Group 1 - The bond market continued to show strength on July 1, with most government bond futures closing higher and interbank bond yields slightly declining, indicating a generally favorable environment for bonds in the second half of the year [1][2] - The People's Bank of China conducted a 7-day reverse repurchase operation of 131 billion yuan at a rate of 1.40%, resulting in a net withdrawal of 275.5 billion yuan for the day, reflecting a significant drop in funding rates at the beginning of the month [5][1] - The issuance of special government bonds is expected to be completed in July, with an estimated issuance scale of around 2 trillion yuan, leading to a net financing scale of approximately 900 billion yuan, which is relatively low for the year [6][1] Group 2 - In the North American market, U.S. Treasury yields fell across the board, with the 2-year yield down by 2.87 basis points to 3.717%, indicating a trend of declining yields [3] - The Asian market saw mixed results, with Japanese 10-year bond yields decreasing by 0.7 basis points to 1.426%, while shorter-term yields increased slightly [3] - In the Eurozone, 10-year bond yields for France, Germany, Italy, and Spain all increased, reflecting a divergence in bond market trends across regions [3] Group 3 - The China Securities Index for convertible bonds rose by 0.48%, with significant trading volume of 62.777 billion yuan, indicating a positive sentiment in the convertible bond market [2] - The issuance of Panda bonds has significantly increased since the end of 2022, with total issuance surpassing 1 trillion yuan, although foreign investment in these bonds remains limited [7] - The PMI data has shown signs of recovery, but the overall demand outlook remains weak, suggesting that while the fundamentals are supportive for the bond market, caution is warranted due to potential volatility [7]

Investment Rating - The report maintains a cautious outlook on the industry, with expectations of GDP growth slowing to 4.5% in the third quarter of 2025, following a strong second quarter performance [3][13]. Core Insights - The second quarter showed robust growth, but June data revealed emerging concerns, particularly in retail and export sectors, indicating a potential softening of economic momentum [3][4]. - The real estate market continues to struggle, with declining transaction volumes and increased fiscal pressure on local governments, necessitating potential policy adjustments [5][12]. - Consumer spending is being supported through financial measures, with a focus on enhancing service supply to stimulate demand [10][11]. Summary by Sections Economic Performance - The second quarter GDP growth is projected to reach 5%, but a decline to 4.5% is anticipated in the third quarter due to weakening exports and a sluggish real estate market [3][13]. - Retail sales showed strong performance in early June, driven by promotional activities, but this may not be sustainable as consumer sentiment weakens [4][10]. Export and Trade - Exports to the U.S. saw a rebound in June, likely due to seasonal demand for the holiday shopping season, but overall export performance remains weak [4][18]. - Container throughput at major ports in China has significantly slowed, indicating a broader decline in trade activity [4][14]. Real Estate Market - The real estate sector remains under pressure, with transaction volumes continuing to decline and fiscal revenues falling short of budget targets [5][22]. - Local governments face increasing fiscal challenges, prompting discussions on expanding budgetary flexibility and potential new financing tools [5][12]. Consumer Spending and Policy Measures - The government is implementing measures to support consumer spending, including financial backing for service consumption and infrastructure development [10][11]. - Structural reforms are necessary for a more balanced economic recovery, focusing on social welfare and tax reforms [11][12].

Core Viewpoint - The article emphasizes that a more proactive fiscal policy is expected to be implemented in the second half of the year, focusing on increasing spending intensity and accelerating expenditure progress to boost domestic demand [1] Fiscal Policy Developments - Since the beginning of the year, the fiscal policy has been more aggressive, with increased spending and a focus on areas that benefit people's livelihoods, promote consumption, and enhance economic resilience [1] - Experts predict that the fiscal policy will expedite the implementation of existing policies, particularly through the early issuance and utilization of ultra-long special government bonds and local government special bonds [1] Potential Future Measures - There is a possibility that new incremental reserve policies will be introduced to further stimulate domestic demand, which may include the issuance of additional ultra-long special government bonds and the establishment of new policy financial instruments [1]

Core Viewpoint - The National Development and Reform Commission emphasizes the need to enhance effective investment and implement "two heavy" constructions, focusing on both "hard investment" and "soft construction" to improve project execution and investment efficiency [1] Group 1: Investment Strategy - The commission plans to optimize the direction of central budget investments and expedite the issuance of central budget investment plans [1] - There will be a management system for local government special bonds, including a "negative list" for investment directions and a "positive list" for project capital contributions [1] - The establishment of new policy-based financial tools aims to address the issues of insufficient project construction capital and matching funds [1] Group 2: Encouraging Private Investment - The initiative includes support and encouragement for the development of private investment [1] - There will be efforts to promote high-quality projects to private capital [1] - The implementation of a new mechanism for public-private partnerships (PPP) will be standardized [1]

金十数据6月27日讯，展望下半年，专家表示，外部环境仍面临很大不确定性，为着力提振内需、加大 对外贸等领域的支持力度，货币政策需在适度宽松方向进一步发力，并保持市场流动性处于稳定的充裕 状态。"预计下半年还会有1至2次降息，总计调降政策利率20个至30个基点，从而引导LPR下行，并传 导至贷款、存款利率的进一步下行。"银河证券首席经济学家章俊说。此外，对于市场讨论较多的政策 性金融工具，华泰证券首席宏观经济学家易峘认为，新型政策性金融工具有望在年内推出，或允许政策 性银行发行金融债券筹集资金，以股权投资形式补充科技创新、外贸等项目资本金，估计今年落地额度 为5000亿元至10000亿元。 （中证报） 专家：新型政策性金融工具或允许政策性银行发行金融债券 ...

Summary of Conference Call Records Industry Overview - The focus is on the bond market and macroeconomic conditions in China, particularly regarding interest rates and fiscal policies [1][2][3]. Key Points and Arguments 1. **Interest Rate Outlook**: The bond market is expected to experience a wide range of fluctuations in the second half of the year, with the 10-year government bond yield projected to range between 1.5% and 1.8% [2][3][11]. 2. **Monetary Policy**: There is an expectation that monetary policy will not undergo significant easing, with limited room for interest rate cuts and a potential 50 basis points for reserve requirement ratio adjustments [3][7]. 3. **Fiscal Stimulus**: A new policy financial tool with a total scale of 500 billion is anticipated, with 100 billion allocated for private investment, which is expected to have a significant multiplier effect on GDP [5][6]. 4. **GDP Growth Target**: The GDP growth target for the year is around 5%, with expectations that investment will precede consumption in driving this growth [6][5]. 5. **Impact of External Tariffs**: The negative impact of external tariffs on exports is expected to be less severe than previously anticipated, with a gradual improvement in data post-June [4][5]. 6. **Debt Supply**: The total supply of bonds is projected to be around 6.88 trillion, with a monthly net financing of approximately 1.15 trillion, which is stable compared to previous years [8][9]. 7. **Institutional Behavior**: Institutional behaviors are expected to influence the bond market significantly, with banks and insurance companies adjusting their strategies based on market conditions [10][12][17]. 8. **Credit Market Performance**: The credit market is expected to outperform interest rate products, with strategies suggested for public institutions to adopt diagonal strategies for credit yield [30][31]. Other Important but Possibly Overlooked Content - **Consumer Spending**: The government has approved 300 billion for consumer spending, with 160 billion already in progress, indicating a proactive approach to stimulate consumption [6]. - **Long-term Rate Predictions**: Long-term interest rates are expected to gradually decline, potentially reaching below 1.5% by the end of 2025 or 2026, although significant downward movement is limited [29]. - **Market Sensitivity**: There is an increasing sensitivity of the macroeconomic environment to changes in the debt financial cycle, which may affect future predictions and risk assessments [32]. This summary encapsulates the essential insights from the conference call, focusing on the bond market, monetary policy, fiscal measures, and broader economic implications.

1. Report Industry Investment Rating No information provided in the content. 2. Core Viewpoints of the Report - In the second quarter, the growth rate of fixed - asset investment slowed down. Given the external uncertainties in the second half of the year, the necessity of stabilizing investment has increased. The new policy - based financial instruments proposed in the April Politburo meeting have attracted high market attention. There is a high probability that the instruments will be implemented in the short term, and the third quarter may be the period for the implementation of broad - credit policies, which will affect the bond market sentiment [1][24]. - The risk of crossing the half - year is controllable, but the institutional fund arrangement is relatively slow. The large - bank net lending scale has significantly increased, and the inter - bank cross - quarter fund progress is relatively slow [3]. - Since June, the bond market's spread exploration has shifted from the mid - term to the ultra - long - term. However, investors should flexibly stop losses and realize profits [4]. - In the bond market this week, the LuJiaZui Conference did not meet expectations, and the yield fluctuated within a narrow range. The central bank's OMO continued net withdrawals, and the capital market was balanced and loose. The net financing of national bonds and policy - based financial bonds decreased, while that of local bonds and inter - bank certificates of deposit increased. The term spread of national bonds widened, and that of China Development Bank bonds narrowed [10][54]. 3. Summary According to the Directory 3.1 New Policy - based Financial Instruments: Progress - The necessity of stabilizing investment has increased due to the slowdown of fixed - asset investment growth in the second quarter and external uncertainties in the second half of the year. Since May, local governments have accelerated the project reserve of policy - based financial instruments, with a possible quota of 500 billion yuan, and the support for science and technology and consumption infrastructure construction may be prioritized [1][14]. - Referring to the experience in 2022, it took about two months from the release of the instrument quota to the completion of the investment, with a relatively fast pace. The policy - based financial supply in 2022 had a leverage ratio of over 4.7 times for credit and over 10 times for infrastructure investment [17]. - The third quarter may be the period for the implementation of broad - credit policies, and attention should be paid to the impact on the bond market sentiment [24]. 3.2 Cross - half - year Risk is Controllable, and Institutional Fund Arrangement is Slow - This week, the tax period passed smoothly. After the tax period, the capital sentiment tightened briefly, which may be related to the increase in the bond market leverage level. The central bank's operations remained relatively active, and the reverse - repurchase balance was at a seasonal high [3]. - The large - bank net lending scale has significantly increased, with the single - day net lending scale reaching 5.3 trillion yuan, a record high for the same period. As of June 20, the inter - bank cross - quarter fund progress was 12%, lower than the previous level. The cross - half - year risk is expected to be relatively controllable [28]. 3.3 Bond Market Strategy: Spread Exploration Shifts from the Mid - term to the Ultra - long - term, but Flexibly Stop Losses and Realize Profits - From April to May, the bond market fully explored the spreads of mid - term interest - rate varieties. The spread quantile of mid - term varieties decreased from 75% - 96% to 44% at the end of May, with limited room for further compression [34]. - In June, the spread exploration shifted to the ultra - long - term. The best - performing maturities since April have experienced two rounds of "short - term → mid - term → ultra - long - term" rotation. The recent ultra - long - term market, mainly driven by trading desks such as funds and other products, is due to the strong demand for capital gains in a low - interest - rate environment and the expected opening of the bond - allocation space for insurance companies in the third quarter [4][37]. - Investors should continue to pay attention to the cost - effectiveness of the ultra - long - term bonds and stop losses and realize profits at appropriate times, such as when the ultra - long - term spreads are fully explored, if the central bank announces bond purchases at the end of June, and in July [5]. 3.4 Bond Market Review: The LuJiaZui Conference did not Meet Expectations, and the Yield Fluctuated within a Narrow Range - **Funding**: The central bank's OMO continued net withdrawals, and the capital market was balanced and loose. The weighted price of DR001 fell back to around 1.37%, and the issuance price of 1 - year national - share bank certificates of deposit dropped to 1.63% [11]. - **Primary Issuance**: The net financing of national bonds and policy - based financial bonds decreased, while that of local bonds and inter - bank certificates of deposit increased [59]. - **Benchmark Changes**: The term spread of national bonds widened, and that of China Development Bank bonds narrowed. The short - term performance of national bonds was better than that of the long - term, while the long - term performance of China Development Bank bonds was better than that of the short - term [54].

Summary of Key Points Core Viewpoint - The article discusses the recent trends in China's fiscal revenue and expenditure, highlighting a slight decline in growth rates for both public fiscal revenue and tax revenue in May, while also addressing the implications of these trends on broader economic conditions and fiscal policy. Fiscal Revenue Trends - In May, public fiscal revenue growth slowed to 0.1% year-on-year, down from 1.9% in the previous month, while tax revenue growth also decreased to 0.6% from 1.9% [1][5][6] - Non-tax revenue turned negative for the first time in 2024, with a year-on-year decline of 2.2%, attributed to reduced reliance on non-tax revenue and a significant downward adjustment in the growth target for non-tax revenue [1][5] - Cumulatively, public fiscal revenue for the first five months showed a year-on-year decline of 0.3%, narrowing the gap from the annual target by 0.37 percentage points [1][5] Tax Revenue Breakdown - Value-added tax performed well with a cumulative year-on-year increase of 2.4%, likely linked to improved industrial profits [8] - Personal income tax saw a significant increase of 8.2% year-on-year, influenced by a low base, tax reconciliations, and active second-hand housing transactions [8] - Consumption tax showed neutral performance, with a cumulative year-on-year growth of 1.6%, reflecting a mismatch with high retail sales growth [9] Fiscal Expenditure Insights - In May, narrow fiscal expenditure growth slowed to 2.6%, with central government expenditure rising by 11.0% and local government expenditure increasing by 0.9% [12] - The resilience in expenditure is attributed to the accelerated issuance of ordinary government bonds, which reached 39% of the annual target by May, the highest level in recent years [12][13] - Social security and employment expenditures maintained high growth rates, reflecting strong fiscal support for social security funds and employment policies [12] Broader Fiscal Context - Government fund revenue growth turned negative again in May, with a year-on-year decline of 8.1%, primarily due to a significant drop in land use rights revenue [15][16] - The real estate market's performance is a key constraint, with land sales showing a downward trend in April and May [15][16] - The overall fiscal situation indicates that while narrow fiscal targets may be met, broader fiscal outcomes remain uncertain due to fluctuations in the land market [15][16] Future Outlook - The improvement of macroeconomic price levels, particularly the Producer Price Index (PPI), is crucial for enhancing corporate profits and tax revenues [17] - The establishment of new policy financial tools is anticipated to support infrastructure investment and credit growth, potentially alleviating construction sector challenges [17]

Group 1 - The Loan Prime Rate (LPR) remains stable with the 1-year LPR at 3.0% and the 5-year LPR at 3.5% after a 10 basis points reduction last month [1] - The recent monetary policy emphasizes balancing support for the real economy while maintaining the health of the banking system, indicating that stabilizing net interest margins is now a key objective [2] - The net interest margin for commercial banks has dropped to a historical low of 1.43%, down 9 basis points from the previous quarter, affecting banks' ability to serve the real economy and manage risks [2] Group 2 - The downward pressure on banks' funding costs is limited due to the increasing trend of term deposits, with 74.3% of household deposits and 74% of corporate deposits being term deposits as of April 2025 [3] - The average interest rate for newly issued corporate loans is approximately 3.2%, down about 50 basis points year-on-year, while personal housing loans average around 3.1%, down about 55 basis points [3] - The potential for new incremental policies may be delayed until after August or even into the fourth quarter, with a focus on establishing new policy financial tools to stimulate investment [4][5]

Group 1: Economic Indicators - The core viewpoint indicates that the economy remains resilient, with signs of improvement in core CPI stability and marginal PMI recovery due to ongoing "stabilization growth" measures [2] - In May, the CPI remained flat at -0.1%, while the PPI decreased from -2.7% to -3.3%. The manufacturing PMI increased from 49.0% to 49.5% [5][6] - New RMB loans in May amounted to 620 billion, an increase of 340 billion from the previous month, while M2 growth slowed to 7.9% [2][17][20] Group 2: CPI Analysis - The May CPI showed a month-on-month decrease of 0.2%, with a year-on-year decline of 0.1%. Core CPI remained stable with a year-on-year increase of 0.6% [5] - The decline in energy prices negatively impacted non-food items, but travel service prices saw a significant rebound, supporting the core CPI [5] Group 3: PPI Insights - The PPI's year-on-year decline of 3.3% was below market expectations, with traditional industry prices mostly declining while new momentum industries saw price increases [6] - Factors affecting PPI include falling international oil prices, seasonal declines in energy and raw material prices, and the impact of consumption and equipment renewal policies [6] Group 4: PMI Developments - The manufacturing PMI recorded 49.5%, indicating an improvement in economic sentiment, driven by tariff delays and proactive macro policies [9] - The production index rose to 50.7%, returning to the expansion zone, while the new orders index increased to 49.8% [9] Group 5: Fixed Asset Investment - Fixed asset investment growth in May decreased to 3.7%, with real estate investment continuing to decline significantly [13] - High-tech industry investments showed strong growth, particularly in information services and aerospace manufacturing [13] Group 6: Credit and M2 Analysis - In May, new credit issuance was 620 billion, reflecting a decrease in consumer loans and a recovery in corporate short-term loans [17] - M2 growth slowed to 7.9%, influenced by a decrease in deposit attractiveness and slower fiscal fund release [20]