Market Overview - The bond market experienced accelerated adjustments with increased redemption pressure during the week of July 21-25, leading to a tightening of market funds initially, followed by a loosening towards the end of the week [1] - The 10-year government bond yield broke above 1.70% for the first time since late May, indicating significant adjustment pressure [1] - The stock market showed positive sentiment, with indices reaching new highs for the year, which diverted some funds from the bond market [1] Weekly Review - On July 21, the LPR remained unchanged as expected, with a generally loose funding environment, but bond yields continued to rise [2] - The 10-year government bond yield rose to 1.677% on July 21, up 1.3 basis points from the previous week, and continued to increase throughout the week, reaching 1.745% by July 24 [2] - By July 25, after a significant net injection of over 600 billion yuan by the central bank, the bond market showed signs of recovery, with the 10-year government bond yield closing at 1.73% [2] Bond Futures - The bond futures market also saw fluctuations, with the 10-year government bond contract T2509 closing at 108.18, down 0.07% for the week [4] - Other maturities, such as the 5-year and 30-year contracts, also experienced declines, with weekly drops of 0.04% and 0.48% respectively [4] Convertible Bonds - The China Convertible Bond Index closed at 463.57, up 0.11% on July 25, with a weekly increase of 2.14% [5] - The trading volume for convertible bonds increased significantly, with a total of 2,443 million hands traded, amounting to 403.4 billion yuan, a week-on-week increase of 253 million hands [5] Bond Issuance - A total of 84 bonds were issued in the market, with a total scale of 939.805 billion yuan, an increase of 283.312 billion yuan from the previous week [6] - The Ministry of Finance issued 5 government bonds, with a total issuance scale increasing by 49.9 billion yuan compared to the previous week [8] Monetary Policy - The central bank conducted a total of 17,268 billion yuan in 7-day reverse repos, with a net injection of 6,018 billion yuan on July 25 [15] - The weighted average rate for R001 fell to 1.55%, while R007 rose to 1.69% due to month-end funding effects [17] International Market - U.S. Treasury yields showed slight fluctuations, with the 10-year yield falling to 4.38% [19] - European bond markets reacted to the European Central Bank's decision to maintain interest rates, leading to increased yields in the German and Italian bonds [22] Industry Insights - Analysts suggest that the recent market adjustments are primarily driven by changes in risk appetite, funding fluctuations, and shifts in trading positions [32] - The "anti-involution" measures and their impact on demand are critical factors to monitor for the bond market's medium-term outlook [32]

TERN TO HISTHER 固定收益周报 本轮债市调整的特征、原因及后续空间 证券研究报告 ● 核心结论 权益、商品表现亮眼背景下,债市调整加剧,债基或遭遇大额赎回。或因遭 遇较大赎回压力,周内基金大量卖债,单日卖出规模近千亿。 本轮调整有何特征?(1)价格角度:本轮调整幅度较小、时间不长,但前 期市场已持续阴跌近三周。(2)数量角度:本轮调整中基金现券净卖出规 模较大、理财端维持净买入。 本轮调整原因何在?(1)风险偏好上行、基本面预期边际改善为主要因素。 但与 2015年供给侧改革相比,本轮反内卷政策供需失衡行业占比增多,且 主要针对中下游民企,相对于上一轮集中在上游国企而言,本轮对 PPI 的影 响或更小,后续关注供给端限产情况与需求端改善情况。(2)货币政策态 度转变担忧、前期市场拥挤度高放大市场波动。 分析师 S0800524020002 15692145933 iiangpeishan@research.xbmail.com.cn 魏旭博 S0800525040007 13001269355 weixubo@research.xbmail.com.cn 联系人 P 后续调整空间还有多大?结合本 ...

Report Industry Investment Rating No relevant content provided. Core View of the Report - In the past week, the bond market continued to correct, hitting the largest decline since April. The correction was due to multiple negative factors such as the stock - bond seesaw, commodity price increases, and tightened funds. After the central bank's MLF and OMO injections on Friday, the decline converged [8][13]. - There are three key considerations for this bond market correction: the reason for the lack of a double - bull market in stocks and bonds lies in actual money flows and central bank's money supply; high - duration crowding restricts the bond market's strategic space; the impact of commodity price increases on the bond market is greater than that of the previous rise in financial stocks [8][13]. Summary by Directory 1. Three Reflections on the Current Bond Market Correction 1.1 Why There Is No Double - Bull Market in Stocks and Bonds - The stock - bond seesaw after July deviated from the normal logic of the DDM model. The outflow of funds from the bond market and the tightened expectation of central bank's injection might be the main reasons. The funds flowing into the bond market are not cheap, and there is also an issue of funds overflowing to the equity market due to low bond market interest rates [8][13]. - The strength of the equity market led to the outflow of high - risk - preference funds from the bond market. Currently, the bond market is in a situation where the stock is strong and the bond is weak, with the cash - CD spread widening and the rising capital interest rate further suppressing the bond market. However, in 2015, even when the stock market was extremely bullish, the yield of the 10 - year Treasury bond only increased by about 20bp [14]. - Under the current stable and loose monetary policy, funds flow more strongly into the equity market than the bond market. In reality, equity institutions rely on funds "overflowing" from the bond market; in terms of expectations, the central bank's loose policy statements boost market sentiment. Since 2025, both aspects have been positive for the equity market. On the contrary, the central bank's cautious medium - term capital injection has led to an obvious outflow of institutional funds from the bond market, and the bond market faces the problem of expensive medium - term stable funds [15]. - The key for the bond market to strengthen lies in whether the CD rate can decline naturally. In the short term, observe the decline rate of cross - month CDs and gradually increase positions following the downward trend. In the long term, 1.7% may be a hard resistance level for 1 - year CDs, and as bank funds stop flowing out and the replacement of deposit rates is completed, the CD rate may decline naturally [5][19]. 1.2 What High - Duration Crowding Means - Around June, the bond market saw consistent bullish expectations, crowded institutional behaviors, and rising bond fund durations, but the cash bond interest rate did not decline significantly. Although the long - term logic is still optimistic, high leverage has led to a lack of strategic adjustment space and defensive flexibility for investors, making it difficult to wait for the long - term logic to materialize [6][22]. - In a high - duration and high - leverage environment, the cash bond position adjustment mode is limited, and only "buying short and selling long" can be used. When long - and short - term expectations deviate, the market tends to sell long - term bonds. Moreover, asset management institutions face liability - side pressure and may be forced to sell bonds, making it difficult to maintain long - term positions [6][23]. - In an environment where institutional behaviors are highly crowded but expectations are not met, investors can actively reduce duration exposure or switch to more liquid assets. Although the bond market stabilized slightly on Friday, the bulls in Treasury bond futures are still fragile. It is recommended to wait for the improvement of sentiment and technical indicators before betting on the next possible positive factors [6][28]. 1.3 The Difference in the Impact on the Bond Market between Commodity and Financial Stock Price Increases - The rise in commodity prices has a greater impact on the bond market than the previous rise in bank stocks. Bank stocks and bonds are both safe - haven assets under the expectation of a gentle economic recovery, and their fluctuations only lead to a mild adjustment of funds between stocks and bonds. However, the rise in commodity futures reflects the expectation of economic recovery, which is completely opposite to the underlying logic of the bond market's strength. Once commodities continue to strengthen, it will subvert the core pricing basis of the bond market and cause violent fluctuations [8][29]. - Currently, only supply - side changes have occurred, and the recovery of demand is still unclear. There is no need to rush to revise the expectation of the interest rate center upwards in the short term [29]. 2. Weekly Bond Market Review - **Funds**: From July 21st to July 25th, 2025, the central bank conducted 16,563 billion yuan of open - market reverse repurchases, with 17,268 billion yuan maturing, resulting in a net withdrawal of 705 billion yuan. The DR001 rate rose 6.08bp to 1.52%, the DR007 rate rose 14.56bp to 1.65%, and the 1 - year AAA CD rate rose 5.75bp to 1.68% [31]. - **Cash Bonds and Futures**: Referring to ChinaBond valuations, the yields of 2 - year, 5 - year, 10 - year, and 30 - year Treasury bonds rose 5.52bp, 7.92bp, 6.72bp, and 8.4bp respectively. The yields of 2 - year, 5 - year, 10 - year, and 30 - year CDB bonds rose 5.58bp, 9.53bp, 9.05bp, and 4.93bp respectively. The closing prices of TS, TF, T, and TL main contracts fell 0.12%, 0.4%, 0.56%, and 2.08% respectively. - **Primary Market**: In the past week, 81 interest - rate bonds were issued, totaling 939.8 billion yuan, including 5 Treasury bonds worth 406 billion yuan, 15 policy - bank bonds worth 158 billion yuan, and 61 local government bonds worth 375.8 billion yuan. The total repayment of interest - rate bonds last week was 618.6 billion yuan, with a net financing of 321.2 billion yuan [33]. - **Market Sentiment**: Throughout the week, the stock - bond seesaw and tight funds pressured the bond market sentiment, and interest rates fluctuated upwards. At the beginning of the week, the start of the Yarlung Zangbo River hydropower project and market speculation on policies led to the strengthening of stocks and commodities, and the bond market sentiment was continuously pressured. On Thursday night, the central bank's window guidance and increased OMO injection on Friday provided some support to the bond market, and interest rates declined slightly [34]. 3. Relative Asset Value 3.1 Overall Expansion of Yield Spreads of Treasury and CDB Bonds at Various Maturities - Except for the long - end CDB yield spread (30Y - 10Y), the yield spreads of Treasury and CDB bonds at various maturities generally expanded, and most were still below the median of historical percentiles. The spread between Treasury and CDB bonds also expanded. The spread between new and old bonds generally contracted, especially the spread between new and old Treasury bonds [44]. - The non - CDB - CDB yield spread expanded or contracted differently, and the local government bond yield spread generally contracted [44]. 3.2 Credit Bonds: Overall Widening of Maturity and Credit Spreads - The maturity spreads of various credit bonds generally widened. The maturity spreads of enterprise bonds and secondary - capital bonds showed a pattern of long - end contraction and short - end expansion. The credit spreads of various credit bonds generally expanded, and most were still below the median of historical percentiles [46].

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - Amidst the strong performance of equities and commodities, the bond market adjustment intensified, and bond funds may have faced large - scale redemptions. The net selling of bonds by funds reached nearly 100 billion yuan per day [2][10]. - The current adjustment is characterized by a relatively small price decline and short - term duration, but the market had been in a slow decline for nearly three weeks. From a quantity perspective, the net selling of spot bonds by funds was large, while wealth management maintained net buying [2][11][12]. - The main reasons for the adjustment are the increase in risk appetite and the marginal improvement of fundamental expectations. Concerns about the change in monetary policy attitude and the high pre - market congestion amplified market fluctuations [2][15]. - The risk of further significant adjustment in the bond market is relatively limited, and the allocation value of interest - rate bonds is gradually emerging. It is recommended that allocation portfolios seize opportunities in the adjustment of interest - rate bonds, especially 5Y CDB bonds and 30Y treasury bonds that have experienced significant recent adjustments. Trading portfolios should focus on signals of relief in fund redemption pressure and the issuance of 50Y treasury bonds next week [2][18][21]. 3. Summary by Relevant Catalogs 3.1. Review Summary and Bond Market Outlook - This week, the tight money market, strong performance of the stock and commodity markets suppressed bond market sentiment, and redemption pressure increased. Yields of 10Y and 30Y treasury bonds rose by 7bp and 8bp respectively. The bond market adjusted due to factors such as the implementation of anti - involution policies, the start of hydropower projects, and changes in money market liquidity [9]. - The characteristics of the current adjustment include relatively small price decline and short - term duration, but the previous slow decline lasted nearly three weeks. The net selling of spot bonds by funds was large, and wealth management maintained net buying [11][12]. - The reasons for the adjustment are the increase in risk appetite, marginal improvement of fundamental expectations, concerns about the change in monetary policy attitude, and high pre - market congestion [15]. - The risk of further significant adjustment in the bond market is relatively limited. The allocation value of interest - rate bonds is gradually emerging. It is recommended that allocation portfolios seize opportunities in the adjustment of interest - rate bonds, and trading portfolios focus on signals of relief in fund redemption pressure and the issuance of 50Y treasury bonds next week [18][21]. 3.2. Bond Market Review 3.2.1. Money Market: Net Central Bank Injection, Rising Money Market Rates - This week, the central bank's open - market operations had a net injection of 1095 billion yuan. Money market rates rose. R001 and DR001 rose by 6bp to 1.55% and 1.52% respectively. The 3M certificate of deposit (CD) issuance rate fluctuated, and the 1M national - owned and joint - stock bank bill transfer discount price decreased by 15bp [25][26]. 3.2.2. Secondary Market Trends: Rising Yields - This week, bond yields rose. Except for the 3m treasury bond, the yields of other key - term treasury bonds increased. Except for the 7y - 5y, 10y - 7y, and 30 - 20y treasury bond term spreads, other key - term treasury bond term spreads widened. As of July 25, the yields of 10y and 30y treasury bonds rose by 7bp and 8bp respectively to 1.73% and 1.97% [34]. 3.2.3. Bond Market Sentiment: Declining Bond Fund Duration, Continuing Decline in Inter - bank Leverage Ratio - This week, the median duration of all - sample bond funds and interest - rate bond funds decreased, and the divergence slightly increased. The turnover rate of ultra - long bonds continued to rise, the 50Y - 30Y treasury bond spread narrowed, and the 20Y - 30Y treasury bond spread slightly widened. The inter - bank leverage ratio dropped to 107.0%, and the exchange leverage ratio rose to 122.9%. The implied tax rate of 10 - year CDB bonds widened [41]. 3.2.4. Bond Supply: Next Week's Continued Issuance of 50Y Special Treasury Bonds - This week, the net financing of interest - rate bonds increased compared to the previous week. The net financing of treasury bonds decreased, while the net financing of local government bonds and policy - based financial bonds increased. This week, the issuance scale of treasury bonds increased, but the continuation issuance sentiment of 30Y treasury bonds was weak. Next week, the 50Y treasury bond will be continued for issuance. The net financing of inter - bank certificates of deposit decreased significantly, and the issuance rate dropped slightly to 1.61% [54][59]. 3.3. Economic Data: Rising Port Throughput, Slowing Industrial Production - In July, the LPR quotation remained unchanged. Since July, port throughput has increased, the freight rate index has weakened year - on - year, and industrial production has slowed down. In terms of real estate, new - home sales have improved, and second - hand home sales have shown mixed performance. In terms of consumption, automobile consumption has been stable, and movie consumption has marginally improved. In terms of exports, port throughput has increased, but the freight rate index has declined. Industrial production has slowed down, with some开工率 indicators decreasing [65]. 3.4. Overseas Bond Market: Narrowing of the 10Y Treasury Bond Yield Spread between China and the US - The US 7 - month Markit manufacturing PMI fell back into contraction. Overseas bond markets showed that the bond markets of China, Japan, and Germany declined, while most emerging markets rose. The 10Y treasury bond yield spread between China and the US narrowed by 11BP [73][74][77]. 3.5. Major Asset Classes: Strong Performance of Rebar and Stock Indexes - The CSI 300 index strengthened, and the Nanhua Rebar index strengthened, while the US dollar index weakened. This week, the performance of major asset classes was as follows: rebar > CSI 1000 > convertible bonds > live pigs > CSI 300 > Shanghai copper > Chinese - funded US dollar bonds > Shanghai gold > Chinese bonds > crude oil > US dollar [78]. 3.6. Policy Review - Multiple policies were introduced this week, including the China Securities Regulatory Commission's measures to stabilize and activate the capital market, the public solicitation of opinions on the revised draft of the Price Law, the strengthening of financial services for rural reform, and announcements related to the Hainan Free Trade Port's full - island customs closure, the Rural Highway Regulations, and the Housing Rental Regulations. The implementation effects of these policies need to be further observed [80][83][84]

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - This week, the yield of the 10-year active Treasury bond rose from 1.664% last Friday to 1.664% + 6.85bp = 1.7325%. The "anti-involution" policy and the start of the Yarlung Zangbo River hydropower project extended the stock-bond seesaw last week to the commodity-bond seesaw this week. By referring to the supply-side reform from 2015 - 2017, it is predicted that the PPI year-on-year will steadily recover but is unlikely to turn positive this year, and the recovery of the year-on-year growth rate of social financing stock requires time and central bank support. It is expected that the interest rate will mainly show a downward trend this year [1][18]. - Last week, overseas markets generally continued the previous week's trend, with US Treasuries falling and US stocks remaining flat. The short - end of US Treasuries rose less than the long - end. Considering the impact of Trump's tariff policy on prices and the support of stablecoins for the short - end of US Treasuries, and based on the new data, the report analyzes the US economic data in July 2025, including PMI, housing sales, unemployment benefits, and EIA crude oil inventory. The "Shadow Fed Chairman" and Trump are pressuring the Fed to cut interest rates. The probability of a 25bp interest rate cut in July remains at 4.1%, while the probability of a rate cut in September has increased to 61.9% [3][7]. 3. Summary According to the Table of Contents 3.1 One - Week Views 3.1.1 Impact of "Anti - Involution" Policy on Commodity - Bond Seesaw - This week (July 21 - 25, 2025), the yield of the 10 - year active Treasury bond rose 6.85bp from 1.664% last Friday to 1.7325%. The start of the Yarlung Zangbo River hydropower project and the "anti - involution" policy affected the bond market. The yield increased on most days, with a slight decline on Friday [1]. - By looking back at the supply - side reform from 2015 - 2017, there was a one - year lag between the rise in commodity prices and bond yields. It is predicted that the PPI year - on - year will recover but not turn positive this year, and the recovery of the social financing stock growth rate needs time and central bank support. It is expected that the interest rate will mainly decline this year [18]. 3.1.2 Outlook for US Treasury Yields After Data Release - Last week, overseas markets continued the previous week's trend, with US Treasuries falling and US stocks remaining flat. The short - end of US Treasuries rose less than the long - end. The report analyzes the July 2025 US economic data: the service PMI decreased, the manufacturing PMI increased; the EIA crude oil inventory decreased by 316.9 million barrels; the annualized month - on - month decline in existing home sales in June was 2.7%; the number of initial jobless claims decreased, and the number of continued jobless claims increased. The "Shadow Fed Chairman" and Trump are pressuring the Fed to cut interest rates. As of July 25, the probability of a 25bp interest rate cut in July remained at 4.1%, and the probability of a rate cut in September increased to 61.9% [3][7]. 3.2 Domestic and Overseas Data Summaries 3.2.1 Liquidity Tracking - In terms of open - market operations, from July 21 - 25, 2025, the net investment was 1295 billion yuan. The money market interest rates generally increased compared to last week [40]. - The yields of various bonds and the term spreads of bonds also changed. For example, the yields of 1 - year and 3 - year Treasury bonds increased, and the term spreads of some bonds also changed [48]. 3.2.2 Domestic and Overseas Macroeconomic Data Tracking - Steel prices significantly increased. For example, the price of HRB400 20mm rebar nationwide rose from 3321 yuan/ton on July 18 to 3472 yuan/ton on July 25, an increase of 151 yuan/ton [55]. - The official prices of LME non - ferrous metal futures all increased. For example, the price of LME 3 - month zinc rose from 2782 dollars/ton on July 18 to 2845 dollars/ton on July 25, an increase of 2.26% [57]. - The total commercial housing transaction area increased across the board [56]. 3.3 One - Week Review of Local Government Bonds 3.3.1 Primary Market Issuance Overview - This week, 61 local government bonds were issued in the primary market, with a total issuance amount of 3757.55 billion yuan, a repayment amount of 828.46 billion yuan, and a net financing amount of 2929.09 billion yuan. The top three provinces in terms of issuance amount were Zhejiang, Chongqing, and Guangdong [68]. - One province issued special refinancing bonds to replace hidden debts, with Henan issuing 118.6481 billion yuan. From January 1 to July 25, 2025, the total issuance of such bonds nationwide was 18364.35 billion yuan [71]. - The total early redemption scale of urban investment bonds this week was 19.58 billion yuan, with Chongqing, Gansu, and Yunnan leading in redemption amount [75]. 3.3.2 Secondary Market Overview - The stock of local government bonds this week was 52.3 trillion yuan, the trading volume was 3861.04 billion yuan, and the turnover rate was 0.74%. The top three provinces in terms of trading activity were Guangdong, Shandong, and Sichuan. The top three active trading maturities were 30Y, 20Y, and 10Y [80]. - The yields of local government bonds generally declined this week [84]. 3.3.3 This Month's Local Government Bond Issuance Plan The report shows the local government bond issuance plan for the end of July, with multiple provinces having planned issuances [85]. 3.4 One - Week Review of the Credit Bond Market 3.4.1 Primary Market Issuance Overview - This week, 370 credit bonds were issued in the primary market, with a total issuance amount of 3508.44 billion yuan, a total repayment amount of 2959.29 billion yuan, and a net financing amount of 549.15 billion yuan, an increase of 96.95 billion yuan compared to last week [87]. - Specifically, the net financing amount of urban investment bonds was - 308.31 billion yuan, and that of industrial bonds was 857.46 billion yuan [88]. 3.4.2 Issuance Interest Rates The issuance interest rates of various bonds changed. For example, the issuance interest rate of short - term financing bonds decreased by 3.55bp, while that of medium - term notes increased by 9.57bp [99]. 3.4.3 Secondary Market Transaction Overview - The trading volume of credit bonds in the secondary market was 5722.35 billion yuan. Among them, the trading volume of medium - term notes was the largest, reaching 3252.69 billion yuan [101]. 3.4.4 Yield to Maturity - The yields of various bonds generally increased. For example, the yield of 1 - year short - term financing bonds increased by 9.61bp, and the yield of 3 - year medium - term notes increased by 10.40bp [104]. 3.4.5 Credit Spreads - The credit spreads of short - term financing bonds and medium - term notes generally widened, while those of urban investment bonds showed a differentiated trend [109][116]. 3.4.6 Rating Spreads - The rating spreads of short - term financing bonds, medium - term notes, and corporate bonds generally widened, while those of urban investment bonds showed a differentiated trend [120][125]. 3.4.7 Trading Activity - The report lists the top five most actively traded bonds in each bond type. The industrial industry had the largest weekly trading volume of credit bonds, reaching 3262.06 billion yuan [133]. 3.4.8 Changes in Subject Ratings There were no bonds with upgraded or downgraded ratings or outlooks this week [134].

Report Overview - The report focuses on the weekly market trends of treasury bond futures, including price movements, yield curve changes, and influencing factors, and provides market logic and trading strategies [26] 1. Report Industry Investment Rating - Not mentioned in the report 2. Core Viewpoints - After the short - term sharp decline this week, treasury bond futures prices may stabilize. The anti - involution policy implementation may be relatively mild, and the short - term rapid rise in the commodity futures market may end. The stock - bond seesaw may reappear, and the results of the upcoming economic talks and the Politburo meeting are worth attention. The trading strategy is for trading - type investments to conduct band operations [26] 3. Summary by Related Catalogs 3.1 Treasury Bond Futures Weekly Market Review - This week, the main contracts of treasury bond futures fell continuously with significant retracements. The 30 - year treasury bond dropped 2.14%, the 10 - year dropped 0.58%, the 5 - year dropped 0.41%, and the 2 - year dropped 0.12% [4] 3.2 Changes in Treasury Bond Spot Yield Curve - As of July 25, compared with July 18, the treasury bond spot yield curve shifted upward overall. The 2 - year yield rose from 1.38% to 1.44%, the 5 - year from 1.53% to 1.60%, the 10 - year from 1.67% to 1.73%, and the 30 - year from 1.89% to 1.97% [6] 3.3 Market Risk Preference and Related Influencing Factors - This week, market risk preference increased, showing an obvious stock - bond seesaw effect [9] - Since July, the decline rate of the national new - home sales area has accelerated. From January to March, the average daily transaction area of commercial housing in 30 large - and medium - sized cities was 236,000 square meters, a year - on - year increase of 2.5%. In April, it was 230,000 square meters, a 12% year - on - year decrease. In May, it was 260,000 square meters, a 3% decrease. In June, it was 310,000 square meters, an 8.4% decrease. From July 1 to 25, it was 200,000 square meters, a 20% decrease [12] - In the first half of July, the China Containerized Freight Index (CCFI) declined slightly, with a faster decline in the US - West route. The CCFI US - West route index reached a recent high of 1256.91 on June 20 and then declined. The CCFI composite index reached a recent high of 1369.34 on June 27 and fell to 1261.35 on July 25 [15] - On July 18, the Ministry of Industry and Information Technology announced that multiple anti - involution and stable - growth policies would be introduced, driving up the prices of domestic - demand - oriented bulk commodities and the Nanhua Industrial Products Index [18] 3.4 Commodity Market Conditions - On Friday night, the prices of coking coal and coke dropped significantly. After five consecutive days of rapid price increases in the first five days of this week, coking coal prices dropped sharply on Friday night after the exchange issued a risk warning, indicating that the short - term rapid rise may end [21] 3.5 Capital Interest Rate Situation - This week, the fluctuation of capital interest rates increased. The weighted average of DR001 was 1.44% this week, compared with 1.47% last week. DR001 rose from a weighted average of over 1.3% in the first three days to 1.65% and 1.52% on Thursday and Friday. The weighted average of DR007 was 1.54% this week, compared with 1.53% last week. The average issuance interest rate of one - year AAA inter - bank certificates of deposit was 1.65% this week, compared with 1.63% last week [24] 3.6 Market Logic and Trading Strategies - Market Logic: The announcement of anti - involution policies increased market risk preference, causing stocks and commodity futures to rise and treasury bond futures to fall. The economic fundamentals still face challenges in terms of demand. The short - term rapid rise in the commodity futures market may end, and treasury bond futures prices may stabilize after a sharp decline. The stock - bond seesaw may reappear, and the results of the economic talks and the Politburo meeting are worth attention [26] - Trading Strategy: Band operations for trading - type investments [26]

Strategy - The active performance of the Hong Kong stock market in both primary and secondary markets is closely linked to liquidity, which plays a more significant role than in the A-share market [3] - The overall liquidity in the Hong Kong market has been loose this year, driven by macroeconomic weakness and asset scarcity, leading to increased southbound capital inflows and more companies listing in Hong Kong [3] - Looking ahead, the liquidity trend in the Hong Kong market may face tightening pressures in Q3, with a potential demand for funds exceeding 300 billion HKD for IPOs and placements, while the supply of funds will depend on the "profit-making effect" [3] Macroeconomy - The recent rebound of the US dollar index and the weakening of the euro raises questions about whether this is a short-term phenomenon or a structural reversal [6] - The new classical framework suggests that the current account is the main determinant of exchange rates, while the post-Keynesian view emphasizes capital flows as the fundamental force affecting exchange rates [6] - In the short term, the significant increase in net supply of US Treasury bonds may lead to further depreciation of the dollar, while the euro may appreciate [6] Strategy - The current stock-bond relationship differs from historical patterns, with the recent stock market rally driven by bank stocks and small-cap stocks, leading to a "bull market in stocks and stable bonds" [9] - This shift indicates that liquidity, rather than growth expectations, is the primary driver of the stock-bond relationship, suggesting lower risk appetite and limited negative impact on the bond market [9] - It is recommended to maintain a conservative asset allocation until uncertainties regarding tariffs are resolved, while continuing to overweight high-dividend stocks and bonds [9] Strategy - Five significant changes in the funding landscape of the A-share market are identified, including the restructuring of monetary order benefiting RMB assets, an increase in the proportion of individual investors, and improved market attractiveness due to asset scarcity [12] - The funding structure in the A-share market is improving, leading to a positive feedback loop in the funding environment, while many institutional investors are at historically low positions, indicating potential bullish sentiment [12] - While the mid-term market trend is determined by fundamentals, the influence of capital flows may temporarily exceed that of fundamentals, suggesting a relatively positive outlook for the second half of the year [12] Stablecoins and Financial Markets - Stablecoins are seen as a potential new infrastructure, with an analysis of the incentive mechanisms for various participants and their potential impact on financial markets and the international monetary system [15] - Issuing offshore RMB stablecoins is considered a priority for China in participating in the development of stablecoins, although the success of RMB internationalization ultimately depends on its legal and functional anchors [15]

Primary Market Review - The issuance scale of government bonds, local bonds, and policy financial bonds last week was 243.3 billion, 251.2 billion, and 162 billion respectively, with net financing amounts of 58.2 billion, 150.5 billion, and -65.4 billion [1] - The total issuance scale of non-financial credit bonds was 270.5 billion, with a net financing amount of 49 billion [1] Secondary Market Review - Interest rates experienced a downward fluctuation last week, influenced by factors such as the central bank's active fund injection, anti-involution trading, and the listing of science and technology innovation bond ETFs [2] Liquidity Tracking - The buyout reverse repurchase operations amounted to 1.4 trillion, with an OMO net injection of 130 million, indicating overall stable tax period funds, which eased after the tax period [3] Policy and Fundamentals - Q2 GDP grew by 5.2% year-on-year, with June industrial output increasing by 6.8% and retail sales by 4.8%. Cumulative fixed asset investment for the first half of the year rose by 2.8%. New loans in June reached 2.2 trillion, an increase of 110 billion year-on-year [4] Overseas Market - U.S. inflation in June was lower than expected, while retail sales remained strong, indicating that tariffs have a manageable impact on inflation. The S&P 500 rose by 0.6% over the week, and the 10-year U.S. Treasury yield remained flat [5] Equity Market - The Wind All A index has risen for four consecutive weeks, with a weekly average trading volume exceeding 1.5 trillion. There are signs of capital flowing out of the consumer sector due to CPI data and underwhelming performance from some food and beverage stocks, while the TMT sector remains strong. As of July 17, 2025, the total financing balance for All A was 1,891.142 billion, an increase of 30.647 billion from July 10, marking nine consecutive trading days of net growth [6] Bond Market Strategy Outlook - The bond market has preliminarily priced in a weakening economy for Q3 and has reacted to anti-involution policies and a recovery in risk appetite. However, the performance of non-spread varieties indicates a cautious outlook on liquidity. Future uncertainties regarding U.S. tariff policies, domestic economic changes, and policy responses may lead to fluctuations in bond yields. The anti-involution policy is expected to boost commodity prices and risk appetite in the short term, but the central bank's clear support for liquidity during the tax period suggests a high likelihood of maintaining a loose monetary stance. The bond market is likely to remain in a volatile pattern, favoring the holding of coupon assets. Trading positions should remain flexible, focusing on policy expectations and liquidity changes. In the convertible bond market, the index is experiencing high-level fluctuations, with differentiation in bank themes and notable performance in anti-involution themes and the computing robot industry chain. Current price levels show increased volatility in convertible bonds across various price bands, with diminished asymmetric risk advantages. Given the ongoing supply-demand structure, reinvestment pressure remains significant amid a trend towards bubble formation, necessitating a focus on niche bonds and structural opportunities within the industry chain [7]

Report Industry Investment Rating No relevant content provided. Core Viewpoints - The stock - bond seesaw is obvious, and treasury bond futures closed down across the board. Driven by the strong stock market, the risk appetite has recovered, suppressing the bond market. Meanwhile, the delay of the Fed's interest - rate cut expectation and the increase in global trade uncertainty have added uncertainty to foreign capital inflows. Overall, the bond market fluctuates between stable - growth and easing expectations, and short - term attention should be paid to policy signals at the end of the month [1][2] - For trading strategies, the 2509 contract is neutral in the unilateral trading; pay attention to the widening of the basis in arbitrage; and in hedging, short - position holders can moderately hedge with far - month contracts as there is medium - term adjustment pressure [3] Summary by Directory 1. Interest Rate Pricing Tracking Indicators - **Price Indicators**: China's CPI monthly环比 is - 0.10% and同比 is 0.10%; China's PPI monthly环比 is - 0.40% and同比 is - 3.60% [8] - **Monthly Economic Indicators**: Social financing scale is 430.22 trillion yuan, with a环比 increase of 4.06 trillion yuan and a环比 change rate of + 0.95%; M2同比 is 8.30%, with a环比 increase of 0.40% and a环比 change rate of + 5.06%; Manufacturing PMI is 49.70%, with a环比 increase of 0.20% and a环比 change rate of + 0.40% [8] - **Daily Economic Indicators**: The US dollar index is 97.51, with a环比 increase of 0.28 and a环比 change rate of + 0.29%; The offshore US dollar - to - RMB exchange rate is 7.1462, with a环比 decrease of 0.015 and a环比 change rate of - 0.21%; SHIBOR 7 - day is 1.55, with a环比 increase of 0.08 and a环比 change rate of + 5.60%; DR007 is 1.58, with a环比 increase of 0.09 and a环比 change rate of + 6.29%; R007 is 1.68, with a环比 increase of 0.04 and a环比 change rate of + 2.35%; The 3 - month yield of inter - bank certificates of deposit (AAA) is 1.60, with a环比 increase of 0.04 and a环比 change rate of + 2.45%; The AA - AAA credit spread (1Y) is 0.08, with a环比 increase of 0.00 and a环比 change rate of + 2.45% [8] 2. Overview of Treasury Bonds and Treasury Bond Futures Market - Relevant figures include the closing price trend of the main continuous contracts of treasury bond futures, the price change rate of each treasury bond futures variety, the maturity yield trend of treasury bonds of each term, the valuation change of treasury bonds of each term in the recent day, the precipitation fund trend of each treasury bond futures variety, the position - holding ratio of each treasury bond futures variety, the net position - holding ratio of the top 20 in each treasury bond futures variety, the long - short position - holding ratio of the top 20 in each treasury bond futures variety, the trading - to - position ratio of each treasury bond futures variety, the spread between China Development Bank bonds and treasury bonds, and the issuance of treasury bonds [11][14][17][20][22][25] 3. Overview of the Money Market Fundamentals - Relevant figures include the interest - rate corridor, central bank's open - market operations, bond - lending turnover and the total position - holding volume of treasury bond futures, Shibor interest - rate trend, the maturity yield trend of inter - bank certificates of deposit (AAA), the transaction statistics of inter - bank pledged repurchase, and the issuance of local bonds [27][29][34][36] 4. Spread Overview - Relevant figures include the inter - term spread trend of each treasury bond futures variety, the term spread of spot bonds and the inter - variety spread of futures (4*TS - T), (2*TS - TF), (2*TF - T), (3*T - TL), and the spread between spot bond yield and futures price (2*TS - 3*TF + T) [40][42][43][46] 5. Two - Year Treasury Bond Futures - Relevant figures include the implied interest rate of the TS main contract and the maturity yield of treasury bonds, the IRR of the TS main contract and the fund interest rate, the basis trend of the TS main contract in the past three years, and the net basis trend of the TS main contract in the past three years [45][48][55] 6. Five - Year Treasury Bond Futures - Relevant figures include the implied interest rate of the TF main contract and the maturity yield of treasury bonds, the IRR of the TF main contract and the fund interest rate, the basis trend of the TF main contract in the past three years, and the net basis trend of the TF main contract in the past three years [54][57] 7. Ten - Year Treasury Bond Futures - Relevant figures include the implied interest rate of the T main contract and the maturity yield of treasury bonds, the IRR of the T main contract and the fund interest rate, the basis trend of the T main contract in the past three years, and the net basis trend of the T main contract in the past three years [62][65] 8. Thirty - Year Treasury Bond Futures - Relevant figures include the implied interest rate of the TL main contract and the maturity yield of treasury bonds, the IRR of the TL main contract and the fund interest rate, the basis trend of the TL main contract in the past three years, and the net basis trend of the TL main contract in the past three years [69][72][75]

Core Viewpoint - The bond market has experienced significant volatility since July, with rising yields and a downward trend, influenced by the performance of equity and commodity markets [1][2]. Group 1: Market Trends - Since July, the bond market has shown increased volatility, with the 10-year government bond yield rising over 5 basis points and the 30-year yield rising over 8 basis points, surpassing 1.9% [1]. - The adjustment in the bond market is attributed to the upward breakthrough in equity and commodity markets, with a notable shift from a two-year upward trend to a narrow range of fluctuations [1]. - The yield spread between the 10-year and 1-year government bonds remains at a historical low of 20 basis points, indicating a crowded and fragile trading structure [1]. Group 2: Economic Fundamentals - The macroeconomic fundamentals of the bond market remain stable, with structural issues in the Chinese economy still needing resolution, characterized by strong production but weak demand [2]. - The real estate market is in a phase of stabilization, and the long-term asset shortage is expected to persist, leading to a prolonged period of moderately loose monetary policy [2]. - The current dividend yield of the CSI All Share Index has dropped to around 2%, narrowing the gap with the 10-year government bond yield, thus enhancing the attractiveness of bonds [2]. Group 3: Future Outlook - The 10-year government bond yield is estimated to be reasonably priced between 1.8% and 1.9%, with a potential need for effective demand-side stimulus policies to break through this range [2]. - The bond market is expected to return to a healthier state as the central bank gradually loosens liquidity and resumes government bond trading [2].