Group 1: Report's Industry Investment Rating - No information provided in the content Group 2: Core Viewpoints - After crossing the quarter - end, the funding situation returned to ease, overnight interest rates continued to decline to 1.3%, the central bank did not initiate treasury bond transactions in June, and the PMI continued to rise slightly. The bond market resumed its upward trend, with ultra - long bonds rising slightly. The trading activity of ultra - long bonds decreased slightly last week but remained quite active. The term spread of ultra - long bonds widened, and the variety spread narrowed. Considering the economic data, although the economy showed resilience in May, there are still downward pressures. After the half - year mark, the funding rate declined again, and the probability of the bond market rising is greater. However, the term spread of 30 - year treasury bonds and the variety spread of 20 - year CDB bonds are still low, with limited spread protection [1][2][3] Group 3: Summary by Relevant Catalogs Weekly Review Ultra - long Bond Review - After the quarter - end, the funding became looser, overnight rates dropped to 1.3%, the central bank did not trade treasury bonds in June, PMI rose slightly, the bond market went up, and ultra - long bonds had a small increase. Trading activity of ultra - long bonds decreased slightly but was still active. The term spread widened, and the variety spread narrowed [1][9] Ultra - long Bond Investment Outlook - **30 - year Treasury Bonds**: As of July 4, the spread between 30 - year and 10 - year treasury bonds was 21BP, at a historically low level. In May, the estimated GDP growth was about 5.0% year - on - year, down 0.1% from April but still above the annual target. With CPI at - 0.1% and PPI at - 3.1% in May, deflation risks remain. Exports declined rapidly in May, and domestic housing prices turned negative month - on - month. After the half - year mark, the funding rate fell again, and the bond market is more likely to rise. However, the term spread of 30 - year treasury bonds is low, with limited protection [2][10] - **20 - year CDB Bonds**: As of July 4, the spread between 20 - year CDB bonds and 20 - year treasury bonds was 3BP, at a historically extremely low level. Similar to the 30 - year treasury bonds, considering the economic situation in May and the decline in the funding rate after the half - year mark, the bond market is likely to rise. But the variety spread of 20 - year CDB bonds is low, with limited protection [3][11] Ultra - long Bond Basic Overview - The balance of outstanding ultra - long bonds exceeded 22.2 trillion. As of June 30, the total amount of ultra - long bonds with a remaining maturity of over 14 years was 222,528 billion, accounting for 14.5% of all bonds. Local government bonds and treasury bonds are the main varieties. By variety, treasury bonds accounted for 26.3%, local government bonds 67.5%, etc. By remaining maturity, the 25 - 35 - year variety accounted for the highest proportion at 40.4% [12] Primary Market Weekly Issuance - Last week (June 30 - July 4, 2025), ultra - long bond issuance decreased significantly, with a total of 359 billion yuan issued. By variety, local government bonds accounted for 344 billion, and mid - term notes 15 billion. By term, 15 - year bonds accounted for 139 billion, 20 - year for 70 billion, and 30 - year for 151 billion [17] This Week's Scheduled Issuance - This week's announced ultra - long bond issuance plan totals 768 billion. By variety, ultra - long local government bonds account for 748 billion, and mid - term notes 20 billion [22] Secondary Market Trading Volume - Last week, ultra - long bond trading was quite active, with a turnover of 11,010 billion, accounting for 13.1% of all bonds. Trading activity decreased slightly compared to the previous week. Ultra - long treasury bond turnover decreased by 2,214 billion, and its proportion decreased by 1.5%; ultra - long local bond turnover decreased by 688 billion, and its proportion decreased by 14.1%; ultra - long policy - bank bond turnover increased by 4 billion, and its proportion increased by 0.1%; ultra - long government - agency bond turnover increased by 78 billion, and its proportion increased by 37.2% [24] Yield - After the quarter - end, the funding situation eased, overnight rates dropped to 1.3%, the central bank did not trade treasury bonds in June, PMI rose slightly, the bond market went up, and ultra - long bonds had a small increase. Yields of 15 - year, 20 - year, 30 - year, and 50 - year treasury bonds changed by 0BP, 0BP, 0BP, and - 3BP respectively to 1.79%, 1.89%, 1.85%, and 1.94%. Yields of representative individual bonds also changed, such as the 30 - year treasury bond active bond 24 special treasury bond 06 yield changing by - 2BP to 1.89% [38][39] Spread Analysis - **Term Spread**: Last week, the term spread of ultra - long bonds widened but remained at a low absolute level. The spread between 30 - year and 10 - year treasury bonds was 21BP, up 1BP from the previous week, at the 5% percentile since 2010 [45] - **Variety Spread**: Last week, the variety spread of ultra - long bonds narrowed and was at a low absolute level. The spread between 20 - year CDB bonds and treasury bonds was 3BP, and between 20 - year railway bonds and treasury bonds was 7BP, down 1BP and 2BP respectively from the previous week, at the 6% percentile since 2010 [46] 30 - year Treasury Bond Futures - Last week, the 30 - year treasury bond futures main contract TL2509 closed at 121.20 yuan, an increase of 0.26%. The total trading volume was 408,900 lots (- 8,046 lots), and the open interest was 151,000 lots (10,690 lots). The trading volume decreased slightly, and the open interest increased slightly compared to the previous week [51]

Group 1 - The report highlights that the current net financing by major banks has reached an unprecedented level of 5.3 trillion yuan, which is historically high and linked to the central bank's liquidity support [2][12][16] - It notes that the trend of easing liquidity can be linearly extrapolated, and any disruption to this trend would require additional variables [3][13] - The report suggests that if the liquidity remains loose in July, the long-term interest rates may decline further, with the current 10Y-1Y yield spread at 30 basis points, the highest since mid-February [3][12][13] Group 2 - The report indicates that the leverage ratio in the bond market has risen to 107.85%, reflecting an increase in borrowing activity [23] - It mentions that the average daily transaction volume of pledged repos was approximately 7.6 trillion yuan, with overnight repos accounting for 89.71% of the total [27][31] - The report states that the median duration of medium- to long-term bond funds remains at 2.87 years, indicating stability in fund management strategies [49]

Core Viewpoint - Since June, the performance of China's bond yield curve, particularly the ultra-long end, has been impressive, with significant interest from institutions in 20-year and 50-year government bonds, as well as credit bonds with maturities over 20 years [1] Summary by Relevant Categories Bond Market Performance - The yield on 50-year government bonds has decreased by over 9 basis points this month, leading declines across all maturities [1] - The spread between 50-year and 10-year bonds has narrowed significantly, reaching the largest reduction since July 2023 [1] Credit Bonds - The 30-year AAA-rated corporate bond yield fell below 2.2% last week, marking a new record low since 2006 [1] - The performance of ultra-long credit bonds has also been strong, reflecting a favorable market environment [1]

Credit Spread Performance - In May, the supply of credit bonds decreased, leading to a general decline in credit spreads, with lower-rated credit bonds experiencing a more significant narrowing [1] - The AAA-rated industrial bonds saw a uniform narrowing of credit spreads across all sectors, with the real estate sector showing the largest reduction of 18.98 basis points, while the financial holding sector had the smallest reduction of 2.36 basis points [8][9] - For private placement bonds, the pharmaceutical and biological sector had the largest narrowing of 17.18 basis points, while the environmental protection sector had the smallest at 0.99 basis points [8][9] City Investment Bonds - In May, credit spreads for city investment bonds across major ratings and maturities all declined, with the largest narrowing observed in Qinghai province for both public and private bonds [1] - The overall trend indicates that credit spreads for city investment bonds are moving downward across various regions and issuer levels [1] Financial Bonds - The credit spreads for bank perpetual bonds and other financial instruments generally narrowed, with most varieties experiencing a decrease, although some maturity spreads widened [1] - Securities companies' subordinated bonds and insurance companies' capital replenishment bonds saw a complete decline in credit spreads during the month [1] Historical Context - By the end of May, various types of credit bonds maintained historically low credit spreads, particularly for short-duration non-financial credit bonds and short-duration financial bonds, while medium to long-term financial bonds remained at relatively high historical percentiles [1][6]

Report Industry Investment Rating No relevant content provided. Core Views - Last week, after the release of May economic data, with the year-on-year growth rate of social consumption reaching 6.4% and the estimated monthly GDP at 5.0%, and the tightening of the capital market, bond yields continued to decline, and non-active ultra-long bonds rose significantly. The trading activity of ultra-long bonds increased slightly, and the term spread remained flat while the variety spread widened [1][3][11]. - As of June 20, the spread between 30-year treasury bonds and 10-year treasury bonds was 20BP, at a historically low level. The May economic data showed resilience, with an estimated GDP growth rate of about 5.0%, a 0.1% decline from April but still higher than the annual target. With deflation risks, a decline in exports, a negative month-on-month change in housing prices, and a decrease in capital interest rates, the bond market sentiment improved. It is expected that the bond market is more likely to continue rising in the short term, but the term spread protection is limited [2]. - As of June 20, the spread between 20-year CDB bonds and 20-year treasury bonds was 4BP, at a historically extremely low level. Similar to the 30-year treasury bonds, considering the economic situation and market conditions, the bond market is expected to rise in the short term, but the variety spread protection is limited [3]. Summary by Directory Weekly Review Ultra-long Bond Review - After the release of May economic data, with the year-on-year growth rate of social consumption reaching 6.4% and the estimated monthly GDP at 5.0%, and the tightening of the capital market, bond yields continued to decline, and non-active ultra-long bonds rose significantly. The trading activity of ultra-long bonds increased slightly and was quite active. The term spread remained flat, and the variety spread widened [1][11]. Ultra-long Bond Investment Outlook - **30-year Treasury Bonds**: As of June 20, the spread between 30-year and 10-year treasury bonds was 20BP, at a historically low level. The May economic data showed resilience, with an estimated GDP growth rate of about 5.0%, a 0.1% decline from April but still higher than the annual target. With deflation risks, a decline in exports, a negative month-on-month change in housing prices, and a decrease in capital interest rates, the bond market sentiment improved. It is expected that the bond market is more likely to continue rising in the short term, but the term spread protection is limited [2][12]. - **20-year CDB Bonds**: As of June 20, the spread between 20-year CDB bonds and 20-year treasury bonds was 4BP, at a historically extremely low level. Similar to the 30-year treasury bonds, considering the economic situation and market conditions, the bond market is expected to rise in the short term, but the variety spread protection is limited [3][13]. Ultra-long Bond Basic Overview - The balance of outstanding ultra-long bonds exceeded 21.6 trillion. As of May 31, the total amount of ultra-long bonds with a remaining term of over 14 years was 216,823 billion (excluding asset-backed securities and project revenue notes), accounting for 14.4% of the total bond balance. Local government bonds and treasury bonds were the main varieties. By variety, treasury bonds accounted for 26.1%, local government bonds 67.8%, policy financial bonds 2.1%, government agency bonds 2.0%, commercial bank subordinated bonds 0.2%, corporate bonds 0.5%, enterprise bonds 0.1%, medium-term notes 1.2%, private bonds 0.0%, and directional instruments 0.0%. By remaining term, the 14 - 18-year (inclusive) category accounted for 26.7%, the 18 - 25-year (inclusive) 26.9%, the 25 - 35-year (inclusive) 40.3%, and over 35 years 6.2% [14]. Primary Market Weekly Issuance - Last week (June 16 - 20, 2025), the issuance of ultra-long bonds was relatively small, with a total issuance of 1,147 billion yuan. Compared with the week before last, the total issuance of ultra-long bonds increased significantly. By variety, treasury bonds accounted for 500 billion, local government bonds 505 billion, policy bank bonds 0 billion, government-supported agency bonds 0 billion, medium-term notes 30 billion, corporate bonds 113 billion, directional instruments 0 billion, enterprise bonds 0 billion, and bank subordinated bonds 0 billion. By term, 149 billion were issued with a term of 15 years, 684 billion with 20 years, 315 billion with 30 years, and 0 billion with 50 years [19]. This Week's Pending Issuance - The announced issuance plan for ultra-long bonds this week totals 3,663 billion. By variety, ultra-long treasury bonds account for 710 billion, ultra-long local government bonds 2,788 billion, ultra-long corporate bonds 0 billion, and ultra-long medium-term notes 165 billion [25]. Secondary Market Trading Volume - Last week, the trading of ultra-long bonds was quite active, with a trading volume of 11,298 billion, accounting for 11.0% of the total bond trading volume. By variety, the trading volume of ultra-long treasury bonds was 7,764 billion, accounting for 29.8% of the total treasury bond trading volume; ultra-long local bonds 2,799 billion, accounting for 51.4% of the total local bond trading volume; ultra-long policy financial bonds 103 billion, accounting for 0.3% of the total policy financial bond trading volume; and ultra-long government agency bonds 89 billion, accounting for 78.8% of the total government agency bond trading volume. The trading activity of ultra-long bonds increased slightly compared with the week before last, with an increase of 2,330 billion in trading volume and a 0.1% increase in the proportion. Among them, the trading volume of ultra-long treasury bonds increased by 1,474 billion, but the proportion decreased by 6.3%; the trading volume of ultra-long local bonds increased by 388 billion, and the proportion increased by 3.5%; the trading volume of ultra-long policy financial bonds decreased by 5 billion, and the proportion decreased by 0.1%; the trading volume of ultra-long government agency bonds increased by 66 billion, and the proportion increased by 66.2% [28]. Yield - After the release of May economic data, with the year-on-year growth rate of social consumption reaching 6.4% and the estimated monthly GDP at 5.0%, and the tightening of the capital market, bond yields continued to decline. For treasury bonds, the yields of 15-year, 20-year, 30-year, and 50-year bonds changed by -3BP, -5BP, -1BP, and -5BP to 1.78%, 1.87%, 1.84%, and 1.95% respectively. For CDB bonds, the yields of 15-year, 20-year, 30-year, and 50-year bonds changed by -5BP, -6BP, -1BP, and -5BP to 1.86%, 1.90%, 2.02%, and 2.19% respectively. For local bonds, the yields of 15-year, 20-year, and 30-year bonds changed by -5BP, -4BP, and -4BP to 1.98%, 2.03%, and 2.03% respectively. For railway bonds, the yields of 15-year, 20-year, and 30-year bonds changed by -5BP, -4BP, and -4BP to 1.92%, 1.95%, and 2.05% respectively. For representative individual bonds, the yield of the 30-year treasury bond active bond 24 Special Treasury Bond 06 changed by -2BP to 1.88%, and the yield of the 20-year CDB bond active bond 21 CDB 20 changed by -5BP to 1.89% [44][45]. Spread Analysis - **Term Spread**: Last week, the term spread of ultra-long bonds remained flat, and the absolute level was low. The spread between the benchmark 30-year and 10-year treasury bonds was 20BP, unchanged from the week before last, at the 4% percentile since 2010 [53]. - **Variety Spread**: Last week, the variety spread of ultra-long bonds widened, and the absolute level was low. The spread between the benchmark 20-year CDB bonds and treasury bonds was 4BP, and the spread between 20-year railway bonds and treasury bonds was 9BP, with a 0BP and 1BP change from the week before last respectively, at the 6% and 5% percentiles since 2010 [54]. 30-year Treasury Bond Futures - Last week, the main 30-year treasury bond futures contract TL2509 closed at 121.32 yuan, an increase of 0.68%. The total trading volume was 327,300 lots (5,583 lots), and the open interest was 137,700 lots (13,009 lots). The trading volume and open interest increased slightly compared with the week before last [60].

1. Report Industry Investment Rating There is no information provided regarding the industry investment rating in the given report. 2. Core Viewpoints of the Report - Despite the central bank's efforts to support the bond market, the decline in bond yields has been limited. The large maturity volume of certificates of deposit (CDs) and the relatively high pricing of CDs have restricted the downward space for long - term yields. The short - term yields are also constrained by factors such as the lack of long - term funds, the pressure of CD maturities and tax payment periods, and the limited impact of the expected restart of central bank bond purchases [1][2][10][15]. - By the end of June, the downward space for short - term yields is expected to open up. This is due to the release of cross - quarter pressure on funds, the seasonal increase in bank wealth management bond purchases in July, and the potential restart of central bank bond purchases [27][28][31]. - The bond market strategy is to focus on coupon income and seize trading opportunities in a narrow - fluctuating market. Investors can consider the allocation opportunities of CDs, credit bonds, and interest - rate bonds, and also grasp the trading opportunities of 10 - year treasury bonds within a narrow range [34][35][42]. 3. Summary According to Relevant Catalogs 3.1 Why Can't the Bullish Bond Market Rise? - **Market Situation**: In June, the central bank showed an attitude of caring for the money market, and large banks increased their purchases of short - term treasury bonds. However, the decline in bond yields was limited. The 1 - year and 10 - year treasury bond yields declined less than in the previous week. The pricing of CDs remained high, restricting the downward space for long - term yields. The 10 - year treasury bond yield fluctuated around 1.65% without a significant breakthrough [1][10][14]. - **Reasons for Limited Short - Term Yield Decline**: - **Lack of Long - Term Funds**: The central bank's operations mainly provided short - term funds, while long - term funds were not sufficient. Since March, MLF has been in a monthly net - investment state, and banks' demand for long - term liabilities has increased [15]. - **Pressure from CD Maturities and Tax Payment Periods**: Since the second week of June, the weekly maturity volume of CDs has exceeded one trillion yuan for three consecutive weeks. Coupled with the tax payment deadline on the 16th, the pressure on capital gaps is large, and the pressure may ease in the second half of the month [20]. - **Limited Impact of Expected Central Bank Bond Purchases**: Although the market is concerned about the restart of central bank bond purchases, the impact on short - term yields may be limited. The downward range of short - term yields may be between 5 - 10bp [21]. 3.2 Bond Market Strategy: Loosening May Come Later, and Assets Can Be Snatched Now - **Downward Space for Short - Term Yields Expected to Open Up at the End of June**: - **Decline in CD Yields after Cross - Quarter Pressure Release**: With the central bank's care for funds and the possible renewal of MLF at the end of June, funds are expected to cross the quarter smoothly. After the cross - quarter pressure is released, CD yields may decline naturally [27]. - **Increased Bond Purchases by Bank Wealth Management in July**: In July, bank wealth management usually enters a period of rapid scale growth. The net purchases of bank wealth management in the secondary market increase, and they prefer CDs and credit products with a maturity of less than one year, which may open up the downward space for CD yields [27]. - **Potential Restart of Central Bank Bond Purchases**: Since June, large banks have significantly increased their net purchases of short - term treasury bonds. The market expects the central bank to restart bond purchases, which may support the short - term bond market [28][31]. - **Bond Market Strategy: Focus on Coupon Income and Seize Trading Opportunities in a Narrow - Fluctuating Market**: - **Allocation Strategy**: - **CDs**: From the end of June to July, the probability of success is high. Investors can pay attention to the allocation opportunities brought by the current price increase. CDs with a yield of around 1.7% have high allocation value [34]. - **Credit Bonds**: Focus on credit - sinking opportunities within 3 years and the opportunity for a slight compression of 4 - 5 - year credit spreads in July [35]. - **Interest - Rate Bonds**: In a narrow - fluctuating market, focus on the exploration of α - type bonds, such as 5 - 7 - year old interest - rate bonds. If the short - term yields decline, the α - compression market of medium - term bonds may be better [38]. - **Trading Strategy**: The 10 - year treasury bond is expected to continue to fluctuate within a narrow range of 1.6% - 1.7%. Traders can consider entering the market when the bond market fluctuates and the long - term interest rate adjusts. When the yield approaches 1.62%, partial profit - taking is recommended [42]. 3.3 Review of the Interest - Rate Bond Market: Loose Funds and Expectations of Repurchase with Ownership Transfer Lead to a Bull - Flat Yield Curve - **Funding Situation**: The central bank's OMO continued to have a net withdrawal, but the money market was in a balanced and loose state. The weighted average price of DR001 dropped to around 1.36%, and the 1 - year CD issuance price of state - owned and joint - stock banks decreased from 1.7% to around 1.66% [9][60]. - **Primary Issuance**: The net financing of local government bonds and inter - bank CDs decreased, while the net financing of treasury bonds and policy - bank bonds increased [55]. - **Benchmark Changes**: The term spread of treasury bonds narrowed, while the term spread of China Development Bank bonds widened. The short - term yields of treasury bonds and China Development Bank bonds decreased, and the long - term yields of treasury bonds decreased while those of China Development Bank bonds increased [52].

Report Industry Investment Rating The provided content does not mention the report industry investment rating. Core Viewpoints - In the future week, the net payment scale of government bonds will decline, and the tax period will disrupt the capital market. Considering the central bank's care for the capital market and the adequacy of its toolbox, the capital market is expected to maintain a balanced and slightly loose operation [1]. - In the future week, the maturity scale of certificates of deposit (CDs) will exceed one trillion, with significant supply pressure. However, the central bank's second - round injection of medium - and long - term funds is expected to marginally relieve the issuance pressure of CDs, and CD yields may show a fluctuating downward trend [1]. - Funds have become the main buyer of interest - rate bonds, with a significant increase in net buying volume in the past week, while rural commercial banks have become the main seller [1]. Summary by Directory 1. Weekly Liquidity Tracking 1.1 Fund Review: The Central Bank Announces Another Injection of Medium - and Long - term Liquidity - In the statistical period (June 9 - 13, 2025), 7 - day reverse repurchase funds of 930.9 billion yuan matured, and the central bank injected 858.2 billion yuan of 7 - day funds, resulting in a net withdrawal of 7.27 billion yuan for the whole week, and the OMO stock decreased to 858.2 billion yuan. The central bank announced a second - round 40 - billion - yuan outright reverse repurchase operation for the next week, achieving a net injection for the whole month [10]. - During the statistical period, the spot exchange rate of the RMB against the US dollar depreciated by 1.52 basis points due to the uncertainty of US tariffs and the increasing expectation of a Fed rate cut [10]. - In terms of government bond progress, in the past week, the net financing of treasury bonds was 262.06 billion yuan, and the net financing since the beginning of the year was 3.10409 trillion yuan, completing 46.6% of the annual plan. The issuance of new local bonds was 8.372 billion yuan, and the issuance since the beginning of the year was 2.00893 trillion yuan, completing 38.6% of the annual plan, with a slowdown in the issuance speed. As of June 13, 1.68 trillion yuan of special refinancing bonds for replacing implicit debts had been issued, completing 84.2% of the annual plan [13]. - In terms of capital structure, the lending scale of state - owned and joint - stock banks increased significantly to over 4.5 trillion yuan, the lending scale of money market funds and wealth management products decreased, and the overall borrowing scale of non - banking institutions decreased slightly. The DR series declined, with overnight rates operating near the policy rate, and the spread between 7 - day rates and the policy rate narrowed to 10bp. The R series rose, and the liquidity stratification increased slightly but remained at a low level. The capital market showed a situation of "increasing volume and decreasing price" throughout the week, with a marginal tightening feeling on Thursday and Friday, and a balanced feeling for the whole week [15]. 1.2 CD Review: The Secondary - Market Interest Rate of CDs Declined Slightly, and the Demand from Core Buyers Strengthened - In the primary market, the net financing scale of inter - bank CDs was - 16.226 billion yuan in the statistical period, with a total issuance of 104.137 billion yuan and a maturity of 120.363 billion yuan. In the next three weeks, 102.164 billion, 113.781 billion, and 24.579 billion yuan of inter - bank CDs will mature respectively. The primary issuance rate decreased slightly, with an average issuance rate of 1.6744% (previous value: 1.7106%) [18]. - In the secondary market, core buyers such as funds and wealth management products continued to increase their holdings, money market funds changed from selling to buying, large - scale banks continued to reduce their holdings, city commercial banks and rural commercial banks changed from buying to selling, and insurance and other non - banking institutions and other product accounts continued to increase their holdings. The secondary - market yields of CDs fluctuated and declined slightly during the week, and the yield curve steepened slightly. The yields of 1M/3M/6M/9M/1Y CDs changed by - 1.78BP/ - 2.00BP/ - 1.50BP/ - 1.05BP/ - 0.91BP respectively [20]. 1.3 Next - Week Focus: The Central Bank's Firm Care for the Capital Market and the Marginal Relief of CD Issuance Pressure - In terms of the capital market, the May social financing data showed that the credit demand of residents and enterprises had recovered compared with April, with a weak stabilization of overall credit demand. The increase in government bond supply drove the stable growth of social financing, which is expected to support the key period of fiscal expenditure in June. After the deposit rate cut in May, the phenomenon of deposit transfer emerged, with a significant increase in non - banking deposits. The central bank announced a second - round injection of 40 billion yuan of 6 - month outright repurchase in the middle of the month. Combined with the previous 100 - billion - yuan 3 - month outright repurchase and the 120 - billion - yuan maturity this month, the net injection of outright reverse repurchases for the whole month was 20 billion yuan. The central bank's small - scale net withdrawal in open - market operations in the past two weeks also showed its care for the capital market. It is expected that the market will price a positive signal on June 16, but the amplitude will be smaller than that on June 6. In the next week, the net payment scale of government bonds will decline, and the tax period will disrupt the capital market. Considering the central bank's care and the adequacy of its toolbox, the capital market is expected to maintain a balanced and slightly loose operation [24]. - In terms of CDs, on the supply side, the net financing of CDs remained negative in the past week. The central bank's injection of medium - and long - term liquidity relieved the liability pressure of banks, and the primary - market interest rate of CDs decreased slightly. On the demand side, the demand from core buyers strengthened marginally, and the secondary - market yields of CDs fluctuated and declined slightly during the week. In the next week, the maturity scale of CDs will exceed one trillion, with significant supply pressure. However, the central bank's second - round injection of medium - and long - term funds is expected to marginally relieve the issuance pressure of CDs, and CD yields may show a fluctuating downward trend [25]. 2. Weekly Institutional Behavior Tracking Recent Considerations on Institutional Assets and Liabilities - The trends of the active bonds of 10 - year and 30 - year treasury bonds deviated significantly at times recently. The main reasons are that the supply rhythms of 10 - year and 30 - year treasury bonds were staggered in June, and the weak sentiment in the primary - market allocation disturbed the secondary - market. Since the beginning of the second quarter, interest rates have mainly fluctuated within a narrow range, and institutions had a strong desire to increase duration to obtain excess returns during the window of loose liquidity at the beginning of June. The trading volume of 30 - year treasury bonds increased more significantly than that of 10 - year treasury bonds. Looking forward, there will be no issuance pressure for 10 - year treasury bonds in the second half of June, and the capital price still shows certain volatility. The window period for institutions to increase duration may end, and the performance of 30 - year treasury bonds may not continue to outperform [27]. - The rotation of the bond - replacement market of China Development Bank (CDB) bonds has been very fast recently. When the bond - replacement of CDB active bonds accelerates, the volatility of new bonds will also increase. Therefore, the spread between 10 - year CDB bonds and 10 - year treasury bonds has fluctuated significantly recently. In the short term, old bonds may be safer to avoid volatility [28]. Key Review of Institutional Secondary - Market Transactions - Large - scale banks continued to buy treasury bonds with a maturity of less than 3 years, with a buying volume of about 77.6 billion yuan in the past week [31]. - Funds have become the main buyer of interest - rate bonds, with a net buying volume of about 160.4 billion yuan in the past week, showing a significant increase. Rural commercial banks have become one of the main sellers, with a net selling volume of about 109.2 billion yuan in the past week [31]. - The main buyers of CDs are money market funds, wealth management products, and other products, while the main sellers are city commercial banks and securities firms [31]. - The net buying volume of main non - banking buyers of credit bonds increased. Funds, wealth management products, and other products were the main net buyers, with funds having the largest increase. Since late March, the net buying volume of credit bonds with a maturity of less than 3 years has been generally stable, while the net buying volume of ultra - long - term credit bonds with a maturity of more than 5 years has fluctuated greatly, and the main non - banking buyers increased their buying volume significantly in the past week [31]. - For secondary - tier capital bonds, funds with a maturity of less than 2 years changed to net sellers, with a net selling volume of about 4.9 billion yuan in the past week, while wealth management products and other products changed to net buyers. The main buyers of 2 - 5 - year secondary - tier capital bonds continued to increase their buying volume, with funds having the largest net buying volume of about 36.2 billion yuan, and the banking system was the main net seller. The trading of 5 - 10 - year secondary - tier capital bonds remained light [31]. High - Frequency Data Tracking of Bond Market Micro - Structure - On June 13, the spread between 10 - year CDB bonds and 10 - year treasury bonds was 5.92bp, and the spread fluctuated and widened. The spread between 1 - year CDB bonds and R001 was 1.87BP, and the yield of short - term bonds was slightly higher than the capital price [33]. - The leverage ratio of the bond market in the week before the holiday was 107.72%, continuing to rise month - on - month [35].

Summary of Credit Bond Yield Trends in April Overall Credit Bond Performance - In April, credit bond yields exhibited a downward trend overall, with short-term spreads narrowing across the board. However, the decline in medium to long-term yields was less pronounced compared to the same maturity national development bonds, leading to a widening of credit spreads [5][9][11]. - By the end of April, short-term credit spreads remained at historically low levels, while medium to long-term financial bonds were at relatively high historical percentiles [5][11]. Industry-Specific Credit Spread Trends - **Industrial Bonds**: Most AAA-rated industrial bonds saw credit spreads widen in April. Among public bonds, the financial holding sector experienced the largest widening of 8.68 basis points, while the textile and apparel sector saw the most significant narrowing of 4.89 basis points. In private bonds, the basic chemical and retail sectors experienced slight narrowing, while other sectors generally widened by 3-10 basis points, with the steel sector widening the most at 10.86 basis points [13][15]. - **Local Government Bonds**: Credit spreads for local government bonds showed mixed trends, with lower-rated bonds generally narrowing while higher-rated bonds widened. Regions with relatively high spreads, such as Guizhou and Qinghai, mostly saw narrowing, while lower spread regions like Beijing and Shanghai experienced widening [5][9]. - **Financial Bonds**: The credit spreads for bank perpetual bonds mostly narrowed, while the spreads for securities company subordinated bonds and insurance company capital replenishment bonds widened across the board [5][9]. Historical Context - The credit spreads for various types of bonds remained at historically low levels, with AA-rated public and private industrial bonds reaching 30%-50% of their historical percentiles. Financial bonds generally had higher spread levels, exceeding the 30% historical percentile [11][12]. Key Industry Observations - In April, the steel and coal industries saw credit spreads widen across the board, with changes not exceeding 7 basis points. The high-grade bonds in these sectors experienced more significant widening. The electricity and construction engineering sectors also saw most spreads widen [15][16].

Report Industry Investment Rating No investment rating for the industry is provided in the report. Report's Core View - Fundamental factors are unlikely to break the narrow - range fluctuation pattern of the bond market. The decline in deposit rates is a short - term positive for non - bank allocation demand. The bond market is reasonably priced compared to credit and other broad - spectrum interest rates, but has a lower cost - performance ratio compared to the stock market. Chinese bonds are a global interest - rate low - lying area. In the short term, continue to focus on non - bank allocation, PMI data, and bond supply. The judgment that the 10 - year Treasury bond will fluctuate in the range of 1.5% - 1.8% remains unchanged. [6] - In terms of operations, continue to recommend 3 - and 5 - year credit bonds and Tier 2 capital bonds, and seek opportunities for spread compression through short - end credit downgrading and long - end high - grade bonds. Long - term and ultra - long - term interest - rate bonds are more suitable for trading than allocation, and continue to buy on dips. The cost - performance ratio of the previously recommended ultra - long local bonds has slightly weakened, while that of policy - financial bonds has slightly increased. [6] Summary by Relevant Catalogs This Week's Strategy View: Looking for Opportunities along the Bond Market Pricing System - Last week, the funding situation was stable. Economic data was released, and the cuts in deposit rates and LPR were implemented. The auction result of the 50 - year Treasury bond was poor, and yields fluctuated within a narrow range. Throughout the week, the yield of the active 10 - year Treasury bond rose 1BP to 1.69% compared to the previous week, the 10 - year CDB bond yield fell 1BP to 1.74%, and the 30 - year Treasury bond yield remained unchanged at 1.92%. The 10 - 1 - year term spread widened, and credit spreads remained largely unchanged. [10] - The bond market has been in a narrow - range fluctuation pattern since the suspension of Sino - US tariffs. Last week's deposit - rate cut failed to break the bond - market equilibrium. Currently, investors generally believe that the bond market has a high probability of winning but a low odds ratio. The report explores bond - market pricing from multiple dimensions. [11] Comparison with Credit and Other Broad - Spectrum Interest Rates - The pricing of the bond market is basically reasonable. There is a transmission between bonds and deposits/loans through the price - comparison effect and institutional behavior. After the recent LPR cut, some banks maintained the original 3% mortgage rate for new mortgages. If 3% is the bottom line for mortgage rates, the 30 - year Treasury bond rate may have also bottomed out. Currently, the 30 - year Treasury bond is 2BP higher than the after - tax mortgage rate, with limited upside. [12][13] - In practice, three factors prevent a simple comparison between bonds and loans: different availability of the two types of assets, the influence of non - bank trading desks not being considered, and banks' asset - allocation decisions being affected by multiple factors other than just returns. The cut in deposit rates directly benefits non - bank bond allocation. In the future, banks will face increased difficulty in liability management. [14][15] Comparison with Overseas Markets - Chinese bonds have become a global interest - rate low - lying area, but the short - term adjustment risk is limited. Recently, the sharp rise in US and Japanese bond yields has attracted global attention. The root causes are the reshaping of the global financial order, high debt levels, tight monetary policies, and large - scale long - bond auctions. [2] - China's interest rates are at a global low, especially at the ultra - long end. However, there is no need to worry about Chinese bond yields rising in tandem with overseas markets in the short term, as the influence of overseas interest rates on the Chinese bond market is limited. In the process of global capital reallocation, Chinese bonds and stocks may be relatively beneficiary assets. In the long run (2 - 3 years), there are concerns about the repricing of term spreads. [2][22][26] Comparison with the Stock Market - The bond market has a lower cost - performance ratio compared to the stock market. Currently, the dividend yields of the CSI 300, the dividend index, and the Hang Seng High - Dividend Index are approximately 3.4%, 6.7%, and 8% respectively. Considering the tax - exemption effect of insurance investments in Hong Kong stocks, their value far exceeds that of investing in ultra - long bonds. [3] - In the past two years, the imbalance in the cost - performance ratio between stocks and bonds has persisted. The core reason is that stocks carry price - fluctuation risks while offering high dividends. If the stock market can maintain an upward - trending and less - volatile pattern, there is a possibility of bond - market funds gradually flowing into the stock market to achieve a balance between stocks and bonds. [3] Comparison of Spreads among Bond Market Varieties - Regarding the pricing model of policy rates → funds → short - end → long - end, currently, the role of the MLF policy rate has diminished, and OMO is the most important pricing anchor in the bond market. However, the current term spreads are relatively flat, making it difficult to price long - term and ultra - long - term bonds according to historical rules. In the future, it is difficult for the yield - curve shape to steepen trendily, and investors should focus on finding relative opportunities. [31][32] - In terms of credit spreads, in the context of debt resolution and stricter urban - investment supervision in recent years, the "scarcity of credit assets" has become more prominent. Credit spreads still have room for compression. Specifically, avoid 1 - year ordinary credit bonds for now; 3 - 5 - year credit spreads still offer good value, and high - grade (AAA) credit spreads over 5 years are relatively attractive. Currently, inter - bank certificates of deposit have a better cost - performance ratio than short - term credit bonds, but there may be supply - demand disturbances at certain times. [33][34] - The spreads among bond varieties have significantly compressed. Low - liquidity policy - financial bonds have a slightly better cost - performance ratio, while the cost - performance ratio of local bonds has slightly weakened. [40] This Week's Operation Suggestions - Currently, the bond - market pricing is reasonable compared to credit and other broad - spectrum interest rates, but has a lower cost - performance ratio compared to overseas markets and the stock market. The fundamentals are still in a state of differentiation and bottom - grinding. The decline in deposit rates is positive for non - bank allocation demand. The long - term trend of the bond market has not reversed, but the trading space is limited, and it remains in a narrow - range fluctuation pattern in the short term. [42] - The market lacks major catalysts, so only short - term information such as funds and institutional behavior can be traded. This week, pay attention to PMI and credit - demand data, which are expected to be relatively strong and slightly negative for bonds. In terms of funds, as this week enters the end - of - month trading period, the funding center may rise slightly, but the central bank is expected to provide active support. In terms of institutional behavior, the deposit - rate cut last week led to an increase in inter - bank certificates of deposit and increased subscriptions of funds by wealth - management products, indicating that deposit migration is occurring, providing real - world support for bond - market allocation demand. [42] - In the medium term, the decline in broad - spectrum interest rates will have a certain impact on the bond market. The low of the 10 - year Treasury bond this year is expected to be around 1.5%, but it may be difficult to break through in the second quarter. The upper limit is expected to be between 1.7% - 1.8%. Therefore, if there is further adjustment from the current level, consider entering the market for allocation. [42] - In terms of operations, continue to recommend 3 - and 5 - year credit bonds and Tier 2 capital bonds, and seek opportunities for spread compression through short - end credit downgrading and long - end high - grade bonds. The narrow - range fluctuation pattern of long - term and ultra - long - term interest - rate bonds remains unchanged, so continue to buy on dips. The cost - performance ratio of the previously recommended ultra - long local bonds has slightly weakened, while that of policy - financial bonds has slightly increased. Inter - bank certificates of deposit are initially in the allocation range, but may fluctuate at relatively high levels due to liability - side disturbances. [44] This Week's Core Focus This week, focus on China's industrial - enterprise profits in April, the official manufacturing PMI in May, the euro - zone economic sentiment index in May, the Fed's monetary - policy meeting minutes in May, the US PCE in April, and the end - of - month funding situation. [45]

1. Investment Rating of the Reported Industry There is no information provided regarding the industry investment rating in the given content. 2. Core Views of the Report - The bond market is in a stalemate and under slight pressure, with ultra - long bonds rising first and then falling. The trading activity of ultra - long bonds decreased slightly last week, but it was still quite active. The term spread of ultra - long bonds narrowed, and the variety spread showed mixed trends [1][4][11]. - For the 30 - year treasury bond, as of May 23, the spread between the 30 - year and 10 - year treasury bonds was 17BP, at a historically low level. With the weakening of policy support, the probability of a decline in bond yields is higher, but the term spread protection is limited [2][12]. - For the 20 - year CDB bond, as of May 23, the spread between the 20 - year CDB bond and the 20 - year treasury bond was 2BP, at a historically extremely low level. With the weakening of policy support, the probability of a decline in bond yields is higher, but the variety spread protection is limited [3][13]. 3. Summary According to the Directory 3.1 Weekly Review 3.1.1 Ultra - long Bond Review - Last week, important events included the release of April economic data (the domestic economy declined significantly compared to March but continued to develop positively), a 500 - billion MLF operation in May with a 10BP cut in LPR after half a year, balanced funds during the tax period, and a relatively high winning bid rate for the new 10 - year treasury bond on Friday, which put slight pressure on the bond market. Overall, the bond market was in a stalemate and under slight pressure, with ultra - long bonds rising first and then falling. The trading activity of ultra - long bonds decreased slightly but remained quite active. The term spread of ultra - long bonds narrowed, and the variety spread showed mixed trends [1][4][11]. 3.1.2 Ultra - long Bond Investment Outlook - **30 - year Treasury Bond**: As of May 23, the spread between the 30 - year and 10 - year treasury bonds was 17BP, at a historically low level. The April economic data showed resilience, with the estimated GDP growth rate of about 4.1% year - on - year, a 0.8% decline from March but still higher than the annual target. The CPI in April was - 0.1% and PPI was - 2.7%, indicating obvious deflation risks. With the recent easing of Sino - US trade frictions, investors' pessimistic expectations have dissipated. The short - term focus will return to the second - quarter domestic economic data. It is expected that with the weakening of policy support, the probability of a decline in bond yields is higher, but the term spread protection is limited [2][12]. - **20 - year CDB Bond**: As of May 23, the spread between the 20 - year CDB bond and the 20 - year treasury bond was 2BP, at a historically extremely low level. Similar to the 30 - year treasury bond situation, with the weakening of policy support, the probability of a decline in bond yields is higher, but the variety spread protection is limited [3][13]. 3.1.3 Ultra - long Bond Basic Overview - The balance of outstanding ultra - long bonds exceeded 21.1 trillion. As of April 30, the total amount of ultra - long bonds with a remaining term of more than 14 years was 21,157.7 billion (excluding asset - backed securities and project revenue notes), accounting for 14.2% of the total bond balance. Local government bonds and treasury bonds are the main varieties. By variety, treasury bonds accounted for 25.6% (5,422.3 billion), local government bonds accounted for 68.2% (14,427.6 billion), etc. By remaining term, the 30 - year variety had the highest proportion [14]. 3.2 Primary Market 3.2.1 Weekly Issuance - Last week (from May 12 to May 16, 2025), a large amount of ultra - long bonds were issued, with a total of 242.4 billion yuan. Compared with the previous week, the total issuance of ultra - long bonds increased significantly. By variety, treasury bonds accounted for 121 billion, local government bonds accounted for 106.4 billion, etc. By term, 15 - year bonds accounted for 22.9 billion, 20 - year bonds accounted for 37.2 billion, 30 - year bonds accounted for 132.2 billion, and 50 - year bonds accounted for 50 billion [19]. 3.2.2 This Week's Pending Issuance - The announced issuance plan for ultra - long bonds this week totals 111.7 billion yuan. By variety, ultra - long treasury bonds account for 0 billion, ultra - long local government bonds account for 104.9 billion, and ultra - long medium - term notes account for 6.9 billion [23]. 3.3 Secondary Market 3.3.1 Trading Volume - Last week, the trading of ultra - long bonds was quite active, with a trading volume of 861.7 billion yuan, accounting for 10.2% of the total bond trading volume. By variety, ultra - long treasury bonds accounted for 31.4% of the total treasury bond trading volume, ultra - long local bonds accounted for 49.6% of the total local bond trading volume, etc. Compared with the previous week, the trading activity of ultra - long bonds decreased slightly, with the trading volume decreasing by 43.8 billion yuan and the proportion decreasing by 0.5%. Among them, the trading volume of ultra - long treasury bonds decreased by 49.8 billion yuan, the trading volume of ultra - long local bonds increased by 3.1 billion yuan, etc. [26]. 3.3.2 Yield - Due to multiple important events last week, the bond market was in a stalemate and under slight pressure, with ultra - long bonds rising first and then falling. For treasury bonds, the yields of 15 - year, 20 - year, 30 - year, and 50 - year bonds changed by 2BP, - 1BP, 1BP, and 3BP to 1.88%, 1.98%, 1.89%, and 2.06% respectively. For CDB bonds, the yields of 15 - year, 20 - year, 30 - year, and 50 - year bonds changed by 0BP, 0BP, 1BP, and 3BP to 1.94%, 2.00%, 2.07%, and 2.30% respectively. For local bonds, the yields of 15 - year, 20 - year, and 30 - year bonds changed by 0BP, 0BP, and - 2BP to 2.08%, 2.12%, and 2.11% respectively. For railway bonds, the yields of 15 - year, 20 - year, and 30 - year bonds changed by - 3BP, - 4BP, and 0BP to 2.00%, 2.04%, and 2.13% respectively. For representative individual bonds, the yield of the 30 - year treasury bond active bond 24 Special Treasury Bond 06 changed by 1BP to 1.95%, and the yield of the 20 - year CDB bond active bond 21 CDB 20 changed by 0BP to 1.98% [33][34]. 3.3.3 Spread Analysis - **Term Spread**: Last week, the term spread of ultra - long bonds narrowed, and the absolute level was low. The spread between the 30 - year and 10 - year treasury bonds was 17BP, a change of - 3BP from the previous week, at the 1% quantile since 2010 [42]. - **Variety Spread**: Last week, the variety spread of ultra - long bonds showed mixed trends, and the absolute level was low. The spread between the 20 - year CDB bond and the treasury bond was 2BP, and the spread between the 20 - year railway bond and the treasury bond was 5BP, changing by 2BP and - 4BP respectively from the previous week, at the 4% and 2% quantiles since 2010 [46]. 3.4 30 - year Treasury Bond Futures - Last week, the main contract of the 30 - year treasury bond futures, TL2509, closed at 119.60 yuan, an increase of 0.32%. The total trading volume was 469,900 lots (a decrease of 182,500 lots), and the open interest was 129,300 lots (an increase of 6,141 lots). The trading volume decreased significantly compared with the previous week, while the open interest increased slightly [48].