1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Short - term liquidity depends on central bank's injections. Investors can maintain duration and seize opportunities from falling interest rates [2]. - In mid - July, there are both positive and negative factors for the liquidity. The key variable is the central bank's roll - over of outright reverse repos. DR007 is likely to fluctuate between 1.40% - 1.50%. There are few negative factors for the bond market. If there is a tightening trend in liquidity, a further decline in large banks' lending volume should be observed first [3]. 3. Summary According to Related Catalogs 3.1 This Week's Institutional Behavior Review: Is There a Tightening Trend in Liquidity? - **Yield Curve**: Yields of treasury bonds and China Development Bank bonds generally increased. For treasury bonds, 1Y yield rose 3bp, 3Y and 5Y rose 4bp, 7Y rose 3bp, 10Y rose about 3bp, 15Y and 30Y rose 2bp. For China Development Bank bonds, 1Y yield rose about 4bp, 3Y rose 4bp, 5Y rose about 6bp, 7Y and 10Y rose 3bp, 15Y rose 2bp, and 30Y changed less than 1bp [13]. - **Term Spread**: The spread between treasury bonds and China Development Bank bonds increased. For treasury bonds, the short - term spread narrowed and the long - term spread widened. For China Development Bank bonds, the short - term spread was divided, and the medium - and long - term spread narrowed [16]. 3.2 Bond Market Leverage and Liquidity - **Leverage Ratio**: It dropped to 107.3%. From July 7th to July 11th, 2025, the leverage ratio decreased continuously during the week. As of July 11th, it was about 107.3%, down 0.69pct from last Friday and 0.58pct from this Monday [20]. - **Average Daily Turnover of Pledged Repurchase**: The average daily turnover of pledged repurchase this week was 8.2 trillion yuan, with an average overnight proportion of 89.57%. From July 7th to July 11th, the average daily turnover was 8.2 trillion yuan, up 0.61 trillion yuan from last week. The average overnight turnover was 7.4 trillion yuan, up 0.55 trillion yuan month - on - month, and the average overnight proportion was 89.57%, down 0.14pct month - on - month [26][27]. - **Liquidity**: Banks' lending volume continued to decline. From July 7th to July 11th, the lending volume of the banking system decreased. On July 11th, large banks and policy banks' net lending was 4.65 trillion yuan; joint - stock banks and urban and rural commercial banks' average daily net lending was 0.66 trillion yuan, and on July 11th, they had a net inflow of 0.91 trillion yuan. The banking system's net lending was 3.74 trillion yuan [31]. 3.3 Duration of Medium - and Long - Term Bond Funds - **Median Duration**: It dropped to 2.87 years. From July 7th to July 11th, the median duration of medium - and long - term bond funds was 2.87 years (de - leveraged) and 3.21 years (leveraged). On July 11th, the median duration (de - leveraged) was 2.87 years, down 0.01 year from last Friday; the median duration (leveraged) was 3.21 years, up 0.04 year from last Friday [45]. - **Duration of Interest - Rate Bond Funds**: It rose to 3.93 years. Among different types of bond funds, the median duration (leveraged) of interest - rate bond funds rose to 3.93 years, up 0.02 year from last Friday; the median duration (leveraged) of credit bond funds rose to 2.98 years, up 0.01 year from last Friday; the median duration (de - leveraged) of interest - rate bond funds was 3.55 years, up 0.09 year from last Friday; the median duration (de - leveraged) of credit bond funds was 2.73 years, down 0.02 year from last Friday [48]. 3.4 Category Strategy Comparison - **China - US Yield Spread**: It generally widened. The 1Y spread widened 3bp, 2Y widened 7bp, 3Y widened 6bp, 5Y widened 5bp, 7Y widened 3bp, 10Y widened about 3bp, and 30Y widened 2bp [52]. - **Implied Tax Rate**: The short - term spread widened, and the long - term spread narrowed. As of July 11th, the spread between China Development Bank bonds and treasury bonds widened 1bp for 1Y, changed less than 1bp for 3Y, widened 2bp for 5Y, widened 1bp for 7Y and 10Y, changed less than 1bp for 15Y, and narrowed 2bp for 30Y [53]. 3.5 Changes in Bond Lending Balance On July 11th, the concentration of lending for active 10Y treasury bonds, active 10Y China Development Bank bonds, second - active 10Y China Development Bank bonds, and active 30Y treasury bonds showed an upward trend, while the concentration of second - active 10Y treasury bonds showed a downward trend. For all institutions, it showed an upward trend [56].

Group 1: Monetary Market Overview - The central bank's net liquidity withdrawal this week was 226.5 billion yuan, with a marginal tightening in the funding environment, as DR001 and DR007 remained below 1.35% and 1.5% respectively[6] - The average daily transaction volume of pledged repos increased slightly week-on-week, but the overall scale has dropped to the lowest level since early June, with a significant decline in net financing from large banks[13] - The funding gap index rose to -314.5 on Friday, indicating a worsening liquidity situation compared to the previous week's -701.0[13] Group 2: Government Debt and Tax Payments - This week, the net payment of government debt was 251.1 billion yuan, aligning with expectations, while next week is projected to see an increase to 428.5 billion yuan, primarily concentrated on Monday and Tuesday[18] - The cumulative issuance of new general bonds in 2025 reached 466.5 billion yuan, with special bonds at 2227.5 billion yuan, and refinancing bonds at 1215.6 billion yuan[18] - Next week, the expected scale of national debt payments is 491.2 billion yuan, with significant payments due on July 15, coinciding with the tax payment deadline[18] Group 3: Market Reactions and Predictions - The central bank's operations indicate a reluctance to allow DR001 to breach the 1.3% lower limit, leading to a decrease in net financing from large banks[16] - Despite the upcoming tax payments and government debt payments, the central bank is expected to increase open market operations to mitigate external disturbances, suggesting a stable liquidity environment[16] - Predictions for Q3 government debt net financing have been adjusted downwards, with expected issuance of approximately 2.54 trillion yuan in July and net financing of about 1.38 trillion yuan[18]

Liquidity Overview - The average daily lending level of banks decreased from 5.0 trillion yuan to 4.3 trillion yuan, with a low of 3.7 trillion yuan on Friday[2] - The central bank conducted a net withdrawal of 2,250 billion yuan on July 7, marking the end of the cross-season liquidity support[1] - The overnight and 7-day funding rates rose by 1-2 basis points compared to the previous week due to continued net withdrawal pressure[1] Market Trends - As of July 11, the R001 rate increased by 4.3 basis points to 1.40%, while the R007 rate rose by 2.1 basis points to 1.51%[1] - The issuance rate for 1-year certificates of deposit from state-owned banks increased from 1.59% to 1.62% during the week[2] - The weighted issuance rate for interbank certificates of deposit was 1.61%, down 1 basis point from the previous week[7] Future Outlook - The upcoming tax period (July 14-18) is expected to cause fluctuations in funding prices, with overnight rates potentially ranging between OMO and OMO+5 basis points[3] - The central bank's attitude remains supportive, as indicated by the resumption of reverse repos on July 10-11[3] - The stability of funding rates during the tax period will depend on the central bank's medium- and long-term fund injections[3] Government Bonds - Net payments for government bonds increased to 398.5 billion yuan for the period of July 14-18, with both national and local bonds seeing an increase in net payments[6] - The planned issuance of government bonds for the same period is 4,642 billion yuan, slightly down from the previous week[6] Interbank Certificates of Deposit - The pressure from maturing certificates of deposit is increasing, with 7,822 billion yuan maturing from July 14-18, up from 5,213 billion yuan the previous week[7] - The average weighted maturity of interbank certificates of deposit decreased to 8.9 months from 9.7 months[7]

Report Industry Investment Rating No relevant information provided. Core Viewpoints - The central bank's continuous net investment maintains loose market liquidity, and the term spread further widens, reflecting a definite expectation of loose short - term liquidity. Amid complex overseas situations and domestic stock market fluctuations, the bond market still has short - term repair momentum. In the medium and long term, supported by a weak economic fundamentals and loose policies, the foundation for a bond market bull market remains. In the short term, the bond market will continue to fluctuate due to the game between loose funding and supply disturbances, but the market's focus is gradually shifting to the Politburo meeting in July and the evolution of Sino - US trade relations. Future policy stances and external disturbances will dominate the market direction [2][3] Summary by Directory 1. Interest Rate Pricing Tracking Indicators - **Price Indicators**: China's CPI (monthly) has a month - on - month change of - 0.10% and a year - on - year change of 0.10%; China's PPI (monthly) has a month - on - month change of - 0.40% and a year - on - year change of - 3.60% [8] - **Monthly Economic Indicators**: Social financing scale is 426.16 trillion yuan, with a month - on - month increase of 2.16 trillion yuan (+0.51%); M2 year - on - year is 7.90%, with a month - on - month decrease of 0.10% (-1.25%); Manufacturing PMI is 49.70%, with a month - on - month increase of 0.20% (+0.40%) [8] - **Daily Economic Indicators**: The US dollar index is 97.58, with a day - on - day increase of 0.09 (+0.09%); The offshore US dollar - to - RMB exchange rate is 7.1791, with a day - on - day decrease of 0.003 (-0.04%); SHIBOR 7 - day is 1.47, with a day - on - day increase of 0.01 (+0.68%); DR007 is 1.49, with a day - on - day increase of 0.02 (+1.21%); R007 is 1.68, with a day - on - day increase of 0.04 (+2.35%); The 3 - month inter - bank certificate of deposit (AAA) is 1.53, with a day - on - day decrease of 0.01 (-0.60%); The AA - AAA credit spread (1Y) is 0.06, with a day - on - day increase of 0.00 (-0.60%) [8] 2. Overview of the Treasury Bond and Treasury Bond Futures Market - The report presents multiple graphs related to the treasury bond futures market, including the closing price trend of the main continuous contracts, the price change rates of each variety, the maturity yield trend of treasury bonds at each term, the valuation change of treasury bonds at each term in the past day, the precipitation of funds in each variety of treasury bond futures, the proportion of open interest in each variety, the net open interest proportion of the top 20 in each variety, the long - short open interest ratio of the top 20 in each variety, the trading - to - open - interest ratio of each variety, the bond lending turnover and the total open interest of treasury bond futures, the spread between China Development Bank bonds and treasury bonds, and the issuance of treasury bonds [10][12][14][17][20][23][25] 3. Overview of the Money Market Funding Situation - The report shows graphs of the interest rate corridor, the central bank's open - market operations, the Shibor interest rate trend, the maturity yield trend of inter - bank certificates of deposit (AAA), the trading statistics of inter - bank pledged repurchase, and the issuance of local government bonds [30][32][35] 4. Spread Overview - The report includes graphs of the inter - term spread trend of each variety of treasury bond futures and the spread between the spot - bond term spread and the futures cross - variety spread for different combinations [39][41][42] 5. Two - Year Treasury Bond Futures - The report provides graphs of the implied interest rate of the TS main contract and the treasury bond maturity yield, the IRR of the TS main contract and the funding 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 [44][46][52] 6. Five - Year Treasury Bond Futures - The report offers graphs of the implied interest rate of the TF main contract and the treasury bond maturity yield, the IRR of the TF main contract and the funding 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 [51][54] 7. Ten - Year Treasury Bond Futures - The report presents graphs of the implied interest rate of the T main contract and the treasury bond maturity yield, the IRR of the T main contract and the funding 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 [59][62] 8. Thirty - Year Treasury Bond Futures - The report shows graphs of the implied interest rate of the TL main contract and the treasury bond maturity yield, the IRR of the TL main contract and the funding 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 [67][70][73] Strategies - **Unilateral Strategy**: With the decline of the repurchase rate and the fluctuating price of treasury bond futures, the 2509 contract is neutral [3] - **Arbitrage Strategy**: Pay attention to the widening of the basis [3] - **Hedging Strategy**: There is medium - term adjustment pressure, and short - side investors can use far - month contracts for moderate hedging [3]

Report Summary 1. Report Industry Investment Rating There is no information provided about the report industry investment rating in the given content. 2. Core Viewpoints - In the short - term, with few domestic and foreign positive factors, the market sentiment and liquidity are fair, and the stock index may show a relatively strong oscillatory pattern. - In the long - term, the Politburo meeting at the end of July will set the policy tone for the second half of the year. Given the possible further deterioration of real estate sales and investment and the overall weakness of consumption, policies are expected to further strengthen to support domestic demand. - The uncertainty of US tariff policies, the approaching Fed rate - cut time, and changes in overseas liquidity and geopolitical patterns will bring periodic trading opportunities for the stock index [4]. 3. Summary by Related Content Money Market - DR001 closed at 1.32 with a 0.58bp increase, DR007 at 1.49 with a 1.78bp increase, GC001 at 1.16 with a 27.50bp decrease, and GC007 at 1.49 with a 2.00bp decrease. SHBOR 3M closed at 1.56 with a 0.30bp decrease, and LPR 5 - year remained at 3.50. - 1 - year, 5 - year, and 10 - year treasury bonds closed at 1.37, 1.51, and 1.66 respectively, with increases of 1.25bp, 2.25bp, and 1.35bp. The 10 - year US Treasury bond closed at 4.34 with an 8.00bp decrease. - The central bank conducted 90 billion yuan of 7 - day reverse repurchase operations yesterday, with 57.2 billion yuan of reverse repurchases maturing, resulting in a net injection of 32.8 billion yuan. This week, there are 652.2 billion yuan of reverse repurchases maturing in the central bank's open - market operations, with 34 billion yuan maturing on Friday. The inter - bank market liquidity has further eased, and major repurchase rates have declined [4]. Stock Index Market - The closing prices of major stock indices on the previous day: CSI 300 at 4010 (up 0.47%), SSE 50 at 2757 (up 0.62%), CSI 500 at 2983 (up 0.50%), and CSI 1000 at 6407 (up 0.25%). The trading volume of IF, IH, IC, and IM increased by 18.2%, 32.7%, 3.7%, and 3.6% respectively, and the positions increased by 4.8%, 11.2%, 2.4%, and 3.5% respectively. - The previous day's trading volume in the two stock markets was 1.4942 trillion yuan, a slight reduction of 11 billion yuan. Most industry sectors rose, with real estate development, engineering consulting services, etc. leading the gains, and jewelry, shipbuilding leading the losses. - The expectation of real - estate policies resurfaced yesterday, and the "small essays" on real - estate significantly boosted the real - estate and building - materials sectors. It is rumored that a central urban work conference will be held next week, which may make policy arrangements for restarting the shantytown renovation [4]. Futures Contract Premium and Discount Situation - The premium and discount rates of IF, IH, IC, and IM contracts in different periods are provided, with some contracts showing premium and others showing discount [4].

Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints - For stock index futures, in the short - term, the stock index discount has returned to an extreme level. In the medium - to - long - term, the report maintains the judgment of going long on the economy. It is recommended to allocate long positions in forward contracts of various varieties on dips [2]. - For treasury bond futures, it is recommended to hedge T and TL contracts on rallies for medium - to - long - term [2]. 3. Summary by Relevant Catalogs (1) Stock Index Futures - **Market Performance**: On July 10, most of the four major A - share stock indices rose. The Shanghai Composite Index rose 0.48% to 3509.68 points, the Shenzhen Component Index rose 0.47% to 10631.13 points, the ChiNext Index rose 0.22% to 2189.58 points, and the Sci - tech Innovation 50 Index fell 0.32% to 979.99 points. Market turnover was 15,151 billion yuan, a decrease of 124 billion yuan from the previous day. In terms of industry sectors, real estate (+3.19%), petroleum and petrochemicals (+1.54%), and steel (+1.44%) led the gains; automobiles (-0.62%), media (-0.54%), and national defense and military industry (-0.41%) led the losses. From the perspective of market strength, IH>IC>IF>IM. The number of rising, flat, and falling stocks was 2,945, 192, and 2,278 respectively. The net inflows of institutional, main, large - scale, and retail investors in the Shanghai and Shenzhen stock markets were - 61, - 150, - 9, and 221 billion yuan respectively, with changes of +57, +17, - 43, and - 31 billion yuan respectively [2]. - **Basis and Annualized Yield**: The basis of the next - month contracts of IM, IC, IF, and IH were 102.57, 78.65, 30.82, and 14.93 points respectively, and the annualized basis yields were - 14.82%, - 12.17%, - 7.12%, and - 5.02% respectively. The three - year historical quantiles were 14%, 10%, 18%, and 23% respectively [2]. - **Trading Strategy**: Allocate long positions in forward contracts of various varieties on dips [2]. (2) Treasury Bond Futures - **Market Performance**: On July 10, the yields of treasury bond futures rose across the board. Among the active contracts, the implied interest rate of the two - year bond was 1.367, up 2.53 bps from the previous day; the implied interest rate of the five - year bond was 1.505, up 3.13 bps; the implied interest rate of the ten - year bond was 1.601, up 2.16 bps; and the implied interest rate of the thirty - year bond was 1.932, up 1.9 bps [2]. - **Cash Bonds**: The current active contract is the 2509 contract. The CTD bonds, yield changes, corresponding net basis, and IRR of 2 - year, 5 - year, 10 - year, and 30 - year treasury bond futures are provided [2]. - **Funding Situation**: The central bank injected 900 billion yuan and withdrew 572 billion yuan in open - market operations, with a net injection of 328 billion yuan [2]. - **Trading Strategy**: Hedge T and TL contracts on rallies for medium - to - long - term [2]. (3) Economic Data - **High - Frequency Data**: Recent high - frequency data shows that the real estate market has contracted, while the other four indicators are similar to the same period [10]. - **Domestic Meso - level Data Tracking**: Based on the comparison of meso - level data of each module with the same period in the past five years (year - on - year and month - on - month), a scoring system shows the real estate market's contraction [11][13].

Summary of Conference Call Notes Industry Overview - The discussion primarily revolves around the **real estate** and **bond markets** in China, highlighting the interplay between monetary policy, market sentiment, and urban renewal initiatives. Key Points and Arguments Bond Market Adjustments - The bond market is experiencing adjustments due to multiple factors, including a recovery in liquidity, increased stock market risk appetite, and expectations surrounding urban renewal policies. The central bank's reverse repos have tightened liquidity, with R01 returning to **1.4%** and one-year deposit rates rising to **1.62%** [1][3]. - Future liquidity tightening is expected to ease due to seasonal factors and increased fiscal spending, with a low likelihood of significant liquidity tightening [1][6]. - The bond market's adjustment is also influenced by the performance of the stock market, particularly the real estate sector, which has seen a **3%** increase in A-shares [2][3]. Urban Renewal Policies - Urban renewal policies have an uncertain impact on the real estate market. Relaxing purchase restrictions and lowering down payments have limited effects, as residents are less inclined to view housing as an investment [1][7]. - The reliance on special bonds for urban renewal projects faces challenges due to the balance between demolition costs and potential returns, making significant short-term impacts unlikely [1][9][10]. - The implementation of urban renewal projects is slow, often taking **three to five years** from demolition to sale, which limits their immediate effect on the housing market [10]. Credit and Valuation Risks in Real Estate - Current credit risks in the real estate market are manageable, with leading developers facing lower financing costs and limited asset depreciation potential. However, valuation risks remain, particularly if sales plans fall short of expectations [11][12]. - The focus is on developers with strong local government support, as they present better investment opportunities compared to those under financial pressure [12]. Market Sentiment and Future Expectations - The market is characterized by a "weak reality, strong expectation" phase, where current conditions do not reflect the optimistic expectations for future performance [13][23]. - If expectations do not materialize, there could be further downward pressure on interest rates. The current environment is more favorable than previous periods, suggesting potential buying opportunities [13][23]. Monetary Policy and Interest Rates - If the Federal Reserve lowers interest rates, the People's Bank of China (PBOC) may act preemptively to stabilize the market. An increase in bond demand is anticipated in August, with potential easing of liquidity [4][16]. - The issuance of government bonds is expected to improve in the second half of the year, with a reduction in supply and an increase in demand likely to stabilize interest rates [17]. Machine Learning Insights - Machine learning models indicate that key variables affecting global yields include real estate transaction volumes and land premium rates, which significantly influence the fundamentals and the bond market [22]. Policy Expectations - There are expectations for gradual relaxation of restrictive policies, but the core issue remains whether the housing market will leverage or de-leverage. The emotional impact of policy changes is more significant than their practical effects [19][20]. Other Important Insights - The current market sentiment is influenced by fear and uncertainty, with potential for short-term volatility in interest rates. However, the overall economic conditions suggest that significant highs are unlikely [18]. - The PBOC's potential reactivation of government bond trading is anticipated, which could further influence market dynamics [25]. This summary encapsulates the critical insights from the conference call, focusing on the real estate and bond markets, their interdependencies, and the broader economic implications.

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report - Recent bond market trends are mainly about compressing various convex points. The 10 - year and 30 - year Treasury yields have faced resistance at key levels since June 11. The 10 - year Treasury yield is expected to fluctuate between 1.6% - 1.65%. In July, the bond market may continue to flatten various spreads, and from August to September, it may further open up space with changes in fundamentals and trade information [2][9][41]. - The money supply is unlikely to drive further decline in bond yields. The bond market has fully priced in the loose money supply since the second quarter, and there is a low probability of the money supply further loosening and inverting with the policy rate. Instead, any marginal change in the money supply could challenge the bond market [2][9]. - Whether the 10 - year Treasury can break through key points in the third quarter depends on fundamentals and trade frictions. The bond market is insensitive to small changes in fundamentals but may react to significant ones. Attention should be paid to the "one - time" pricing of trade friction information in the bond market [9]. 3. Summary by Relevant Catalogs 3.1 Different Types of Bond Bull: Bond Market Seeking Convex Point Returns - Since June 11, the 10 - year Treasury yield has faced resistance at 1.6%, and the 30 - year Treasury yield at around 1.8%. In the nearly one - month trading period, neither could break through downward. The bond market trends from June 11 to July 8 focused on compressing convex points [13]. - **Term Convex Point**: The long - end spreads of interest - rate bonds converged, and the spreads of long - duration credit bonds also compressed significantly. For example, the yields of 20Y and 50Y Treasuries decreased by 6.5bp and 7.5bp respectively, and the spreads of 5Y and 10Y AA + medium - and short - term notes narrowed by 6.4bp and 11.1bp [13]. - **Variety Convex Point**: The overall credit spread compressed to a historical low. Longer - duration and lower - grade varieties performed well, especially Tier 2 and perpetual bonds. For instance, the credit spread of AA - rated urban investment bonds compressed by 6.7bp, and for 5Y Tier 2 bonds, the compression order was AA > AA + > AAA - [13]. - **Liquidity Convex Point**: The difference in liquidity premiums between active and non - active bonds weakened, and the spread between new and old bonds compressed significantly. For example, the spread between the active and previous active 10Y China Development Bank bonds compressed from 4.3bp to 1.3bp [14]. 3.2 Money Fails to Drive the Bond Market to Break Through Key Points - Since the second quarter, the money supply has been loose, but the bond market has fully priced it. There is a low probability of the money supply further loosening and inverting with the policy rate. Due to the rising inter - bank leverage ratio and large - scale lending by major banks, any marginal change in the money supply could challenge the bond market [27]. - Only Treasuries with a term of over 5 years have positive carry in the current loose money supply environment. If the money price tightens marginally to around 1.6%, the range of Treasuries with positive carry will be compressed to those over 7 years. The central bank's desired market interest rate is within a range, and currently, the money price is close to the lower limit, so monetary easing is unlikely to drive further decline in interest rates [30]. 3.3 Bond Market Breaking Through Key Points Depends on Fundamentals and Trade Frictions - Whether the 10 - year Treasury can break through key points in the third quarter depends on fundamentals and trade frictions. The bond market is insensitive to small changes in fundamentals but may react to significant ones. Attention should be paid to the "one - time" pricing of trade friction information in the bond market [9]. - **Fundamental Concerns**: - Real estate sales were relatively resilient in the first half of the year, but there is uncertainty about further recovery in the second half. The transaction area of commercial housing in 30 large and medium - sized cities has been under downward pressure since the end of June [9]. - Consumption growth ultimately depends on urban residents' per capita disposable income and marginal propensity to consume. The "trade - in" policy has temporarily boosted consumption growth, but further growth requires an increase in residents' income or marginal propensity to consume, which are more complex and need further observation [9]. - Trade frictions may lead to "one - time" pricing in the bond market. At the beginning of this round of trade frictions, the bond market declined by 15bp in two trading days and rose by 5bp in one trading day after the Sino - US negotiation on May 12. US President Trump announced that "reciprocal tariffs" will take effect on August 1, and as the grace period approaches, attention should be paid to the "one - time" pricing of trade frictions in the bond market [9].

Core Viewpoint - The latest C50 Wind Direction Index survey indicates that the central rate of interbank certificates of deposit (CDs) may continue to decline in July, and the necessity to restart government bond trading in the short term is reduced [1] Group 1: Market Liquidity Outlook - The survey involved 20 market institutions, with 12 expressing an optimistic view on the overall liquidity in July, indicating no liquidity gap [1] - Six institutions assessed the liquidity as neutral, estimating a liquidity gap of less than 1 trillion yuan [1] - Two institutions predicted a potential tightening phase, with a liquidity gap ranging from 1 trillion to 2.06 trillion yuan [1] Group 2: Interest Rate and Bond Market Expectations - Multiple market institutions anticipate that the central rate of interbank CDs may continue to decline in July [1] - The resumption of central bank bond purchases is expected to take time, as the market adjusts to the influx of incremental funds from insurance, wealth management, and banks [1] - A bullish trend in the bond market is anticipated, suggesting that early positioning in potential investment varieties for incremental funds may be a favorable strategy [1]

Core Viewpoint - The bond market continues to show weakness due to a lack of downward pressure on short-term funding rates and the strength of the A-share market, leading to a slight increase in yields on major interbank bonds and a decline in government bond futures [1] Market Performance - Government bond futures closed lower across the board, with the 30-year main contract down 0.22% at 120.920, the 10-year main contract down 0.08% at 109.020, the 5-year main contract down 0.08% at 106.135, and the 2-year main contract down 0.03% at 102.466 [2] - Major interbank bond yields increased, with the 30-year government bond yield rising by 0.55 basis points to 1.8605%, the 10-year policy bank bond yield rising by 0.55 basis points to 1.7220%, and the 10-year government bond yield rising by 0.3 basis points to 1.6430% [2] Funding Conditions - The central bank conducted a 690 billion yuan reverse repurchase operation at a fixed rate of 1.40%, with a net withdrawal of 620 billion yuan for the day, as 1,310 billion yuan in reverse repos matured [4] - Short-term Shibor rates mostly declined, with the overnight rate unchanged at 1.312%, the 7-day rate down 0.3 basis points to 1.455%, and the 1-month rate down 1.1 basis points to 1.546%, marking a new low since September 2022 [4] Institutional Insights - Citic Securities noted that while there is a certain degree of preemptive positioning in the bond market, the overall trading congestion has decreased compared to June, although institutions maintain a high duration preference [5] - Guosheng Fixed Income pointed out that the current 50-30 year bond yield spread is at a neutral level, with limited room for further compression, but also minimal adjustment pressure [5] - Changjiang Fixed Income suggested that the credit bond market is driven by ample liquidity and incremental funds, recommending investors to focus on opportunities in 5-year AA+ credit bonds while controlling risk levels [5]