Inflation Overview - July CPI remained flat year-on-year at 0.0%, better than the market expectation of -0.1% and consistent with prior predictions[1] - Month-on-month CPI increased by 0.4%, compared to a previous value of -0.1%, aligning with seasonal trends[1] - July PPI recorded a year-on-year decline of -3.6%, matching the previous value and falling short of the market expectation of -3.4%[1] CPI Components - Service prices rose by 0.6% month-on-month, contributing approximately 0.26 percentage points to the CPI increase[2] - Industrial consumer goods prices increased by 0.5% month-on-month, contributing about 0.17 percentage points to the CPI[2] - Food prices decreased by 1.6% year-on-year, primarily due to a high base effect from the previous year, impacting CPI by approximately -0.29 percentage points[5] PPI Insights - PPI's month-on-month decline of 0.2% was influenced by seasonal factors, including high temperatures and increased rainfall affecting construction demand[7] - Prices in the non-metallic mineral products sector fell by 1.4%, while coal mining prices decreased by 1.5%[7] - The prices of high-tech products, such as aircraft manufacturing, rose by 3.0%, indicating a shift towards high-end industrial development[9] Market Outlook - The market is expected to exhibit a dual bull structure in equities and bonds in the second half of the year, supported by a potential easing of US-China trade relations[1] - A-shares are anticipated to experience a structural rally characterized by alternating low-volatility dividends and technology growth[1] - The 10-year government bond yield is projected to decline to around 1.5% amid low probability of large-scale domestic demand stimulus[1]

Group 1 - The core viewpoint is that the Chinese market is expected to present a "dual bull" scenario for stocks and bonds in the second half of 2025, driven by structural investment opportunities in the new economy and a low-interest-rate environment leading to an asset shortage in the bond market [1][3] - The A-share market, despite uncertainties, is supported by a loose liquidity environment and recognition from decision-makers of the stock market's impact on public confidence and consumption [1][3] - Emerging markets, particularly the Greater China region, are seen as attractive investment opportunities, with structural opportunities in cyclical sectors like non-ferrous metals and stable performance in the industrial manufacturing sector [2][3] Group 2 - The bond market is influenced by significant changes, including the volatility of the US dollar index and the strengthening of the RMB, which historically correlates with better performance of domestic stock assets [2][3] - The current low-interest-rate environment, with one-year fixed deposit rates below 1%, is prompting a shift towards diversified asset allocation, including fixed income, stocks, overseas short-term bonds, and gold [3] - The bond market is expected to continue playing a stabilizing role in investment portfolios, with a favorable macro environment supporting its performance, despite declining yields [3]

Economic Indicators - The manufacturing PMI for July is at 49.3%, a decrease of 0.4 percentage points from June, indicating a weak recovery and potential peak in economic growth momentum[1] - The new orders index fell to 49.4%, down 0.8 percentage points from the previous month, entering a contraction zone, suggesting tightening market demand[13] - The comprehensive PMI output index is at 50.2%, down 0.5 percentage points from last month, still indicating overall expansion in production activities[27] Sector Performance - The production index for July is at 50.5%, a decline of 0.5 percentage points, but remains in the expansion zone for three consecutive months[3] - Equipment manufacturing PMI is at 50.3% and high-tech manufacturing PMI is at 50.6%, both above the critical point, indicating continued expansion in these sectors[1] - The consumer goods industry PMI is at 49.5%, down 0.9 percentage points, while the high-energy-consuming industries PMI is at 48.0%, up 0.2 percentage points, showing mixed performance across sectors[1] External Trade and Demand - The new export orders index is at 47.1%, down 0.6 percentage points, reflecting cautious attitudes among foreign trade enterprises due to uncertainties in tariffs[16] - Port cargo throughput in July increased by 10.9% year-on-year, indicating some resilience in actual export volumes despite potential sustainability issues[17] Price Trends - The main raw material purchase price index rose to 51.5%, up 3.1 percentage points, marking the first rise above the critical point since March, indicating improved market price levels[18] - The factory price index is at 48.3%, up 2.1 percentage points, suggesting a slight recovery in manufacturing prices[18]

Group 1 - The core viewpoint is that the domestic market in China is expected to show a "dual bull" pattern in both equity and bond markets in the second half of the year, driven by structural investment opportunities in new economy sectors and a low-growth, low-inflation environment in the bond market [1] - The A-share market, despite uncertainties, is likely to benefit from a loose liquidity environment and recognition from decision-makers of the stock market's impact on public confidence and consumption [1] - In the cyclical sector, there are structural opportunities in non-ferrous metals, but a comprehensive rebound in the sector requires significant improvement in macro demand [1] Group 2 - The technology sector is expected to experience a clear domestic and international divergence, with overseas demand for computing power exceeding expectations, particularly in hardware segments benefiting from global AI infrastructure, such as GPU supply chains and optical modules [2] - The bond market is influenced by China's rapid demographic changes and complex geopolitical situation, with a focus on consumption and technology as new growth points for the economy [2] - The investment strategy for the second half of the year should consider allocations to fixed income plus, equity assets, overseas short-term bonds, and gold to capitalize on potential benefits from China's economic transformation [2]

1. Report Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Core Viewpoints of the Report - After last week's unexpected adjustment, bond market interest rates may reach their peak. The main reasons for the adjustment are tight liquidity, increased inflation expectations due to "anti - involution", and the impact of the rising equity market on the bond market [7][14]. - The tight liquidity is not a cause - effect relationship with the bond market adjustment but a synchronous one. The central bank's increased MLF and reverse - repo operations on Friday indicate its intention to break the negative feedback, so the tight liquidity is not expected to last [7][14]. - The inflation expectations increase caused by "anti - involution" will not last long. It is difficult for the PPI to turn positive this year, and the market expectations will gradually subside, reducing the impact on the bond market [7][14]. - The equity market will continue to rise, but the stock market's rise is not a sufficient condition for interest rate hikes. The continued rise of the equity market will mainly be driven by the improved expectations of national governance and technological - led economic transformation, with a limited impact on the bond market. A scenario of both rising stocks and bonds is still possible [7][15]. - For highly liquid interest - rate bonds, it is recommended to gradually participate, such as 10 - year treasury bonds with yields above 1.7% and 30 - year treasury bonds with yields above 1.95%. For less liquid credit bonds, there may still be a risk of catch - up decline, so it is advisable to wait and see. For convertible bonds, although the valuation is expensive, their investment value driven by the equity market is still optimistic [7][19]. 3. Summary According to the Table of Contents 3.1 Interest Rate Viewpoint: Re - examining the Reasons for Bond Market Adjustment - Interest Rates May Reach the Peak - The reasons for the bond market adjustment include tight liquidity, increased inflation expectations due to "anti - involution", and the impact of the rising equity market. However, these factors are not expected to have a long - term negative impact on the bond market [7][14]. - The tight liquidity is part of a negative feedback loop but the central bank's actions suggest it will not persist. The inflation expectations increase from "anti - involution" will fade as PPI is unlikely to turn positive this year. The equity market's rise does not necessarily lead to a bond market decline, and a dual - bull market for stocks and bonds is possible [7][15]. 3.2 This Week's Key Points in the Fixed - Income Market: The Fed's Interest Rate Decision Will Be Announced 3.2.1 Intensive Release of Overseas Data - This week, China will release July PMI, the US will release July non - farm payrolls, July ADP, and the Fed's interest rate decision, and the Eurozone will release the June unemployment rate [21]. 3.2.2 The Issuance of Interest - Rate Bonds This Week Continues to Remain at a Relatively High Level - This week, it is expected to issue 677.2 billion yuan of interest - rate bonds, which is at a relatively high level compared to the same period [22]. 3.3 Review and Outlook of Interest - Rate Bonds: Bond Funds Have Experienced Continuous Redemptions 3.3.1 Slight Net Withdrawal of Reverse Repos - The central bank's open - market operations maintained a neutral net injection. The reverse - repo issuance volume first decreased and then increased, with a total of 1.6563 trillion yuan, and a slight net withdrawal of 7.05 billion yuan. The MLF had a net injection of 10 billion yuan this month [31][32]. - The capital interest rate increased from a low level, and the trading volume showed an obvious reverse change. The weekly average of the repurchase trading volume was around 7.7 trillion yuan, and the overnight ratio averaged 88.5%. The overnight and 7 - day DR and R interest rates all increased [32]. - A large number of certificates of deposit (CDs) matured, resulting in a significantly negative net financing. The secondary market yield of CDs increased rapidly, driving up the primary issuance rate [39]. 3.3.2 Obvious Upward Adjustment of Interest Rates - At the beginning of the week, with loose liquidity but hot sentiment in the stock and commodity markets, there was a large amount of profit - taking funds in the bond market, and the long - end interest rates adjusted slightly. In the second half of the week, as the central bank's injection weakened, the liquidity pressure increased sharply, and bond funds faced a large number of redemptions, causing interest rates to continue to rise. On July 27, the yields of 1 - year, 3 - year, 5 - year, 7 - year, and 10 - year treasury bonds all increased compared to the previous week [55]. 3.4 High - Frequency Data: The Improvement in the Operating Rate Did Not Persist - On the production side, the operating rates were divided. The blast furnace and PTA operating rates remained flat, while the semi - steel tire and petroleum asphalt operating rates declined. The year - on - year growth rate of the average daily crude steel production in mid - July remained negative [66]. - On the demand side, the year - on - year growth rates of passenger car manufacturers' wholesale and retail sales remained high. The year - on - year growth rate of the commercial housing transaction area continued to be negative. The SCFI and CCFI composite indexes both decreased [66]. - On the price side, the crude oil price decreased, the copper and aluminum prices increased, the coal prices were divided, the coking coal price rose rapidly, and the power coal price remained flat. The building materials composite index increased, the cement index decreased, and the glass index increased significantly. The production and inventory of rebar increased, and the futures price increased. The prices of vegetables and pork increased, while the price of fruits decreased [67].

Group 1 - The report suggests that the bond market interest rates may have reached a peak after an unexpected adjustment, driven by three main factors: tight liquidity, rising inflation expectations due to "anti-involution," and the impact of a rising equity market on the bond market [4][7][11] - The analysis indicates that the tight liquidity is not a causal factor for the bond market adjustment but rather a synchronous relationship, with the central bank's recent operations showing an intention to alleviate the negative feedback loop [4][7][11] - The report anticipates that the inflation expectations driven by "anti-involution" will not persist for long, with the Producer Price Index (PPI) unlikely to turn positive within the year, leading to a gradual calming of market expectations [4][7][11] Group 2 - The report highlights that the equity market is expected to continue rising, but this does not necessarily imply an increase in interest rates. The upward momentum in the equity market will likely return to expectations of improved national governance and technological leadership in economic transformation [8][11] - The report recommends gradual participation in liquid interest rate bonds, such as 10-year government bonds yielding over 1.7% and 30-year government bonds yielding over 1.95%, while advising caution with less liquid credit bonds due to potential downside risks [11][12] - The report notes that the bond market experienced a significant adjustment, with the 10-year government bond yield surpassing 1.7%, reflecting a broader trend of rising yields across various maturities [35][36][41]

Core Viewpoint - The document emphasizes that the research material is intended solely for professional investors associated with Huachuang Securities, highlighting the importance of appropriate investor suitability management [1][3]. Group 1 - The research team at Huachuang Securities is positioned to provide timely exchanges of viewpoints specifically for professional investors in the context of new media [3]. - The material is derived from previously published research reports by Huachuang Securities, and any discrepancies should refer to the complete content of the original reports [4]. - The opinions and analyses presented may change without notice based on subsequent reports from Huachuang Securities [4].

Group 1 - The report argues that an increase in the equity market does not necessarily lead to a rise in interest rates, indicating a potential for a simultaneous bull market in both stocks and bonds [5][8][15] - Historical patterns show that both scenarios of rising equity markets with either rising or falling interest rates have occurred, suggesting that the underlying reasons for stock market increases are crucial [9][11] - The current stock market rise is attributed to improved governance expectations and economic transformation, rather than a significant increase in household deposits moving into equities [11][13] Group 2 - The report highlights that the fixed income market is experiencing a high issuance of interest rate bonds, with an expected issuance of 940.8 billion yuan this week, indicating a robust supply environment [16][18] - Recent data shows a significant increase in reverse repos and a net injection of liquidity by the central bank, which has implications for bond market dynamics [23][24] - The report notes that the leverage ratio in the bond market has risen above seasonal averages, reflecting increased trading activity and potential adjustments in investor strategies [13][14]

Core Viewpoint - The 30-year government bond ETF from Bosera has shown strong performance and liquidity, with significant capital inflows and a favorable market environment driven by a loose monetary policy [3][4][5]. Group 1: Performance Metrics - As of July 17, 2025, the 30-year government bond ETF from Bosera has increased by 0.38% in July [3]. - The ETF's latest scale reached 9.152 billion yuan, marking a one-year high [4]. - The fund's net inflow was 45.0394 million yuan, with a total of 1.441 billion yuan in net inflows over the past five trading days [4]. - The ETF has achieved a net value increase of 13.64% over the past year, ranking 5th out of 412 in the index bond fund category [4]. Group 2: Market Dynamics - The trading volume for the ETF was active, with a turnover rate of 13.16% and a transaction volume of 1.203 billion yuan [3]. - The central bank's current stance is accommodative, supporting liquidity in the market amid global uncertainties [3]. - The insurance industry has raised over 74 billion yuan in capital this year, indicating a growing demand for capital [3]. Group 3: Risk and Fee Structure - The maximum drawdown since the ETF's inception is 6.89%, with a tracking error of 0.035% over the past month [5]. - The management fee for the ETF is 0.15%, and the custody fee is 0.05% [5]. - The ETF closely tracks the Shanghai Stock Exchange 30-year government bond index, reflecting the overall performance of corresponding government bonds [5].

Group 1: Economic Outlook - BlackRock's Chief China Economist highlighted that China's export data exceeded expectations in the first half, with June exports growing by 5.8% year-on-year, but pressures are expected to increase in the second half due to a weakening real estate market and softening consumption in the restaurant sector [3] - The company noted that while there are short-term pressures on demand, recent policy adjustments could benefit long-term economic structure improvements, enhancing foreign investment interest in the Chinese market [3] - The expectation is for policy measures to gain momentum towards the end of September, with nominal interest rates having significantly decreased, although real interest rates remain high [3] Group 2: Investment Strategy - BlackRock's investment strategy in the current low-interest-rate environment favors equities, suggesting a core allocation to stocks, with interest rate bonds serving as stabilizers and credit bonds maintained at a neutral stance [3][4] - The focus is on three asset categories: stocks with strong cash flow value, broad consumption sectors benefiting from policy support, and traditional high-growth sectors like AI and healthcare [4] - The importance of gold as a hedging tool in asset allocation is expected to continue to rise, with a positive outlook on U.S. stocks despite their current high valuations due to solid fundamentals [4] Group 3: A-Share and Hong Kong Market Outlook - BlackRock's Chief Equity Investment Officer expressed optimism for the A-share market in the second half, citing government policies aimed at stimulating consumption and improving the operating environment for listed companies [6] - For the Hong Kong market, potential opportunities are identified in the Hang Seng Technology sector and high-quality traditional enterprises, with expectations for valuation improvements if mid-year reports show strong performance [6] Group 4: Debt Market Insights - The debt market is experiencing an "asset shortage," with extreme compression of term spreads and credit spreads, leading to high valuations and low yield levels [7] - The expectation is for the central bank to maintain liquidity support, which will underpin the debt market, although the current high valuations make the market sensitive to risks [7]