Group 1: Market Overview - The total market size of bond ETFs has surpassed 260 billion yuan as of May 16, with several products managing over 10 billion yuan, indicating a significant head effect [1] - The rise of bond ETFs is attributed to their stability, transparency, and convenience, gaining recognition from both institutional and individual investors amid increased volatility in the equity market [1] Group 2: Macro Policy Environment - In the first four months of 2025, new social financing reached 1.2 trillion yuan, a year-on-year increase of 1.2 trillion yuan, pushing the social financing stock growth rate to 8.7%, the highest since March 2024 [2] - The net financing of government bonds in April was 976.2 billion yuan, a year-on-year increase of over 1 trillion yuan, supported by the early issuance of special government bonds [2] - The financial system's liabilities are expanding faster than assets, leading to increased demand for bond allocation as interbank liquidity remains ample [2] Group 3: Economic Fundamentals - In April 2025, the cumulative year-on-year growth rate of industrial added value decreased by 0.1 percentage points compared to March, while the CPI remained at -0.1%, indicating weak industrial production and demand [4] - The issuance pace of local government special bonds has slowed compared to previous years, creating a window for allocation in interest rate bonds [4] - The 30-year government bonds are highlighted for their hedging properties against economic downturns, serving as a "ballast" for market funds [4] Group 4: Global Geopolitical Context - The ongoing U.S.-China tariff negotiations have entered a "tug-of-war" phase, with heightened tensions in semiconductor and new energy sectors, leading to a conservative risk appetite in global capital [7] - The geopolitical tensions in the Middle East, particularly regarding the Iran nuclear deal, have further intensified inflation expectations, enhancing the protective attributes of bonds [7] Group 5: Fund Performance and Investor Behavior - The 30-year government bond ETF (博时511130) has seen continuous net inflows, with a total of 446 million yuan over a week, indicating strong institutional investor interest [8] - Despite a slight price correction of 0.26%, the fund's scale increased to 6.717 billion yuan, marking a new high in nearly a month, reflecting a strong willingness among institutional investors to buy on dips [8] - The fund's Sharpe ratio over the past year stands at 1.08, with a maximum drawdown of 6.89%, outperforming over 90% of bond funds, showcasing its defensive attributes [8]

Group 1 - The core viewpoint indicates that the bond futures market is experiencing a rise, with the 30-year main contract increasing by 0.24%, while interbank major interest rate bond yields are rebounding [1] - The recent reserve requirement ratio (RRR) cut has taken effect, stabilizing liquidity rather than further easing, primarily due to the central bank's continuous net withdrawal and a higher government bond payment volume, which offset some of the RRR cut effects [1] - In the short term, attention should be paid to marginal changes in the funding environment; if the funding environment tightens, long-term yields may continue to fluctuate [1] Group 2 - The central bank has indicated that there will be future reductions in deposit rates and the Loan Prime Rate (LPR), which may lead to a further decline in yields [1] - For the year, the 10-year government bond yield is expected to fluctuate between 1.4% and 1.9%, with a core fluctuation range of 1.5% to 1.7%. The downward opportunities in the bond market are linked to interest rate cut expectations and declining funding costs [1] - The政金债券ETF (511520) has seen a net inflow of over 1.5 billion in the past 10 days, with a total scale of approximately 46.2 billion, making it the largest bond ETF in the market and suitable for clients looking to adjust duration easily [1][2]

Report Information - Report Title: "Curve: Can It Flatten After Steepening? — Interest Rate Weekly (Week 2 of May)" [1] - Report Date: May 12, 2025 [2] - Chief Analyst: Yan Ziqi [2] - Research Assistant: Hong Ziyan [2] Report Industry Investment Rating - Not provided in the report Core Views - The current short - end downward movement depends more on the central bank's stance and operations, as well as the decline of funding rates and certificate of deposit rates. If the marginal indicators improve, the short - end downward space may open up [6] - The long - end is likely to oscillate in the short term, and a downward trend requires catalytic factors. The current bond market is favorable, but more catalysts are needed for interest rates to decline. It is advisable to maintain duration and wait for opportunities, and appropriate leverage can be added under the background of falling funding rates [8][9] Summary by Related Catalogs Short - end Interest Rate Analysis - After the double - cut policy was announced last week, the interest rate curve steepened, with the short - end down nearly 5bp and the long - end flat. The central bank's funding rate DR007 dropped significantly to 1.54% on May 9 [2] - Historically, after the reserve requirement ratio cuts were implemented since 2021, the short - end interest rates declined, oscillated, and increased 3, 2, and 3 times respectively. The necessity of short - end decline after reserve requirement ratio cuts may not be high [2] - Currently, non - bank institutions are buying short - term bonds, but large - bank - dominated allocation disks have not entered the market. Banks have been net sellers in recent weeks. However, large banks' funds lending has increased recently, and if the inter - bank certificate of deposit rate further approaches the policy rate, the short - end downward space may open up [4] - The key factor for the short - end to decline further lies in the central bank's stance and operations, as well as the decline of funding rates and certificate of deposit rates [6] Long - end Interest Rate Analysis - This year, the long - term bond has a high probability of short - term oscillation and needs catalytic factors to decline due to factors such as the weakening of broad - money expectations, repeated tariffs, and narrow term spreads [8] - The central bank's Q1 2025 monetary policy implementation report has relatively neutral impacts on the bond market. Although it mentions secondary trading of treasury bonds, new expressions are put forward to prevent interest rate risks [8] - The April inflation data is in line with expectations. The core CPI maintains a 0.5% positive growth. The real interest rate is close to the historical lower quartile, but the further downward space is limited [8]

Core Viewpoint - The 30-year Treasury ETF is experiencing active trading and significant net inflows, indicating strong investor interest and potential opportunities in the long-term bond market [1][2]. Group 1: Market Performance - As of April 21, 2025, the 30-year Treasury ETF (511090) has decreased by 1.37%, with the latest price at 123.44 yuan [1]. - The ETF has shown active trading with a turnover rate of 11.96% and a total transaction volume of 1.967 billion yuan [1]. - The average daily trading volume over the past month is 10.883 billion yuan [1]. Group 2: Fund Flows - The latest size of the 30-year Treasury ETF is 16.648 billion yuan [2]. - Over the past six days, the ETF has seen continuous net inflows, with a maximum single-day inflow of 268 million yuan, totaling 962 million yuan in net inflows, averaging 160 million yuan per day [2]. - Leveraged funds have been actively buying into the ETF, with a maximum single-day net purchase of 61.4369 million yuan, bringing the latest financing balance to 342 million yuan [2]. Group 3: Interest Rate Outlook - Analysts suggest that long-term interest rates may remain stable or slightly decline, with the 10-year Treasury yield expected to fluctuate between 1.6% and 1.7% [2]. - If funding rates decrease, the yield curve may steepen, potentially bringing the 10-year Treasury yield closer to 1.5% [2]. Group 4: Investment Characteristics - The 30-year Treasury ETF closely tracks the China Bond 30-Year Treasury Index, which consists of publicly issued 30-year treasury bonds [3]. - The ETF is considered a valuable tool for portfolio management, offering low trading thresholds and high trading efficiency, with a minimum transaction unit of 100 shares, approximately 10,000 yuan [3]. - Multiple market makers provide liquidity, ensuring immediate execution of trades and ample counterparty availability [3].