Group 1: Liquidity and Interest Rates - The funding rates remain low, with R001 averaging around 1.35% and R007 around 1.47% during the week of October 13-17, 2025[1][12] - Despite nearly 2 trillion in open market maturities, liquidity achieved self-balancing due to central bank support and low government debt payment pressure[1][11] - The overnight rate is expected to continue fluctuating around OMO-5bp, with R007 likely to stay below 1.50%[2][17] Group 2: Open Market Operations - From October 20-24, the reverse repo maturity will be 789.1 billion, significantly lower than the average of 1.1 trillion since 2025[2][17] - The central bank net drained 581.9 billion in the week of October 13-17, with reverse repos maturing at 1.021 trillion[3][22] - The net reverse repo balance as of October 17 was 789.1 billion, down from 1.137 trillion on October 11[3][24] Group 3: Government Bonds and Payments - Government bond net payments for October 20-24 are projected at 158.4 billion, up from 140.2 billion the previous week[5][30] - The increase in net payments is primarily due to a rise in local government bond issuance, which increased by 177.6 billion[5][32] - The net issuance of treasury bonds decreased from 181.1 billion to 21.6 billion, influenced by a significant increase in maturity amounts[5][32] Group 4: Interbank Certificates of Deposit - The pressure from maturing interbank certificates of deposit is expected to remain manageable, with 616.7 billion maturing from October 20-24[6][38] - The weighted issuance rate for one-year CDs was 1.63%, a slight increase from the previous week[6][36] - The net financing from CDs turned positive at 234 billion, with total issuance at 727.6 billion during the week of October 13-17[6][41]

Group 1 - The liquidity perspective indicates that after the National Day holiday, the funding environment has returned to a loose state, with overnight funding rates dropping below 7DOMO and 7-day funding rates around 7DOMO, alleviating pressure on banks' liabilities [1][9] - The report anticipates that the government bond supply pressure in the fourth quarter will be manageable, with limited government bond issuance currently affecting the funding environment [1][9] - The upcoming tax period is expected to maintain a comfortable funding state before its arrival, with overall pressure from the upcoming reverse repos being manageable due to the five working days for operations [1][9] Group 2 - As of October 19, the issuance progress of local government bonds shows that cumulative replacement bonds issued reached 19,900 billion yuan, achieving 99.50% progress; new general bonds issued totaled 6,717 billion yuan, achieving 83.97% progress; and new special bonds issued reached 36,973 billion yuan, achieving 84.03% progress [2][10] - The report notes that the issuance of local bonds has sharply decreased post-National Day, leading to a decline in secondary market transactions, with significant drops in net purchases by insurance and participation from funds in the 7-10 year segment [3][11] - The fourth quarter local bond issuance plan is set at 8,516 billion yuan, with expectations of around 10,000 billion yuan in market neutral expectations, although no incremental policy reserves have been observed [2][11] Group 3 - The report highlights opportunities in local bonds from three perspectives: the implied tax rates for 5Y and 10Y bonds remain around 5%, while most 20Y and 30Y bonds are below 4% [3][12] - The report suggests monitoring specific bonds with high implied tax rates, such as the 25 Tianjin bond with an implied tax rate of 12.21%, despite its small issuance size [3][12] - The report also notes that the yield spread between local bonds and government bonds has widened, particularly in the 7Y and 10Y segments, indicating a need to pay attention to risks associated with long-duration bonds [3][12]

Group 1: Liquidity Overview - After the National Day holiday, the liquidity returned to a loose state, with a significant reverse repo maturity of CNY 2.66 trillion on October 9-10[1] - The overnight rate (R001) decreased by 21 basis points to 1.33%, while the 7-day rate (R007) fell by 13 basis points to 1.49% as of October 10[1][11] Group 2: Future Outlook - The liquidity is expected to remain stable before the tax period, with the tax declaration deadline delayed to October 27, leading to increased liquidity pressure at the end of the month[2] - The net repayment of government bonds from October 13-17 is projected to be CNY 748 billion, which is not expected to significantly disturb liquidity[2] Group 3: Market Operations - From October 13-17, a total of CNY 19.71 trillion in reverse repos will mature, including CNY 10.21 trillion in 7-day reverse repos and CNY 8 trillion in 3-month buyout reverse repos[3][28] - The People's Bank of China (PBOC) conducted a net withdrawal of CNY 426.3 billion from October 9-11, with a total reverse repo issuance of CNY 11.37 trillion during the same period[3][27] Group 4: Bill Market Dynamics - The 1-month bill rate fell by 115 basis points to 0.90%, and the 3-month rate decreased by 135 basis points to 0.30% as of October 10[4][31] - Major banks turned to net buying of CNY 478 billion in bills on October 9, reversing a trend of net selling in the previous month[4][32] Group 5: Government Debt - The net repayment of government bonds from October 13-17 is CNY 852 billion, up from CNY 468 billion in the previous week[5][34] - The increase in net repayment is primarily driven by a rise in national bonds, which saw a net repayment increase of CNY 861 billion to CNY 1.26 trillion[5][36] Group 6: Interbank Certificates of Deposit - The weighted issuance rate of interbank certificates of deposit fell to 1.61%, down 5.7 basis points from the previous week[6][38] - The upcoming maturity pressure for certificates of deposit is expected to rise slightly, with CNY 4.94 trillion maturing from October 13-17[6][53]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Liquidity easing is the most certain factor in the current bond market. Although there are some disturbances in October, as long as the central bank's attitude remains unchanged, the impact of tool maturities is relatively limited, and the government bond supply may shrink significantly, which will ease the tax - period disturbances. The probability of monetary policy tightening is low, and the DR001 and DR007 central levels in October are expected to remain slightly below 1.4% and 1.5% [3][66]. 3. Summary According to the Directory 3.1 August: Government Deposits Leaked Heavily, and the Excess Reserve Ratio Dropped to a Low Level - The excess reserve ratio in August decreased by 0.1pct to 1.1% compared with July, lower than the expected 1.4%, mainly due to the 337 billion yuan increase in government deposits instead of the expected decline. This was caused by the slowdown in narrow - fiscal expenditure growth, low broad - fiscal deficit scale, treasury cash fixed - deposit withdrawal, and slow use of replacement bonds [6]. - The central bank's claims on other depository corporations in August were slightly higher than the net funds injected through reverse repurchase, MLF, PSL, SLF, and other structural monetary policy tools. The legal deposit reserve of the central bank was slightly lower than expected, while currency issuance and foreign exchange holdings were close to expectations [15]. 3.2 September: The Central Bank Offset Exogenous Disturbances with Medium - term Liquidity, and the Fundamentals Fluctuated but the Central Level Remained Stable - The broad - fiscal deficit scale in September may be at a relatively high level compared with the same period in previous years. The expenditure of replacement bonds will cause additional leakage of government deposits, and the net financing scale of government bonds will decline slightly compared with August. It is expected that government deposits will decrease by about 810 billion yuan month - on - month, which will supplement liquidity [16]. - In September, bank reserve payments and currency issuance increased seasonally, with the former expected to rise by 310 billion yuan and the latter by 250 billion yuan. Foreign exchange holdings may continue to withdraw about 70 billion yuan in funds [16]. - In the open market, the central bank's net injection of pledged reverse repurchase in September was 390.2 billion yuan, the net injection of outright reverse repurchase was 300 billion yuan, and the net injection of MLF was 300 billion yuan. Assuming that PSL and other structural monetary policy tools had a net withdrawal of about 200 billion yuan, the central bank's claims on other depository corporations may increase by about 790 billion yuan month - on - month. It is expected that the excess reserve ratio in September will be about 1.4%, an increase of about 0.3pct compared with August, similar to June [16][26]. - Although the central bank did not continuously increase the injection during the period of rising funds in September, the average values of DR001 and DR007 in September were roughly the same as those in July - August, indicating that the central bank maintained a relatively loose attitude within the existing framework, and the change in its operation mode may be related to exogenous disturbances and tool positioning adjustments [28]. - Since the beginning of this year, the central bank has increased the scale of policy tool injections to offset exogenous disturbances such as government deposits and bond maturity. Since Q3, the central bank has shifted its injections more towards medium - term outright reverse repurchase and MLF. After the increase in medium - and long - term liquidity injection scale, the central bank has relaxed the control of short - term fluctuations in funds [35]. - In September, the central bank adjusted the 14 - day reverse repurchase to a fixed - quantity, interest - rate tender, and multiple - price winning bid, which may lower the 14 - day reverse repurchase interest rate. After the adjustment, the 14 - day reverse repurchase became a supplement to the 7 - day reverse repurchase, focusing on providing cross - quarter funds [38]. - The lower net lending of banks in September compared with June may be related to the weak sentiment of non - bank institutions and the decline in leverage willingness, which released potential risks in the funds market. The early progress of cross - quarter operations in September was also an important reason for the loose funds at the end of the month [41]. 3.3 October: Disturbances Mainly Come from Maturities and Tax Payments, but the Certainty of Liquidity Easing under the Central Bank's Care Remains Strong - In October, the broad - fiscal revenue and expenditure may show an anti - seasonal deficit, and the supply pressure of government bonds will be significantly weakened. It is expected that government deposits will increase by about 570 billion yuan month - on - month, significantly lower than the same period in previous years. After the National Day holiday, cash reflux may release about 150 billion yuan in liquidity, and the reserve payment base may decrease seasonally by about 30 billion yuan [50]. - In the open market, it is assumed that the balance of pledged reverse repurchase will drop to 2 trillion yuan at the end of October, corresponding to a net withdrawal of about 660 billion yuan in reverse repurchase. MLF and outright reverse repurchase may continue to be over - renewed, with net injections of 100 billion yuan and 300 billion yuan respectively. Assuming that PSL and other structural monetary policy tools have a net withdrawal of about 200 billion yuan, the central bank's claims on other depository corporations will decrease by about 460 billion yuan month - on - month. It is also assumed that the central bank will restart bond purchases of 100 billion yuan. Overall, it is expected that the excess reserve ratio in October will be about 1.2%, a decrease of 0.2pct compared with September, at a neutral level for non - quarter - end months [50]. - The central bank's Q3 monetary policy meeting continued the tone of the Politburo meeting in July. Although the meeting's description of the economy was slightly weakened, it emphasized that monetary policy should promote growth and prices to be at a reasonable level. The probability of reserve requirement ratio cuts and interest rate cuts in Q4 cannot be ruled out, but the central bank may still need to observe, and potential policy changes need to be observed in important meetings in mid - to late October [64]. - The exogenous disturbances in the funds market in October mainly come from tax periods and the large - scale maturity of policy tools. As long as the central bank's attitude remains unchanged, the impact of tool maturities is relatively limited. The reduction in government bond supply in October will ease tax - period disturbances. The probability of monetary policy tightening is low. It is expected that the central levels of DR001 and DR007 in October will remain slightly below 1.4% and 1.5%, and whether they can become looser still needs to observe the central unified deployment [66].

Report Industry Investment Rating No relevant content provided in the report. Core Viewpoints - The capital market in September 2025 tightened slightly compared to August, but the tightening amplitude was limited compared to the historical average. The central bank's net capital injection was relatively high, and the capital stratification pressure remained low. In October, the capital market may maintain a marginal tightening trend, with the capital center likely to remain stable or rise slightly [2][6] 9 - Month Review: Marginal Tightening Compared to August - **Capital Rate Central Uplift**: In September, the central points of various - term capital rates increased slightly. The operating central points of DR001, DR007, and DR014 rose by 4bp, 1bp, and 3bp respectively. The upward deviation of DR007 from the OMO 7 - day rate widened slightly to 9bp [2][12] - **Limited Tightening Compared to History**: Historically, the deviation of DR007 from the policy rate in September usually widens compared to August. However, in 2025, the tightening amplitude of the capital rate was lower than the historical average since 2016 [2][17] - **High Central Bank Net Investment**: As of the 28th, the central bank's net capital injection in September reached 97.6 billion yuan, second only to September 2023. The capital market showed a different trend from previous years, with an upward trend around the tax period and a slight decline at the end of the month [2][20] - **Increase in Inter - bank Certificate of Deposit Yields**: The central points of inter - bank certificate of deposit yields for various terms increased significantly compared to August. The issuance rates of inter - bank certificates of deposit of various banks also showed an upward trend, indicating some pressure on the liability side of banks before the quarter - end [3][23] - **Low Capital Stratification Pressure**: The R - DR spread remained at a low level. The spread between R001 and DR001 narrowed slightly, while the spread between R007 and DR007 widened slightly, but overall, the stratification pressure was at a historical low [3] 10 - Month Outlook: May Maintain a Marginal Tightening Trend - **Historical Experience of Horizontal Movement of Shibor 3M**: Since May 2025, Shibor 3M has been horizontally moving for nearly 90 days and started to rise at the end of September. Historically, after horizontal movement, capital rates mostly declined, but the two instances of decline within 30 days after horizontal movement both occurred in October [4] - **Seasonal Pattern in October**: Seasonally, the capital market in October usually tightens. The spread between Shibor 3M and the OMO 7 - day rate in October usually widens compared to September, with an average increase of 10bp since 2018. The capital rate often shows a flat trend in the first half of the month and an upward trend in the second half [5] - **Credit and Capital Relationship**: If credit rebounds in the fourth quarter, the capital rate may rise. The growth rate of social financing stock peaked and declined in August. As debt replacement ends in the fourth quarter, corporate credit may bottom out and rebound. Historically, the trend of Shibor 3M is generally consistent with the growth rates of social financing stock and corporate medium - and long - term loans [5] - **Analysis of Liquidity Gap**: In October, the net financing pressure of government bonds will decrease significantly. However, as it is a large tax - paying month at the beginning of the quarter, the liquidity gap may be about 90 billion yuan. Considering the maturity of various monetary tools, the liquidity gap will increase to 3.1 trillion yuan. Assuming equal - amount renewal, the estimated excess reserve ratio in September is about 1.06% [52][54]

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].