Report Summary 1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints - The report focuses on the performance of Treasury bond futures on December 17, 2025, including price changes, capital conditions, and market trading volume [3][4][5]. - Weak non - farm payroll data has strengthened the market's expectation of further interest rate cuts by the Federal Reserve [8]. 3. Summary by Relevant Catalogs 3.1 Treasury Bond Futures Price Changes - On December 17, the 30 - year Treasury bond futures main contract rose 0.63%, the 10 - year rose 0.10%, the 5 - year rose 0.06%, and the 2 - year rose 0.01% [3]. - The opening, high, low, closing prices, price changes, amplitudes, trading volumes, and open interests of 2 - year, 5 - year, 10 - year, and 30 - year Treasury bond futures main contracts are provided [4]. 3.2 Capital Conditions - Overnight shibor was reported at 1.2760%, up 0.2bp from the previous trading day; 7 - day shibor was reported at 1.4290%, down 0.3bp; 14 - day shibor was reported at 1.5100%, down 0.1bp; 1 - month shibor was reported at 1.5370%, up 0.4bp [4]. - The 2 - year active CTD bond was 250017.IB with an IRR of 1.62%, the 5 - year was 230014.IB with an IRR of 0.96%, the 10 - year was 250018.IB with an IRR of 1.54%, and the 30 - year was 210005.IB with an IRR of 2.24%. Currently, R007 is about 1.5003% [4]. 3.3 Market Trading Volume - On December 17, the inter - bank pledged repurchase market traded a total of 2.9 trillion yuan, a decrease of 0.06%. Overnight repurchase rate closed at 1.31%, down 14bp from the previous trading day; 7 - day repurchase rate closed at 1.48%, unchanged from the previous trading day; 14 - day repurchase rate closed at 1.52%, up 3bp; 1 - month repurchase rate closed at 1.60%, down 1bp [5]. 3.4 Yield Curve Changes - The Treasury bond yield curve showed mixed changes (2Y yield rose 0.85BP to 1.41%; 5Y yield fell 0.13BP to 1.64%; 10Y yield fell 0.13BP to 1.85%; 30Y yield rose 0.15BP to 2.28%). - The credit bond yield curve also showed mixed changes (for AAA - rated medium - and short - term notes, 6M yield rose 3.00BP to 1.73%; 1Y yield rose 5.00BP to 1.74%; 3Y yield fell 11.00BP to 1.81%; 5Y yield rose 0.50BP to 2.28%) [5]. 3.5 Macro and Industry News - Weak non - farm payroll data has strengthened the market's expectation of further interest rate cuts by the Federal Reserve [8]. 3.6 Trend Intensity - The trend intensity of Treasury bond futures is 0 [9].

1. Report Industry Investment Rating No information provided in the given content. 2. Core Viewpoints of the Report - In 2026, the central bank may focus on structural monetary policy, while aggregate tools still need to be eased. The PBoC will implement an appropriately accommodative monetary policy and maintain relatively accommodative financing conditions [2][3]. - Weak financing demand, high real interest rates, and monetary - fiscal coordination require aggregate tools to play a role, and constraints from banks' net interest margins and Fed policies may ease. It is expected that there will be 1 - 2 interest rate cuts (10 - 20BP) and a reserve requirement ratio (RRR) cut of 25 - 50BP (the PBoC's resumption of government bond trading has reduced the probability and magnitude of an RRR cut) [2][3]. - The PBoC's bond purchases may cap the upper limit of bond market interest rates, and the implementation of aggregate tools is likely to drive the bond market higher [2][3]. 3. Summaries According to the Table of Contents 3.1 The Economy Requires a Moderately Accommodative Monetary Policy - Fundamental data still requires further recovery, and financing demand remains weak. In October 2025, the Manufacturing PMI, Manufacturing PMI Production Index, and Manufacturing PMI New Orders Index were below the 50 - point threshold and declined from September. The year - on - year growth of total loans of financial institutions in September 2025 decelerated, suggesting that overall financing demand is subdued [13]. - "Anti–involution" measures and holiday - driven consumption supported a month - on - month increase of October's inflation, but overall price levels are expected to recover moderately. PPI negative growth has narrowed, and CPI and core CPI in October grew year - on - year, likely boosted by holiday spending [14]. 3.2 Real Interest Rates Remain Relatively High - China's real interest rates remain elevated, with the real rate as of September at 2.16%, higher than the U.S. level of 1.16%. Low inflation has kept real interest rates high, discouraging corporate investment and household consumption. In 2026, monetary policy may continue to lower real interest rates through further RRR cuts and interest rate cuts [21]. 3.3 Monetary Policy Needs to Coordinate with Proactive Fiscal Policy - In 2026, central - government leveraging will continue to require relatively low financing costs. The central government's leverage ratio has risen notably in recent years but remains low relative to households. Both central and local government bond issuance have shown an upward trend, and this year's deficit - to - GDP ratio target has been raised to 4%. Fiscal expansion requires monetary policy to maintain low financing costs and avoid crowding - out effects [25]. - The recommendations for the Fifteenth Five - Year Plan call for strengthening coordination between fiscal and monetary policy, including raising the proportion of central fiscal expenditure and enhancing fiscal - monetary coordination [26]. 3.4 Focus on Structural Monetary Policy In 2026 - In 2026, structural monetary policy tools may still take precedence. Given the structural imbalances in the economy, these tools can provide targeted support to major strategies, priority areas, and weak links [30]. - The recovery of banks' net interest margins and the Federal Reserve's interest rate cuts will help expand the room for China's aggregate monetary policy tools. Deposit rate reductions have alleviated pressure on banks' funding costs, and the constraints from the exchange rate and the China - US interest rate spread on further rate cuts have weakened [31]. - Regarding aggregate monetary policy tools, it is expected that there will be 1 - 2 additional rate cuts of about 10 - 20 basis points in 2026, and the probability and magnitude of RRR cuts may decline, likely in the range of 25 - 50 basis points [37]. 3.5 The PBoC's CGB Purchases May Support A Steeper Yield Curve - After the PBoC initiated government bond purchases, the probability of a steeper yield curve has increased. In 2024, the PBOC's bond purchases concentrated in short - term bonds, driving a decline in short - end yields and steepening the curve. In 2025, the strongest net buying pressure was still in bonds with maturities within three years, so the likelihood of further curve steepening remains high [40].

Core Viewpoint - The People's Bank of China (PBOC) has decided to resume the trading of government bonds after a 10-month suspension, indicating a positive shift in the bond market and a need for liquidity support [2][3]. Group 1: Reasons for Resuming Bond Trading - The resumption is attributed to a phase of alleviated interest rate risks in the bond market and the necessity to provide liquidity support [3]. - The initial suspension in January was due to overly optimistic market sentiment and rapid declines in government bond yields, which increased interest rate risks and widened the China-U.S. interest rate differential [3]. - Since July, a shift in risk appetite has led to capital outflows from the bond market, causing a rapid increase in the 10-year government bond yield from 1.6% to over 1.8%, stabilizing around this level for a month [3]. - The macroeconomic environment, including the Federal Reserve's rate cuts and a narrowing of the China-U.S. interest rate differential, has created a favorable context for the PBOC to restart bond trading [3]. Group 2: Market Implications - The resumption of bond trading signals a defined upper limit for bond yields, suggesting limited room for further increases in the 10-year government bond yield [4]. - The PBOC's actions are aimed at enhancing the financial function of government bonds and improving the coordination between monetary and fiscal policies [4]. - The recent rise in short-term bond yields has led to a narrowing of the yield spread between 10-year and 1-year government bonds, indicating a potential steepening of the yield curve [4]. - In the short term, the PBOC's bond purchases may focus on the shorter end of the yield curve, with the long end requiring further observation of the scale of bond purchases and equity market performance [4].

Core Viewpoint - The article emphasizes the importance of improving the government bond yield curve as a foundation for the financial market, highlighting recent measures taken by the Ministry of Finance to enhance liquidity in the secondary market for government bonds [2][3]. Summary by Sections Government Bond Market Operations - The Ministry of Finance announced operations to support the market for government bonds, specifically selling 2.7 billion yuan of 2025 10-year bonds and 2.8 billion yuan of 2025 12-year bonds to improve liquidity and reflect market supply and demand [2][3]. Current Market Conditions - The article discusses the ongoing asset shortage and declining policy interest rates, which have increased investor preference for government bonds, leading to a liquidity squeeze in the bond market [2][3][4]. - In July, there was a net decrease of 1.11 trillion yuan in household deposits, indicating a shift in financial asset distribution among residents [3]. Importance of a Healthy Yield Curve - A well-functioning government bond yield curve is crucial for the stability and predictability of the financial system, especially as household asset exposure risks change [3][4]. - The Ministry of Finance's operations aim to balance supply and demand in the market, preventing excessive price increases and ensuring that the yield curve reflects market conditions [3][4]. Challenges in the Market - The article identifies two main issues contributing to the current market's risk-averse behavior: low policy interest rates leading to credit tightening and insufficient capacity to generate effective risk assets, exacerbating the asset shortage [4][5]. - The focus on safe assets like government bonds has resulted in liquidity problems in the secondary market, as investors prefer to hold rather than trade these securities [4][5]. Recommendations for Improvement - To enhance the government bond yield curve and market pricing mechanisms, it is essential to address low interest rates and promote a more open economic environment that encourages risk-taking and innovation among market participants [5][6]. - The article advocates for comprehensive reforms to eliminate barriers to market efficiency and foster a competitive legal market order, ultimately improving investment returns and addressing the asset shortage [5][6].

Group 1 - The core viewpoint emphasizes the importance of improving the government bond yield curve as a foundation for the financial market [1][2] - The Ministry of Finance has initiated operations to support the market for government bonds, specifically through selling operations for 2025 government bonds, with amounts of 270 million and 280 million respectively [1][2] - The current market conditions, including a significant decrease in household deposits and an increase in non-bank deposits, highlight the need for a healthy government bond yield curve to ensure financial stability [2] Group 2 - The government bond market is experiencing liquidity issues due to a strong preference for safe assets among investors, driven by an ongoing asset shortage [3][4] - The Ministry of Finance's selling operations aim to address supply-demand imbalances in the market, preventing excessive price increases and ensuring liquidity [2][3] - A comprehensive approach is needed to reform and open up various sectors, removing barriers to market efficiency and enhancing the marginal return on investments [4][5]

Core Viewpoint - The article emphasizes the importance of improving the government bond yield curve and establishing a solid pricing foundation for the financial market, which requires addressing the benefits and drawbacks of low interest rate policies and fostering market participants' risk-taking spirit and creativity [1][4][5] Group 1: Government Bond Market Operations - The Ministry of Finance announced operations to support the market for government bonds, specifically through selling operations for the 2025 government bonds, with amounts of 270 million and 280 million respectively [1][2] - The government bond market support operations are not new, having been implemented since the issuance of the operational rules in September 2016, and are increasingly regularized due to recent changes in the financial market [1][2] - The current selling operations reflect a supply-demand imbalance in the market for key maturity government bonds, aiming to prevent excessive price increases and improve liquidity in the secondary market [2][3] Group 2: Financial Asset Distribution Changes - In July, there was a net decrease of 1.11 trillion yuan in household deposits, highlighting the significance of a healthy government bond yield curve as the distribution of household financial assets changes [2] - The shift in household asset exposure risks necessitates a more stable and predictable financial system, which places higher demands on the healthy operation of the government bond yield curve [2] Group 3: Market Pricing Mechanism - To create a healthy liquidity environment for the government bond market, it is crucial to establish a sound pricing mechanism and reduce transaction costs, allowing the yield curve to effectively cover risk exposures [3][4] - The current market's risk-averse behavior is driven by a persistent asset shortage and low policy interest rates, leading to liquidity issues in the government bond secondary market [3][4] - The article suggests that addressing low interest rates and enhancing the marginal investment return is essential for guiding changes in the government bond yield curve [4][5] Group 4: Structural Reforms - Comprehensive reforms and opening up various sectors are necessary to broaden the productive boundaries of market participants and eliminate non-market barriers to effective market operation [4][5] - The government bond market support operations are seen as a starting point, with the ultimate goal being to improve the yield curve and market pricing foundation through deeper reforms [5]

Group 1 - The yield curve for U.S. 2-year and 10-year Treasury bonds has steepened, with the spread widening to 60 basis points, marking the largest spread since April of this year [1]

Group 1 - The release of CPI data has led to a steepening of the yield curve for 2-year and 10-year U.S. Treasury bonds, with the latest spread reported at 50.5 basis points [1] - The yield on the 10-year U.S. Treasury bond has been affected by the CPI data [1]

Group 1: Report Industry Investment Rating - No information provided Group 2: Core Viewpoints of the Report - On June 5, the 30 - year Treasury bond futures main contract fell 0.16%, the 10 - year main contract fell 0.01%, the 5 - year main contract rose 0.02%, and the 2 - year main contract rose 0.04% [2] - The trend strength of Treasury bond futures is 0, indicating a neutral outlook [8] Group 3: Summary by Relevant Catalogs 1. Fundamental Tracking - **Treasury Bond Futures Prices**: On June 5, the 30 - year Treasury bond futures main contract (TL2509) closed at 119.310, down 0.16%; the 10 - year main contract (T2509) closed at 108.720, down 0.01%; the 5 - year main contract (TF2509) closed at 106.030, up 0.02%; the 2 - year main contract (TS2509) closed at 102.430, up 0.04% [2][3] - **Funding Rates**: Overnight shibor was 1.4080%, unchanged from the previous trading day; 7 - day shibor was 1.5340%, down 0.9bp; 14 - day shibor was 1.5910%, up 1.5bp; 1 - month shibor was 1.6200%, unchanged from the previous trading day [2] - **Repo Market**: On June 5, the inter - bank pledged repo market traded 2.7 billion yuan, an increase of 10.23%. Overnight repo rate was 1.40%, down 2bp; 7 - day repo rate was 1.60%, up 10bp; 14 - day repo rate was 1.60%, up 2bp; 1 - month repo rate was 1.60%, down 6bp [4] - **Yield Curves**: Treasury bond yield curve showed mixed movements (2Y down 2.36BP to 1.44%; 5Y down 0.67BP to 1.56%; 10Y up 0.43BP to 1.67%; 30Y up 0.70BP to 1.90%). Credit bond yield curve also showed mixed movements [4] 2. Macro and Industry News - On June 5, 126.5 billion yuan of 7 - day reverse repurchase operations were carried out, with 266 billion yuan of 7 - day reverse repurchases maturing, resulting in a net withdrawal of 139.5 billion yuan [7] - On June 6, 2025, the People's Bank of China will conduct 1 trillion yuan of outright reverse repurchase operations with a term of 3 months (91 days) [7] 3. Trend Intensity - The trend intensity of Treasury bond futures is 0, with a neutral outlook [8]

Group 1 - The demand for Japan's 10-year government bonds has unexpectedly strengthened, providing a boost to the recently volatile bond market, with a key demand indicator reaching a new high since April 2024 [1] - The 10-year government bond futures rose slightly to 139.14 yen, corresponding to a yield decrease of 2.5 basis points to 1.48%, despite rising yields in major global economies [1][4] - The upcoming 30-year government bond auction is seen as a critical test of market sentiment towards ultra-long-term bonds, with traders remaining cautious [1][4] Group 2 - Senior interest rate strategist Miki Den from Sumitomo Mitsui Trust Securities noted that the 1.5% yield level is attractive for allocation funds, which is key to the recovery in demand [4] - However, he warned that the downward yield potential may be limited due to the upcoming 30-year bond issuance, indicating that the market needs to digest the supply pressure from ultra-long-term bonds [4] - The global bond market is currently experiencing a crisis of confidence, with concerns over large fiscal deficits in major economies increasing debt burdens, compounded by the Bank of Japan's gradual exit from large-scale bond purchases [4][5] Group 3 - Recent auction data shows that the subscription multiple for the 2.6 trillion yen 10-year government bonds significantly increased to above the one-year average, despite yields rising over 50 basis points from the 2023 low [5] - The attractiveness of Japanese bonds relative to other developed countries is a primary reason for the influx of allocation funds [5] - The upcoming 30-year bond auction is expected to be a crucial observation point, as its yield has reached the highest level since issuance, which will directly impact global investors' risk assessment of the Japanese bond market [5]