1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report - The adjustment of the 14 - day reverse repurchase tender method is beneficial for the decline of cross - quarter funds prices. The current institution's cross - quarter progress is slow, and the central bank's adjustment shows its intention to support cross - quarter liquidity, which helps to stabilize the cross - quarter funds price. Although this week's funds were tightened due to multiple factors, it cannot be inferred that the central bank's attitude has changed. Next week, the overall liquidity pressure is expected to ease marginally [3][26][29]. 3. Summary According to the Directory 3.1 Money Market 3.1.1 This Week's Funds Review - The central bank's OMO had a net injection of 5623 billion yuan this week, and a 6000 - billion - yuan 6M outright reverse repurchase was carried out on Monday, with a monthly net injection of 3000 billion yuan. A 1500 - billion - yuan 1M treasury cash fixed - deposit operation was conducted on Wednesday, with a winning bid rate of 1.78%, the same as the previous value. Affected by factors such as the tax period and government bond payments, funds were marginally tightened. DR001 once rose to 1.51% on Thursday and only eased significantly on Friday [3][8]. - The trading volume of pledged repurchase fluctuated and declined this week, with the average daily trading volume decreasing by 0.33 trillion yuan to 7.16 trillion yuan. The net lending of large banks decreased in the first half of the week and rebounded above 4 trillion yuan in the second half. The net lending of city commercial banks and joint - stock banks decreased on Monday and recovered in the middle of the week but declined again on Friday. The net lending of non - banks increased significantly on Wednesday and then decreased slightly, while the net borrowing of non - banks increased in the second half of the week. The funds gap index first rose and then fell [3][16]. - The September cross - quarter progress of inter - bank institutions and exchanges was slow, with the overall market cross - quarter progress at the lowest level in recent years. The excess reserve ratio in August decreased by 0.1 pct to 1.1%, lower than the expected 1.4%, mainly due to the unexpected increase of 3370 billion yuan in government deposits [3][20][22]. - This week, funds tightened marginally due to multiple exogenous disturbances, especially the freezing of 8512 billion yuan by the new stock Jinhuaxincai on the Beijing Stock Exchange, which caused a significant increase in GC001 on Tuesday and Wednesday. However, funds eased on Friday, and the average values of DR001 and DR007 since September were 1.39% and 1.48% respectively, similar to those since Q3, so it cannot be inferred that the central bank's attitude has changed [3][26]. 3.1.2 Next Week's Funds Outlook - Next week, the treasury bond payment scale is expected to be 3320 billion yuan, and the local bond issuance scale of 12 regions is 1961 billion yuan, with an actual payment scale of 2422 billion yuan. The net payment scale of government bonds will decrease from 4030 billion yuan this week to 908 billion yuan, but the single - day net payment on Monday will reach 2525 billion yuan [3][33]. - The report maintains the assumption that the treasury bond issuance in September is 1.49 trillion yuan with a net financing of about 7300 billion yuan, and the local bond issuance is 9000 billion yuan with a net financing of 4900 billion yuan. It is estimated that the government bond issuance scale in September is about 2.39 trillion yuan, with a net financing scale of about 1.22 trillion yuan [3][41]. - It is estimated that the treasury bond issuance scale in October is about 1.25 trillion yuan, with a net financing scale of about 2700 billion yuan, and the local bond issuance scale is 7100 billion yuan, with a net financing scale of 4600 billion yuan. The overall government bond issuance scale in October is expected to be about 1.96 trillion yuan, with a net financing of about 7300 billion yuan [3][44]. - Next week, the maturity scale of reverse repurchases will rise to 18268 billion yuan, and there will be a 3000 - billion - yuan MLF maturity on Thursday. The main exogenous disturbances to the funds will be concentrated in the first half of the week. Although the demand for cross - quarter funds will increase in the second half of the week, the central bank will stabilize funds through 14 - day reverse repurchase injections, MLF is likely to be renewed in excess, and the end - of - quarter fiscal expenditure may also provide some hedging. It is expected that the liquidity pressure will ease marginally compared to this week [3][52]. 3.2 Inter - bank Certificates of Deposit - This week, the 1Y Shibor rate rose 0.6BP to 1.67%, and the secondary rate of 1 - year AAA - rated inter - bank certificates of deposit rose 0.5BP to 1.68% [53]. - The issuance scale of inter - bank certificates of deposit increased while the maturity scale decreased this week, with a net financing of 903 billion yuan. The net financing scales of state - owned banks, joint - stock banks, city commercial banks, and rural commercial banks were 2469 billion yuan, - 843 billion yuan, - 529 billion yuan, and - 47 billion yuan respectively. The issuance proportion of 1Y certificates of deposit rose to 23%, and the 3M certificates of deposit had the highest issuance proportion at 36%. Next week, the maturity scale of certificates of deposit is about 8941 billion yuan, an increase of 881 billion yuan compared to this week [57]. - The issuance success rates of state - owned banks, city commercial banks, and rural commercial banks increased compared to last week, while that of joint - stock banks decreased. Except for the relatively low issuance success rate of state - owned banks, the others were above the average level in recent years. The issuance spread of 1Y certificates of deposit between city commercial banks and joint - stock banks narrowed [58]. 3.3 Bill Market This week, bill rates fluctuated and rose. The rates of 3M and 6M national stock bills rose 10BP and 7BP respectively to 1.25% and 0.86% [4]. 3.4 Bond Trading Sentiment Tracking - This week, bond yields fluctuated at a high level, and the spreads of credit and Tier 2 perpetual bonds were relatively stable. Large banks' willingness to increase bond holdings decreased significantly, especially for medium - and short - term treasury bonds. Their willingness to reduce holdings of 3 - 7 - year policy financial bonds and local bonds increased, and they tended to reduce holdings of Tier 2 perpetual bonds [4]. - Trading - type institutions tended to increase bond holdings, including fund companies and securities companies. The willingness of other products to increase holdings also rose, while that of other institutions decreased. Allocation - type institutions tended to reduce bond holdings. Rural commercial banks tended to reduce bond holdings, the insurance companies' willingness to increase holdings decreased, and the wealth management products' willingness to increase holdings was basically the same as last week [4].

1. Report Industry Investment Rating There is no information about the report industry investment rating in the provided content. 2. Core View of the Report The report analyzes the liquidity situation from July to September 2025, predicting that the September capital market will likely remain relatively loose, similar to August, within the existing policy framework [2][3]. 3. Summary by Relevant Catalogs 3.1 July: Slow Replacement Bond Expenditure and Neutral Excess Reserve Ratio - July's excess reserve ratio dropped by 0.2pct to 1.2%, slightly more than expected but at a neutral level for non - quarter - end months [6]. - Fiscal deposits in July rose by 7648 billion yuan, higher than the expected 4508 billion yuan, indicating a slow expenditure progress of replacement bonds [6]. - The central bank's claims on other depository corporations increased by 2184 billion yuan in July, matching high - frequency monetary policy tools [6]. 3.2 August: Rising Excess Reserve Ratio and New Low in Capital Interest Rate - The scale of the broad fiscal deficit in August may be higher than in previous years, and the expenditure of replacement bonds will reduce government deposits. Government bond net supply decreased significantly compared to last year, with an estimated 3100 - billion - yuan decline in government deposits [13]. - The central bank's claims on other depository corporations are expected to rise by about 4900 billion yuan in August, and the excess reserve ratio is estimated to be about 1.4%, up 0.2pct from July [13]. - In August, capital was generally loose but tightened after the middle of the month. The decline in bank net lending around the tax period was significantly higher than in previous years, which may be related to the stock market and the central bank's "anti - arbitrage" stance, but the impact may be short - term [32]. - The average values of DR001 and DR007 in August reached new lows for the year, possibly due to the decline in non - bank institutional leverage demand [51]. 3.3 September: Stable Capital Interest Rate and Limited Downward Space for Overnight Interest Rate - The broad fiscal deficit in September may still be higher than in previous years, and the expenditure of replacement bonds will continue to reduce government deposits. The net financing of government bonds is expected to decline slightly compared to August, with an estimated 7800 - billion - yuan decline in government deposits [57]. - The central bank's claims on other depository corporations are expected to rise by about 2800 billion yuan in September, and the excess reserve ratio is estimated to be about 1.6%, up 0.2pct from August [57]. - There is no obvious exogenous shock to the capital market in September. The central bank aims to boost inflation, and the probability of policy tightening is low. The capital market in September is likely to remain relatively loose, similar to August [65][69].

Group 1 - The core viewpoint indicates that the new RMB loans and social financing in August exceeded market expectations, suggesting a neutral to tight liquidity state [1][2] - The economic data for August shows a recovery in consumption, investment, and exports, with retail sales increasing by 0.5% year-on-year, marking the first positive growth this year [1] - The monetary multiplier reached a historical high of 7.17 in August, reflecting strong credit expansion, while the excess reserve ratio continued to decline, leading to tighter interbank liquidity [2] Group 2 - The central bank's operations included a total of 620 billion yuan in reverse repos maturing this week, with a net injection of 90 billion yuan over the first four days [2] - Despite the central bank's excess MLF operations, the issuance rates for interbank certificates of deposit remained firm, indicating ongoing pressure on banks' medium to long-term liabilities [3] - The VIX index has decreased from a high of 38.28 to around 25, reflecting a decline in market risk appetite due to simultaneous declines in US crude oil and stock markets [3] Group 3 - FTSE Russell announced it will conduct a final assessment regarding the inclusion of RMB bonds in its indices, with a high likelihood of Chinese government bonds being included, which could attract significant allocation funds to the bond market [4] - The interbank lending center extended trading hours for overseas institutions investing in the Chinese bond market, demonstrating a positive regulatory attitude towards foreign capital [4]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - In July 2025, the capital market experienced increased volatility but maintained a stable central level. The central bank actively adjusted its open - market operations to maintain market stability. The implementation effect of monetary policy will continue to emerge, and the central bank may maintain a coordinated policy stance during the peak issuance of government bonds. - In August, the overall capital gap pressure is expected to be seasonally large, around 1.8 trillion yuan. However, the capital central level is likely to remain around 1.5%, with a limited risk of significant tightening. The central bank may maintain a coordinated policy stance and there is a relatively higher probability of restarting bond - buying from August to September [4][5][69]. 3. Summary According to the Directory 3.1 7 - Month Capital and Liquidity Review 3.1.1 Capital Review - In July 2025, the overnight capital fluctuation range increased compared to the end of the previous quarter. The overnight capital fluctuated between 1.3 - 1.4% at the beginning of the month and rose to around 1.5% in the middle. The 7D capital price was basically around 1.5% from the beginning to the middle of the month and rose to around 1.6% at the end. The spread between 7D and overnight capital inverted for one day at the end of the month [10]. - The capital operation was affected by fiscal expenditures, reverse - repurchase operations, and MLF. The capital center decreased overall, with DR001 centered around 1.4% and DR007 fluctuating around 1.5% [11]. - The capital stratification pressure increased briefly in July, with spreads at a seasonal low. The capital volatility of overnight increased, and the 7D capital volatility changed seasonally. The average daily trading volume of inter - bank pledged repurchase decreased slightly compared to June [16][22][23]. 3.1.2 Liquidity Review - In terms of liquidity volume, the base currency in July may have decreased by 6019 billion yuan. The end - of - month excess reserves may have decreased by 5161 billion yuan, with an excess reserve ratio of about 1.55%. The narrow - sense excess reserve level after deducting reverse - repurchase is about 0.7%, still at a low level [31]. - In open - market operations, the central bank actively increased reverse - repurchase investments in July, with a net investment of 1880 billion yuan. MLF invested 4000 billion yuan and matured 3000 billion yuan. The net investment of outright reverse - repurchase was 2000 billion yuan, and a 1000 - billion - yuan treasury deposit operation was carried out [33][37][40]. 3.2 7 - Month Monetary Policy Tracking - In the middle of July, the central bank leader stated that the effect of the implemented monetary policy would continue to emerge, and it was reasonable for small and medium - sized banks to increase bond holdings. The regulatory attitude was more moderate than expected. - In the middle and late July, the central bank solicited opinions on "canceling the freezing of collateral for bond repurchase", which may improve collateral utilization efficiency in the long run. - At the end of July, the Political Bureau meeting emphasized implementing a more proactive fiscal policy and a moderately loose monetary policy, and fully releasing policy effects. The probability of a short - term interest rate cut is low, and the central bank may maintain a coordinated policy stance during the peak issuance of government bonds [3][48][52]. 3.3 8 - Month Gap Prediction 3.3.1 Rigid Gap - In August, the growth of general deposits may freeze about 902 billion yuan in reserves. The MLF maturity is 3000 billion yuan, and the outright reverse - repurchase maturity is 0.9 trillion yuan (4000 billion yuan for 3M and 5000 billion yuan for 6M) [4][57]. 3.3.2 Exogenous Shocks - Cash withdrawals and non - financial institution deposits may slightly freeze excess reserves. Cash withdrawals may consume about 577 billion yuan in excess reserves, and non - financial institution deposits may consume about 723 billion yuan [61]. 3.3.3 Fiscal Factors - The government bond issuance in August is expected to be around 1.5 trillion yuan. Considering factors such as payment reflux, taxation, and fiscal expenditures, government deposits may freeze about 2000 billion yuan in liquidity [64]. 3.3.4 Comprehensive Judgment - The overall capital gap in August is estimated to be around 1.8 trillion yuan, with a seasonally large pressure. However, the capital central level is likely to remain around 1.5%, with a limited risk of significant tightening. The central bank may continue the idea of over - repurchase and pay attention to the bank's liability situation and the possibility of the central bank restarting bond - buying from August to September [4][5][69].

1. Report Industry Investment Rating The provided content does not mention the industry investment rating. 2. Core Viewpoints of the Report - In June, the excess reserve ratio rose to 1.3%, still at a low level for the end - of - quarter month and lower than expected. The central bank maintained the normalization of capital prices by supporting bank lending. In July, the central bank aimed to keep liquidity relatively loose within the existing framework, with the excess reserve ratio expected to be around 1.2%. In August, the excess reserve ratio is projected to be about 1.1%, remaining at a neutral level in recent years. The probability of reserve requirement ratio cuts and interest rate cuts in August is low, but the central bank may still maintain relatively loose liquidity [2][3]. - The fluctuation of the capital market in July was related to the improvement of the equity market sentiment, especially the freezing of funds due to new stock listings on the Beijing Stock Exchange. The capital market in August may continue the tone of July, and attention should be paid to whether DR001 can break through the lower limit of 1.3% at the beginning of the month [2][33][61]. 3. Summary by Relevant Catalogs 3.1. Quarter - end Central Bank Claims Did Not Rise Unexpectedly, and the Increase in the Excess Reserve Ratio in June Was Weaker than Seasonal - In June, the excess reserve ratio rose by about 0.3pct to 1.3%, lower than the expected 1.5%, due to the central bank's claims on other depository corporations not rising additionally as expected to offset the previous decline. After the central bank announced the liquidity injection of various tools in May, the difference between the central bank's claims on other depository corporations and high - frequency data decreased, and its follow - up normalization needs attention [6]. - In June, the fiscal deposit decreased by 5722 billion yuan, less than the expected 7400 billion yuan. The expenditure progress of special refinancing bonds was slow, and the repurchase of treasury cash time deposits might have led to an additional increase in government deposits. Other factors such as currency issuance, central bank legal deposit reserves, and foreign exchange funds were close to expectations [8]. - Despite the relatively low excess reserve ratio, the net lending scale of banks continued to rise in June, and the central DR001 rate dropped below 1.4%, indicating that the central bank was normalizing capital prices by supporting bank lending [15]. 3.2. In July, the Central DR001 Rate Was Stable but with Increased Fluctuations, and the Central Bank Maintained Relative Looseness within the Existing Framework - In July, although the supply pressure of government bonds remained high, the general fiscal revenue and expenditure might show an anti - seasonal deficit, and the expenditure of replacement bonds was expected to bring additional government deposit injections. It was estimated that government deposits would increase by about 450 billion yuan, and the consumption of excess reserves would weaken marginally. Credit lending decline might lead to a decrease in bank reserve payments by about 90 billion yuan. Currency issuance might increase by about 30 billion yuan, and foreign exchange funds might continue to withdraw about 50 billion yuan. In the open market, the central bank's claims on other depository corporations might rise by about 260 billion yuan, and the excess reserve ratio was expected to be about 1.2% [15]. - In July, DR001 once exceeded 1.35%, and 1.3% seemed to become the new lower limit. The average DR001 for the whole month did not decline significantly but fluctuated more. The decline in non - bank capital demand led to a decline in DR007 despite the decrease in bank net lending. This might indicate that the central bank had achieved policy normalization and hoped to maintain relatively loose liquidity within the existing framework, resulting in stable but more volatile capital interest rates [27]. - The increased fluctuation of the capital market in late July might be related to the improvement of the equity market sentiment, especially the freezing of funds due to new stock listings on the Beijing Stock Exchange. The freezing and unfreezing of funds on the Beijing Stock Exchange might only impact the inter - bank liquidity under special circumstances [33]. - The cross - month progress of institutions in July was generally slow, but the abundant capital supply ensured the looseness of the capital market at the end of the month [37]. 3.3. In August, Relative Looseness May Still Be Maintained within the Existing Framework, and Attention Should Be Paid to Whether the Central Bank Continues to Relax Controls and Amplify Fluctuations - In August, although the general fiscal deficit might be higher than the same period in previous years, and the expenditure of replacement bonds might still cause additional leakage of government deposits, the net supply of government bonds was also at a high level. It was estimated that government deposits would decrease by about 50 billion yuan. Reserve payments might increase seasonally, currency issuance might increase by about 50 billion yuan, and foreign exchange funds might continue to withdraw about 50 billion yuan. In the open market, the central bank's claims on other depository corporations might decline by about 430 billion yuan, and the excess reserve ratio was expected to be about 1.1% [3][43]. - Since July, the central bank has emphasized the implementation of existing policies. The threshold for reserve requirement ratio cuts and interest rate cuts has increased, and it is not the baseline expectation for August. However, the central bank's concern about bond investment risks has decreased, and it may still tend to maintain relatively loose liquidity within the existing framework in August [3][56]. - In August, the capital market may continue the tone of July. Attention should be paid to whether DR001 can break through the lower limit of 1.3% at the beginning of the month. If so, the central bank may further relax controls on bank lending, increasing the fluctuation of the capital market. Although the exogenous disturbances such as the tax period in August may decrease, the decline in the central DR001 and DR007 rates may be limited [61].

Monetary Policy and Liquidity - The central bank injected a total of 1.2011 trillion yuan through OMO and MLF this week, with a reverse repo of 1.4 trillion yuan on Tuesday[3] - DR001 rose to 1.53% on Tuesday due to tax payments and government bond payments, but stabilized around 1.45% after the tax period ended[3] - The average daily transaction volume of pledged repos decreased by 0.97 trillion yuan to 7.24 trillion yuan compared to last week[3] Government Debt and Financing - The actual net payment of government bonds this week was 428.8 billion yuan, expected to decrease to 269.9 billion yuan next week[4] - Cumulative issuance of new general bonds in 2025 reached 494.1 billion yuan, with new special bonds at 2.3889 trillion yuan[4] - The forecast for July government bond issuance was slightly adjusted down to 1.22 trillion yuan, with a net financing scale of approximately 460 billion yuan[4] Market Sentiment and Expectations - The central bank emphasized that the effects of implemented monetary policies will continue to manifest, indicating a reduced impetus for further loosening in the short term[3] - The central bank's recent decision to remove the freezing of collateral for bond repos may signal a potential restart of bond purchases, although the impact is expected to be limited[3] - Despite expectations of gradual liquidity easing post-tax period, DR001 may not return to the early July low of 1.3%[3]

Liquidity Overview - The average daily lending level of banks decreased from 5.0 trillion yuan to 4.3 trillion yuan, with a low of 3.7 trillion yuan on Friday[2] - The central bank conducted a net withdrawal of 2,250 billion yuan on July 7, marking the end of the cross-season liquidity support[1] - The overnight and 7-day funding rates rose by 1-2 basis points compared to the previous week due to continued net withdrawal pressure[1] Market Trends - As of July 11, the R001 rate increased by 4.3 basis points to 1.40%, while the R007 rate rose by 2.1 basis points to 1.51%[1] - The issuance rate for 1-year certificates of deposit from state-owned banks increased from 1.59% to 1.62% during the week[2] - The weighted issuance rate for interbank certificates of deposit was 1.61%, down 1 basis point from the previous week[7] Future Outlook - The upcoming tax period (July 14-18) is expected to cause fluctuations in funding prices, with overnight rates potentially ranging between OMO and OMO+5 basis points[3] - The central bank's attitude remains supportive, as indicated by the resumption of reverse repos on July 10-11[3] - The stability of funding rates during the tax period will depend on the central bank's medium- and long-term fund injections[3] Government Bonds - Net payments for government bonds increased to 398.5 billion yuan for the period of July 14-18, with both national and local bonds seeing an increase in net payments[6] - The planned issuance of government bonds for the same period is 4,642 billion yuan, slightly down from the previous week[6] Interbank Certificates of Deposit - The pressure from maturing certificates of deposit is increasing, with 7,822 billion yuan maturing from July 14-18, up from 5,213 billion yuan the previous week[7] - The average weighted maturity of interbank certificates of deposit decreased to 8.9 months from 9.7 months[7]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The capital market is expected to enter a relatively comfortable range in July, supported by seasonal patterns and the central bank's supportive attitude. However, there are still some disturbances in July, and attention should be paid to the periodic pressure on the capital market [2][17][20] - Next week, the pressure of maturing certificates of deposit and the net payment scale of government bonds will increase, but the capital market at the beginning of the month is expected to remain balanced and loose. With the central bank's support, the capital price may continue to run at a relatively low level [3][27] 3. Summary by Relevant Catalogs 3.1 1. 1.3% Overnight Rate Sustainability - The central bank's large - scale injection supported the cross - quarter capital market, with seasonal increases in capital prices and overall stability. After the cross - quarter period, the central bank's large - scale net withdrawal did not change the loosening trend of the capital market, and the lending of large banks rebounded rapidly, leading to a decline in capital and certificate of deposit prices [1][12] - In July, the capital market may enter a comfortable range, but there are disturbances such as tax payments and MLF withdrawals in the middle of the month, and attention should be paid to the central bank's injection [2][20][25] 3.2 2. Open Market: Next Week's Maturity Pressure Declines - From June 30 to July 4, the net reverse repurchase investment in the open market was - 13753 billion yuan. From July 7 to July 11, 6522 billion yuan of reverse repurchases will mature [4][32][33] 3.3 3. Government Bonds: Local Bond Issuance Exceeds 2000 Billion Yuan Next Week - This week, the net payment of government bonds was 341 billion yuan. Next week, government bond issuance will drop to 2020 billion yuan, with no treasury bond issuance and 2020 billion yuan of local bond issuance. The net payment of treasury bonds is 1599 billion yuan, and that of local bonds is 1112 billion yuan [38] 3.4 4. Excess Reserve Tracking Forecast - It is predicted that the excess reserve ratio in July 2025 will be about 0.85%, a month - on - month decrease of about 0.3 pct and a year - on - year decrease of 0.64 pct [43] 3.5 5. Money Market: This Week's Capital Interest Rates Declined - Compared with June 27, DR001, DR007, R001, and R007 decreased by 5.43BP, 27.46BP, 9.94BP, and 43.2BP respectively to 1.31%, 1.42%, 1.36%, and 1.49% [6][46] - The overnight and 7 - day SHIBOR rates decreased by 1.34BP and 9.32BP respectively to 1.37% and 1.63%. The overnight and 7 - day CNH HIBOR rates decreased by 5.91BP and 9.56BP respectively to 1.76% and 1.81% [51] 3.6 6. Interbank Certificates of Deposit 6.1 Primary Market: This Week's Certificate of Deposit Issuance Scale Continued to Decline - From June 30 to July 4, the total issuance of inter - bank certificates of deposit was 2429 billion yuan, with a net financing of - 339 billion yuan. Compared with last week, the issuance scale decreased, and the net financing increased [69] - By issuer, joint - stock banks had the highest issuance scale, and city commercial banks had the highest net financing. By term, 1 - year certificates of deposit had the highest issuance scale and net financing [69] - Next week, the maturity scale of inter - bank certificates of deposit will be 5213 billion yuan, an increase from this week [70][80] 6.2 Secondary Market: Yields Broke Through the Previous Low - This week, the secondary yields of certificates of deposit continued to decline, breaking through the previous low and mostly operating in the range of 1.5% - 1.6% [95] - The yields of certificates of deposit of all terms and grades decreased. The relative value of certificates of deposit changed compared with last week [95][101]

1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints of the Report - The report analyzes the liquidity situation from May to July 2025, predicting that the excess reserve ratio in June will reach 1.5%, and in July it will be around 1.3%. It also points out that the central bank may have adjusted its monetary policy operation target to focus on DR001, and the funding rate in July is expected to continue to decline, maintaining an optimistic outlook on the July liquidity environment [2][3] 3. Summary by Relevant Catalogs 3.1 May: Central Bank's Continuous Additional Withdrawal and Slow Disbursement of Replacement Bonds Lead to Lower - than - Expected Increase in Excess Reserve Ratio - In May, the excess reserve ratio rose by about 0.1pct to 1.0%, lower than the expected 1.2%, remaining at the lowest level in the same period since 2019. The central bank's claims on other depository corporations decreased by an additional about 140 billion yuan, and the cumulative decline since March exceeded 1.5 trillion yuan [6] - Fiscal deposits in May increased by 28.1 billion yuan, slightly higher than expected. The government deposit decreased by an additional 53 billion yuan compared to the sum of the general fiscal surplus and net government bond payments, lower than the expected 65 billion yuan. The progress of special refinancing bonds in May might still be lower than expected [8] - The cash return in May was slow, and the reserve requirement and foreign exchange funds were close to expectations. The central bank's claims on the government decreased by 8.42 billion yuan, and the increase compared to before the central bank started bond - buying in July last year was less than 1 trillion yuan [8] 3.2 June: Excess Reserves Return to Neutral, and the Central Bank Promotes Funding Normalization Step by Step with DR001 as the Anchor - In June, the government deposit is expected to decrease by about 74 billion yuan, which is an important source of liquidity supplement. The reserve requirement may consume about 32 billion yuan of excess reserves, currency issuance may increase by about 3 billion yuan, and foreign exchange funds may withdraw about 5 billion yuan. The central bank's claims on other depository corporations are expected to increase by about 1.23 trillion yuan month - on - month, and the excess reserve ratio is expected to be about 1.5%, up about 0.5pct from May [11] - The central bank disclosed the liquidity injection situation of various central bank tools in May and announced the tender information of repurchase - style reverse repurchase one day before the operation, which is interpreted as an attempt to increase policy transparency, but it is still difficult to fully convey the central bank's policy intention [24][27] - In June, the central bank's net lending center of banks continued to rise, accompanied by a decline in funding rates. DR007 did not fall to the expected 1.4% - 1.5% range, while the average value of DR001 fell below 1.4%, which may reflect a change in the central bank's funding regulation model. The central bank may have adjusted its monetary policy operation target to focus on DR001 [29][35] 3.3 In a Steady - State Environment, the Lower Limit of Funding Easing Has Not Been Reached, and Funding Rates in July Are Expected to Continue to Decline - In July, the government deposit is expected to increase by about 46 billion yuan month - on - month, at a relatively low level in the same period of previous years, and the consumption of excess reserves will be marginally weakened. The reserve requirement may decrease by about 10 billion yuan, currency issuance may increase by about 3 billion yuan, and foreign exchange funds may continue to withdraw about 5 billion yuan. The central bank's claims on other depository corporations are expected to decrease by about 24 billion yuan month - on - month, and the excess reserve ratio is expected to be about 1.3%, down 0.2pct from June [42] - As of June, the average value of DR001 has fallen close to the policy rate. Whether it can continue to decline in July is the core issue of market concern. Although the central bank maintains the goal of restricting the rapid decline of interest rates, it also needs to balance cost reduction and maintaining bank spreads. If the current fundamental environment does not change significantly, the current monetary easing tone may continue [3][54] - Historically, interest rate cuts have often occurred in Q3, and if there is an interest rate cut this year, it is likely to be after the Politburo meeting in July. Even if there is no interest rate cut, there may still be room for further easing in the funding market, and it is likely that DR001 will fall below 1.3%. The overall outlook for the July liquidity environment is still optimistic [3]

1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints - The main tone of "moderately loose monetary policy" remains unchanged, and stabilizing growth is still the central bank's primary short - term goal. If economic growth shows no improvement and faces more pressure, a new round of broad monetary policy may be launched [1]. - In July, the large - scale supply of government bonds and tax - payment factors will significantly interfere with the capital market. However, the central bank's support for the capital market is expected to continue, with overnight and 7 - day capital interest rates likely to remain stable [1]. - The supply - demand structure of inter - bank certificates of deposit (CDs) will further improve in July, with the maturity scale of CDs decreasing and the interest rate having room to decline [1]. 3. Summary by Directory 3.1 Current Situation and Future Concerns - From June 23 to June 27, the central bank made substantial net injections to support cross - quarter liquidity, leading to a divergence in capital prices. Overnight capital interest rates were stable, while 7 - day rates rose significantly, and the liquidity stratification phenomenon was obvious [5]. - The second - quarter monetary policy committee meeting changed the wording, but it doesn't rule out the possibility of broad monetary policy in the third quarter. If the economy doesn't improve, new policies may be introduced [5]. - In July, large government bond supply and tax - payment factors will affect the capital market, but the central bank's support is expected to continue. The overnight capital interest rate may fluctuate around the policy rate, and the 7 - day rate may return to around 1.5% [6]. - It is estimated that in July 2025, government bond issuance will be 2.61 - 2.86 trillion yuan, with net financing of 1.45 - 1.70 trillion yuan, slightly higher than in June. The supply of ultra - long - term special treasury bonds may increase, and new local government special bonds are expected to be the main type in the third quarter [6]. - In July, MLF and buy - out repurchase maturities total 1.5 trillion yuan, more than in June. The central bank's operation method has enhanced its control over medium - and long - term liquidity [10]. - Thanks to the central bank's support, in June, CDs maintained high - volume issuance with stable or decreasing prices. In July, the supply - demand structure of CDs will improve, and the interest rate has room to decline [10]. 3.2 Money Market Interest Rate Tracking - From June 23 to June 27, overnight capital interest rates were stable (DR001 around 1.37%, R001 between 1.44% - 1.46%), while 7 - day rates rose (DR007 from 1.51% to 1.70%, R007 from 1.56% to 1.92%), and the liquidity stratification was obvious [13]. - During this period, the bank's capital lending scale increased, the money fund's lending scale decreased, and the bond market leverage ratio continued to rise [17]. - From June 23 to June 27, bill interest rates first decreased and then increased, with the 3M national - share discount rate and half - year national - share transfer discount rate showing corresponding changes [22]. 3.3 Open Market Operation Tracking - As of June 27, the central bank's total balance of open - market operations was 1168.85 billion yuan, including 202.75 billion yuan in pledged repurchase, 480 billion yuan in buy - out repurchase, and 515 billion yuan in MLF [23]. - From June 23 to June 27, the central bank's net injection in open - market operations was 126.72 billion yuan, with 106.72 billion yuan in pledged repurchase. In June, buy - out repurchase and MLF maturities and net injections were as expected. From June 30 to July 4, pledged repurchase maturities reached 202.75 billion yuan [27]. 3.4 Government Bond Tracking 3.4.1 Government Bond Issuance - From June 23 to June 27, treasury bond issuance was 11.1 billion yuan, and net financing was 11.1 billion yuan; local bond issuance was 64.164 billion yuan, with net financing of 56.0393 billion yuan [33]. - It is estimated that from June 30 to July 4, treasury bond issuance will be 0 yuan, with net financing of - 8.015 billion yuan; local bond issuance will be 7.2139 billion yuan, with net financing of 2.1676 billion yuan [33]. 3.4.2 Government Bond Payment - From June 23 to June 27, government bond net payment was 78.981 billion yuan, including 33.1 billion yuan for treasury bonds and 45.881 billion yuan for local bonds. It is estimated that from June 30 to July 4, the net payment will be - 0.594 billion yuan [39]. 3.5 Inter - bank Certificate of Deposit Tracking 3.5.1 Primary Market of Inter - bank CDs - From June 23 to June 27, inter - bank CD issuance was 72.64 billion yuan, with net financing of - 41.15 billion yuan. The maturity scale from June 30 to July 4 was 27.67 billion yuan. By bank type, city commercial banks had the highest issuance; by term type, 3M CDs had the highest issuance [42]. - The overall issuance success rate was 94%. State - owned banks and other banks had a 100% success rate, and 3M CDs had a 95% success rate. The issuance interest rates of all types of banks and terms decreased [42][43]. 3.5.2 Secondary Market of Inter - bank CDs - From June 23 to June 27, despite the tightened cross - quarter liquidity, the yields of secondary - market CDs of all terms increased slightly, and the yield curve was partially inverted [60]. 3.6 Excess Reserve Ratio Tracking - The estimated excess reserve ratio at the end of May 2025 was 0.52%. From June 23 to June 27, the central bank's net injection in open - market operations was 126.72 billion yuan, and government bond net payment was 78.981 billion yuan, increasing the excess reserve scale by 47.739 billion yuan [64].