Report Industry Investment Rating - Not mentioned in the provided content Core Viewpoints - Based on the calculation results of spot bond trading data, the central duration of all pure bond funds increased by 0.07 years to 3.15 years week-on-week this week [3]. - The median duration of medium - and long - term pure bond funds increased and the divergence decreased this week. The median 5DMA of all medium - and long - term pure bond funds reached 2.85 years, a week - on - week increase of 0.19 years, at the 99.3% quantile in the past three years, and the 5DMA of duration divergence was 0.48, a week - on - week decrease of 0.02, at the 57.4% quantile in the past three years [3]. - The median duration of short - term pure bond funds decreased and the divergence increased this week. The median 5DMA of all short - term bond funds reached 0.85 years, a week - on - week decrease of 0.08 years, at the 74.2% quantile in the past three years, and the 5DMA of duration divergence was 0.49, a week - on - week increase of 0.01, at the 74.4% quantile [3]. - The turnover rate of ultra - long - term interest rate bonds decreased and most of the turnover rates of credit bonds increased this week. As of May 23, 2025, the 10DMA of the turnover rate of treasury bonds with a term of over 10 years remained flat week - on - week at 2.40%, at the 80.7% quantile level in the past three years, while the turnover rates of most 3 - 5 - year credit bonds increased [3]. - The leverage ratio of the inter - bank bond market increased by 0.01 percentage points to 107.0% week - on - week this week. The leverage ratio of insurance companies increased by 0.20 percentage points to 125.6%, the leverage ratio of banks increased by 0.02 percentage points to 102.6%, the leverage ratio of securities companies decreased by 2.95 percentage points to 198.1%, and the leverage ratio of broad funds decreased by 0.12 percentage points to 111.8% [3]. - The scale of existing wealth management products in the whole market increased by 59.84 billion yuan week - on - week last week. The increase was in line with the seasonal level, and the net - breaking rate decreased slightly. The performance comparison benchmarks of newly issued wealth management products showed different trends for different terms [3]. Summary by Directory 1. This Week's Bond Fund Duration Central Point Increased - The central duration of all pure bond funds increased by 0.07 years to 3.15 years week - on - week this week [3][8]. - For medium - and long - term pure bond funds, the median duration of different types (interest - rate type, credit type, and all) showed different changes in terms of median and divergence, with most of the median durations increasing and the divergence showing different trends [3]. - For short - term pure bond funds, the median duration decreased and the divergence increased, with different trends for different types (interest - rate type and credit type) [3]. 2. This Week's Ultra - Long - Term Interest Rate Bond Turnover Rate Decreased, and Most Credit Bond Turnover Rates Increased - The turnover rates and their quantiles of different types of bonds (interest rate bonds, credit bonds, short - duration assets) for different terms are presented. For example, the 10 - year - plus treasury bond turnover rate 10DMA was 2.40% and remained flat week - on - week, at the 80.7% quantile in the past three years [3][22]. - The week - on - week changes in the turnover rates of different bonds are shown. Most 3 - 5 - year credit bond turnover rates increased [3][25]. - The turnover rates, their quantiles in the past three years, and the valuation spreads of local government bonds in different provinces and cities are provided. Sichuan, Shandong, and Anhui had relatively high local government bond turnover rates, and the 7 - 10 - year (inclusive) valuation spreads were 14.36bps, 15.03bps, and 15.37bps respectively [3][27]. 3. This Week's Allocation - Oriented Leverage Ratio Increased, and Trading - Oriented Leverage Ratio Decreased - The inter - bank bond market leverage ratio increased by 0.01 percentage points to 107.0% week - on - week. The leverage ratios of insurance companies, banks, securities companies, and broad funds changed differently, with insurance companies and banks increasing, and securities companies and broad funds decreasing [3][29]. 4. Last Week's Wealth Management Scale Increased, and the Net - Breaking Rate Decreased - The scale of existing wealth management products in the whole market increased by 59.84 billion yuan week - on - week last week, in line with the seasonal level. The net - breaking rate decreased to 0.89%, a week - on - week decrease of 0.11pcts [3]. - By term, the scale of wealth management products within 1 month (inclusive) increased significantly, the daily - open type decreased significantly, and the scales of other terms increased slightly. By investment nature, the scale of fixed - income wealth management products increased significantly, the cash - management type decreased significantly, and other investment types increased slightly [3]. - The performance comparison benchmarks of newly issued wealth management products for different terms showed different trends, with those within 1 month (inclusive) and 1 - 3 years (inclusive) increasing, those within 6 months - 1 year (inclusive) remaining flat, and others decreasing [3].

Trade Relations and Economic Indicators - The significant reduction in tariffs between China and the U.S. has improved trade expectations, with the U.S. comprehensive tariff rate on China remaining around 40%[2] - April export data exceeded expectations, but PPI showed a year-on-year decline of 2.7%, indicating underlying economic weaknesses[2] - New loan issuance in April was below expectations, with cumulative new household loans in the first four months at a near ten-year low[2] Market Trends and Monetary Policy - The bond market has entered a defensive phase, with yields generally rising; the 10-year government bond yield increased to 1.68% (+5bp) and the 30-year yield to 1.88% (+4bp)[11] - Market sentiment is shifting towards a "trend over volatility" approach, delaying expectations for further interest rate cuts until after Q2 data is released in July[2] - The likelihood of a return to a tight funding environment similar to Q1 is low due to several factors, including stable bank liabilities and a supportive central bank stance[3] Investment Strategy and Bond Valuation - The bond market is expected to experience a period of volatility, with the 10-year yield fluctuating between 1.6% and 1.7%[26] - In the short-term, the focus should be on evaluating price-performance ratios, particularly in the 1-3 year bond segment, which currently shows a high liquidity advantage[26] - For mid-term bonds (5-7 years), the pricing uncertainty is moderate, while the 10-year agricultural development bonds offer attractive spreads[6] Financial Products and Risk Assessment - The total scale of wealth management products decreased by 771 billion yuan to 31.49 trillion yuan, reflecting a seasonal decline[32] - The proportion of wealth management products with negative returns has slightly increased to 1.96%, but remains relatively low compared to historical levels[38] - The overall performance of wealth management products not meeting expectations has decreased to 17.4%, indicating improved performance across various institutions[44]

Key Points - The overall funding market has warmed up, with a slight decrease in leverage ratios in the interbank bond market [1] - There is a divergence in the issuance heat of new bonds, with an increase in the issuance of national development bonds and a decrease in other policy financial bonds [1][2] - In the secondary market, funds and rural commercial banks have significantly increased their positions in short-term bonds, while trading activity in ultra-long bonds continues to weaken [2] - The scale of wealth management products has seen a low growth rate in May, with a total increase of 16 billion yuan, primarily in cash management and fixed-income products [3] - The scale of funds has increased by 61.8 billion yuan in May, with notable increases in equity and bond funds [3]

Group 1 - The overall performance of credit bonds remains weak, with credit spreads showing a slight upward trend despite a balanced and loose funding environment [1][11][13] - The total market size of wealth management products reached 30.84 trillion yuan as of April 20, 2025, reflecting an increase of 1.82 trillion yuan since the end of March, indicating a significant growth compared to the same period in previous years [2][16] - Wealth management has shifted its investment direction, showing increased buying power for secondary capital bonds and commercial paper, while the buying interest for certificates of deposit has decreased [3][20] Group 2 - The demand for credit bonds is expected to improve, supported by wealth management needs and allocation forces, although the pace and types of bonds require careful consideration [4][27] - The issuance of credit bonds totaled 537.2 billion yuan during the week, with a net financing of 114.8 billion yuan, indicating a stable issuance environment [32][34] - The supply of urban investment bonds continues to be tight, with a net outflow of 409 billion yuan, reflecting a decrease in net financing compared to previous weeks [43][45]

Investment Rating - The industry investment rating is "Recommended (Maintain)" [2] Core Insights - The banking wealth management market saw a slight increase in the total scale, reaching 29.92 trillion yuan by the end of February 2025, with a month-on-month growth of 150.4 billion yuan [4][9] - The issuance scale of bank wealth management products in February 2025 was 466.2 billion yuan, an increase of 60.5 billion yuan from the previous month, with a notable rise in the proportion of medium to long-term products [18] - The performance benchmark for newly issued wealth management products has declined across various terms, reflecting the impact of a low-interest-rate environment [21][22] Summary by Sections 1. Existing Wealth Management Market Overview - As of the end of February 2025, the existing scale of bank wealth management products was 29.92 trillion yuan, with cash management products accounting for 23.4%, fixed income products 74.4%, mixed products 2.0%, equity products 0.1%, and commodity and financial derivatives 0.05% [9][12] 2. Wealth Management Product Issuance Market Overview - The issuance scale of bank wealth management products in February 2025 was 466.2 billion yuan, with a significant increase in the proportion of products with a term of over one year, which accounted for 56.2% of the total issuance [18] - The performance benchmarks for various terms of wealth management products have decreased, with the 1-3 month benchmark at 2.39%, down 6 basis points from the previous month [21][22] 3. Wealth Management Product Net Value Tracking - The annualized yield for cash management products was 1.60%, while fixed income products saw a significant decline to 1.02%, down 95 basis points from the previous month [31] - The number of wealth management products with a net value below par increased to 2,996, representing 4.31% of the total, indicating a rise in the breaking net value ratio [38] 4. Industry Dynamics - Several banks have lowered the performance benchmarks for their wealth management products, with some products now having a benchmark below 2%, reflecting the ongoing low-yield environment and regulatory adjustments [43]

Group 1 - The report indicates that the recent credit bond market has experienced a significant yield adjustment, with the duration and magnitude of this adjustment being the second highest since 2022 [2][8][19] - The adjustment has lasted for 14 days as of the end of February 2025, with the maximum drawdown of the medium to long-term pure bond fund index reaching 61 basis points [8][9][10] - The report highlights that the tightening of the funding environment is a common factor influencing the recent adjustments, similar to the situation observed in August to October 2023 [13][14] Group 2 - In the primary market, the issuance scale of credit bonds in February decreased month-on-month but increased year-on-year, with a total of 44 credit bonds canceled, marking the fifth highest cancellation scale since 2022 [2][6][12] - The secondary market saw a decline in transaction activity for city investment bonds and financial bonds, while the turnover rate for industrial bonds increased [2][4][6] - The report suggests that the core variables affecting credit bond trends are the funding environment and institutional behavior, with limited potential for further significant increases in credit bond yields [17][19][20] Group 3 - The report recommends a strategy of focusing on short-duration bonds and selectively timing investments in medium to long-duration bonds, particularly after the release of policy signals from the National People's Congress [5][17] - It is anticipated that the adjustment space for short-duration non-financial credit bonds may be within 20 basis points, while medium to long-duration bonds are expected to have a limited adjustment space of around 10 basis points [14][19] - The report emphasizes that the demand for credit bonds remains supported by the net buying activity of wealth management products during the recent market adjustment [20][21]