policy banks on May 9th was 3.26 trillion yuan, and the average daily net lending of joint - stock banks and rural commercial banks was 0.02 trillion yuan, with a net lending of 0.09 trillion yuan on May 9th. The main fund borrowers were mutual funds, and the lending of money market funds continued to decline [31]. - DR007 and R007 continued to decline. As of May 9th, R007 was 1.58%, down 0.26pct from last Friday; DR007 was 1.54%, down 0.26pct from last Friday; the spread between R007 and DR007 was 3.96bp. 1YFR007 and 5YFR007 also continued to decline [31][32]. 3.4 Duration of Long - and Medium - Term Bond Funds - The median duration of long - and medium - term bond funds decreased to 2.74 years (de - leveraged) and 2.99 years (leveraged). On May 9th, the median duration (de - leveraged) was 2.74 years, down 0.06 years from last Friday; the median duration (leveraged) was 2.99 years, down 0.1 years from last Friday [41][43]. - In terms of different types of bond funds, the median duration of interest - rate bond funds (leveraged) increased to 3.78 years, up 0.03 years from last Friday; the median duration of credit bond funds (leveraged) decreased to 2.67 years, down 0.12 years from last Friday. The median duration of interest - rate bond funds (de - leveraged) was 3.36 years, down 0.01 years from last Friday; the median duration of credit bond funds (de - leveraged) was 2.57 years, down 0.05 years from last Friday [48]. 3.5 Comparison of Category Strategies - Sino - US yield spread: The overall inversion deepened. The 1Y spread inverted more deeply by 24bp, the 2Y by 30bp, the 3Y by 28bp, the 5Y by 30bp, the 7Y by 26bp, the 10Y by 19bp, and the 30Y by 15bp [52]. - Implied tax rate: It narrowed overall. As of May 9th, the spread between China Development Bank bonds and Treasury bonds narrowed by 5bp for 1Y, 4bp for 3Y, less than 1bp for 5Y, 2bp for 7Y, and 1bp for 10Y [53]. 3.6 Changes in Bond Lending Balance - On May 9th, the concentration trend of lending of active 10Y Treasury bonds increased, while the concentration trends of lending of less - active 10Y Treasury bonds, active 10Y China Development Bank bonds, less - active 10Y China Development Bank bonds, and active 30Y Treasury bonds decreased [54].

Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints - In March, the total bond custody scale increased by 265.56 billion yuan month - on - month, with the increment mainly contributed by inter - bank certificates of deposit (CDs), which reached a record high of 1.12 trillion yuan. However, the custody increments of various interest - rate bonds and credit bonds decreased slightly compared to the previous month [4][7]. - After a mid - to - early - month correction, the bond market recovered in late March. Due to looser funds, the demand for CDs from broad - based funds soared, leading to a significant increase in net financing of CDs despite a high maturity volume, and CD rates peaked and declined. The increased purchases of interest - rate bonds by trading institutions such as broad - based funds and securities firms, along with a marginal decrease in government bond supply, alleviated the pressure on commercial banks' asset - side to undertake primary issuance, and thus eased their liability pressure. However, the demand for credit bonds from trading desks remained weak, the bond purchases by insurance companies slightly decreased, and overseas institutions also significantly increased their CD holdings, with the overall bond purchase volume reaching a new high since August last year [4][9]. - In March, the repo balance increased significantly, and the bond market leverage ratio rose by 0.6 pct month - on - month to 106.8%. Although the increase was similar to the historical average for the same period, it remained at a low level since 2022. By institution, the leverage ratios of commercial banks and non - bank institutions both increased but were still at relatively low levels [4][38]. 3. Summary by Directory 3.1. Inter - bank CD Supply Surge Drove a 2.7 - Trillion - Yuan Increase in March Bond Custody Volume - The total bond custody scale in March increased by 265.56 billion yuan month - on - month, with the increment mainly from inter - bank CDs, reaching 1.12 trillion yuan. The custody increments of other interest - rate bonds and credit bonds decreased slightly. For interest - rate bonds, the net financing and net payment of treasury bonds increased, but the custody increment decreased slightly; the custody increment of local bonds decreased as the issuance of replacement bonds slowed; and the custody increment of policy - bank bonds decreased due to an increase in the maturity volume. For credit bonds, the custody increments of medium - term notes and short - term commercial paper decreased, and the custody scales of enterprise bonds and PPNs continued to decline [7]. - The commercial bank bond custody volume decreased by 53 billion yuan from an increase of 120 billion yuan in the previous month, while the non - bank bond custody increment increased by 338 billion yuan to 448 billion yuan. The custody scale decline of credit - asset - backed securities narrowed to 130 billion yuan. The issuance scale of inter - bank CDs in March reached a record high, with the custody increment rising by 634.4 billion yuan to 1.115 trillion yuan, which was the main reason for the increase in March's custody increment [7]. 3.2. In March, Trading Desks Massively Increased Holdings of Inter - bank CDs and Interest - Rate Bonds, Significantly Easing Commercial Banks' Liability Pressure - **Broad - based Funds**: The custody increment of broad - based funds increased significantly by 158.5 billion yuan to 170.5 billion yuan. They increased their holdings of inter - bank CDs, government bonds, local bonds, and policy - bank bonds, and reduced their holdings of credit bonds and commercial bank bonds. Relative to the stock, they increased their allocation of bonds, mainly inter - bank CDs and various interest - rate bonds [13]. - **Securities Firms**: The bond custody scale of securities firms increased by 1.145 billion yuan from a decrease of 560 million yuan in the previous month, mainly by increasing their holdings of treasury bonds. Relative to the stock, they also increased their allocation of bonds, mainly treasury bonds [17]. - **Insurance Companies**: The bond custody increment of insurance companies slightly decreased by 1.48 billion yuan to 9.64 billion yuan. They reduced their holdings of medium - term notes and increased their holdings of local bonds, among others. Relative to the stock, their bond - allocation strength weakened slightly [20]. - **Overseas Institutions**: The bond custody increment of overseas institutions increased by 7.19 billion yuan to 14.18 billion yuan, reaching a new high since August last year. They significantly increased their holdings of inter - bank CDs and increased their holdings of treasury bonds but reduced their holdings of policy - bank bonds. Relative to the stock, they increased their bond - allocation strength [26]. - **Other Institutions**: The bond custody increment of other institutions decreased from an increase of 60.18 billion yuan in the previous month to a decrease of 990 million yuan, mainly affected by the reduction in the net investment of central bank's outright reverse repurchase. They reduced their holdings of local bonds, policy - bank bonds, and treasury bonds and also reduced their holdings of inter - bank CDs, medium - term notes, and short - term commercial paper. Relative to the stock, they reduced their bond allocation [28]. - **Commercial Banks**: The bond custody scale of commercial banks increased by 58.17 billion yuan, with a decrease of 83.66 billion yuan compared to the previous month. They significantly reduced their holdings of inter - bank CDs, and also reduced their holdings of policy - bank bonds, short - term commercial paper, and commercial bank bonds. Relative to the stock, they reduced their bond allocation [31]. - **Credit Unions**: The bond custody volume of credit unions decreased from an increase of 8.67 billion yuan in the previous month to a decrease of 1.9 billion yuan, mainly due to a large - scale reduction in inter - bank CD holdings. Relative to the stock, they reduced their bond allocation [34]. 3.3. In March, the Bond Market Leverage Ratio Seasonally Rebounded but Remained at a Low Level Since 2022 - In March, the repo balance increased significantly, and the bond market leverage ratio rose by 0.6 pct month - on - month to 106.8%. The increase was similar to the historical average for the same period but remained at a low level since 2022. By institution, the leverage ratio of commercial banks rose by 0.6 pct to 103.2%, only higher than that in January - February this year; the non - bank institution leverage ratio rose by 0.5 pct to 115.9%, still at a relatively low level since April 2022. Among non - bank institutions, the leverage ratios of securities firms and non - legal - person products increased to 200.7% and 114.4% respectively, remaining near historical lows [38]. - In broad - based funds, the repo balances of various institutions rebounded. The repo balances of money market funds and wealth management products increased significantly but were still near historical lows. The repo balances of insurance companies and other products with relatively stable liabilities were close to the high in January this year, and the repo balance of non - money market products of fund companies was relatively stable, still below the pre - March 2023 level [38].