Core Viewpoint - The report from Rong360 Digital Technology Research Institute indicates a continued decline in bank deposit rates, with medium to long-term rates entering the "1 era" and 3-month rates entering the "0 era" [1] Group 1: Deposit Rate Trends - As of June 2025, the average interest rates for various term deposits are as follows: 3-month at 0.949%, 6-month at 1.156%, 1-year at 1.287%, 2-year at 1.372%, 3-year at 1.695%, and 5-year at 1.538% [2] - Compared to the previous month, the rates for 3-month, 6-month, 1-year, 2-year, 3-year, and 5-year deposits have decreased by 5.5 BP, 5.6 BP, 5.2 BP, 5.6 BP, 1.6 BP, and 3.5 BP respectively [2] - The report also highlights that large-denomination certificates of deposit (CDs) have seen a decline in average rates across all terms, with the 3-month rate dropping by 5.96 BP and the 1-year rate by 8.39 BP [2] Group 2: Structured Deposits - In June 2025, the average term for RMB structured deposits was 103 days, an increase of 13 days from the previous month, while the average expected intermediate yield was 1.78%, down by 7 BP [3] - The average expected maximum yield for structured deposits was 2.14%, which decreased by 11 BP compared to the previous month [3] - Different types of banks showed varying average terms and yields for structured deposits, with state-owned banks at 70 days and an expected maximum yield of 1.99%, while foreign banks had an average term of 334 days and a maximum yield of 4.34% [4] Group 3: Performance by Underlying Assets - For structured deposits linked to foreign exchange, the average expected intermediate yield was 1.77%, down by 24 BP, while those linked to gold had a yield of 1.78%, down by 2 BP [4] - Structured deposits linked to indices, funds, and stocks saw an increase in average expected intermediate yield to 2.00%, with the maximum yield rising to 5.40%, an increase of 8 BP [4]

Core Viewpoint - The report from Rong360 Digital Technology Research Institute indicates a continued decline in bank deposit rates, with medium to long-term rates entering the "1 era" and 3-month rates entering the "0 era" [1] Group 1: Deposit Rate Trends - As of June 2025, the average deposit rates for various terms are as follows: 3-month at 0.949%, 6-month at 1.156%, 1-year at 1.287%, 2-year at 1.372%, 3-year at 1.695%, and 5-year at 1.538% [1][2] - The report shows a month-on-month decline in average rates across all terms, with 3-month rates down by 5.5 basis points, 6-month by 5.6 basis points, 1-year by 5.2 basis points, 2-year by 5.6 basis points, 3-year by 1.6 basis points, and 5-year by 3.5 basis points [2] Group 2: Large Certificate of Deposit Rates - For large certificates of deposit, the average rates in June 2025 are: 3-month at 1.179%, 6-month at 1.391%, 1-year at 1.477%, 2-year at 1.462%, 3-year at 1.768%, and 5-year at 1.700% [2] - All terms for large certificates of deposit also experienced a decline, with the 3-month rate down by 5.96 basis points, 6-month by 6.74 basis points, 1-year by 8.39 basis points, 2-year by 18.67 basis points, and 3-year by 30.01 basis points [2] Group 3: Structured Deposit Trends - The average term for RMB structured deposits in June 2025 is 103 days, an increase of 13 days from the previous month, with an average expected middle yield of 1.78%, down by 7 basis points [3] - Different types of banks show varying average terms for structured deposits, with state-owned banks at 70 days, joint-stock banks at 90 days, city commercial banks at 164 days, and foreign banks at 334 days [3] Group 4: Performance by Linked Assets - For structured deposits linked to different assets, the average expected middle yield for those linked to exchange rates is 1.77%, down by 24 basis points, while those linked to gold yield 1.78%, down by 2 basis points [4] - Structured deposits linked to indices, funds, and stocks show an average expected middle yield of 2.00%, which is an increase of 1 basis point, with the highest expected yield at 5.40%, up by 8 basis points [4]

Core Viewpoint - In the first half of 2025, China faces increasing internal and external challenges, leading to a moderately loose monetary policy by the central bank to support economic recovery and maintain liquidity [1][2]. Monetary Policy Overview - The central bank implemented a moderately loose monetary policy to address external shocks and maintain liquidity, balancing short-term and long-term goals [2][12]. - Key actions included adjusting the medium-term lending facility, increasing targeted loans for consumption and agriculture, and lowering policy interest rates [3][12]. Market Operations - The monetary policy operations in the first half of 2025 featured a focus on optimizing interest rate control mechanisms and enhancing structural monetary policy tools [3]. - A 0.5 percentage point reserve requirement ratio cut was implemented, alongside various liquidity support measures [3][12]. - The central bank temporarily paused government bond purchases to maintain market stability [3]. Market Performance - The interbank market saw a total transaction volume of 786.23 trillion yuan, a decrease of 7.13% year-on-year, with pledged repos dominating the market [6]. - The issuance of interbank certificates of deposit surged, with a total issuance of 17.4 trillion yuan in the first half of 2025, reflecting a 6.6% increase year-on-year [7][8]. Interest Rate Trends - The first half of 2025 saw a three-phase interest rate trend: initial tightening due to deposit management, followed by easing as liquidity improved, and finally a slight tightening due to increased special bond issuance [5][13]. - The average interest rates for one-year interbank certificates of deposit decreased to around 1.65% by the end of June 2025 [8][15]. Future Outlook - The second half of 2025 is expected to maintain a moderately loose monetary policy, with continued support for economic recovery and low inflation [16][17]. - The central bank is likely to utilize various policy tools to enhance the transmission of monetary policy and support the real economy [17][18].

Core Viewpoint - The trend of decreasing business loan interest rates is emerging, similar to the previous competition in consumer loan rates, with some banks offering rates below 3% and even as low as 2.15% for secured loans [1][2][3]. Group 1: Current Interest Rate Trends - Many banks, including state-owned and joint-stock banks, are now offering business loan rates below 3%, with some products like "mortgage quick loans" available at rates as low as 2.60% [2]. - In regions outside Guangdong, such as Sichuan, banks are also offering competitive rates, with one bank providing a 1-year mortgage-backed business loan at 2.15% for high-quality collateral [2]. - Some larger banks maintain higher rates, with one reporting a pure credit business loan rate of 3.6% and a secured loan rate around 3% [3]. Group 2: Factors Influencing Rate Changes - The decline in business loan rates is attributed to insufficient credit demand from economic entities and policy initiatives aimed at reducing financing costs for the real economy [1][7]. - The People's Bank of China has reported a slowdown in the growth of short-term and medium-term business loans, indicating a decrease in demand [8]. Group 3: Implications for Banks - Lower business loan rates may compress net interest margins and reduce banks' profitability, particularly affecting smaller banks more than larger ones due to their reliance on interest income [9][10]. - Experts suggest that banks should innovate financial products and focus on effective market demand to balance business expansion and asset quality [9][10].

Core Viewpoint - A price war for business loans among banks targeting small and micro enterprises has emerged following tightened regulations on consumer loans, with many banks lowering interest rates to below 3% [1][8]. Group 1: Business Loan Interest Rates - Several banks, including state-owned and joint-stock banks, have reduced business loan interest rates to below 3%, while some smaller banks struggle to keep up [1][8]. - The interest rate for the "Business Loan" product from China Merchants Bank is as low as 2.68%, with a maximum loan amount of 20 million yuan [3][6]. - The approval process for business loans has improved, with some banks reducing the approval time for loans under 1 million yuan to as little as 3 working days [6][12]. Group 2: Market Competition and Disparities - The competition in the business loan market has intensified, with significant interest rate disparities among banks, particularly between large state-owned banks and smaller regional banks [8][9]. - Some regional banks in the northeastern part of China have interest rates above 4%, while banks in the southeastern coastal regions offer rates below 2.5% due to a more favorable credit environment [8][9]. - The use of big data models for risk assessment has led to a more uniform interest rate for similar clients, but it has also given rise to issues with intermediaries manipulating client information to secure better loan terms [9][10]. Group 3: Commercial Logic Behind Low Rates - Banks are promoting low-interest business loans as a strategy to attract creditworthy clients, which can lead to additional revenue from services like payroll and wealth management [11][12]. - Despite the decline in business loan interest rates, the actual loan disbursement may not meet expectations due to increased difficulty in acquiring quality small and micro clients [12]. - Future trends may see further segmentation in the business loan market, with more specialized products tailored to specific industries and scenarios [12].

Core Viewpoint - The General Administration of Customs has announced a change in the calculation of interest for the deposit of restricted processing trade goods, effective from August 1, 2025, aligning it with market interest rates [1] Group 1 - The new interest calculation will be based on the bank's current deposit interest rate [1] - This adjustment is part of the broader trend towards interest rate marketization reform [1] - The new announcement supersedes the previous announcement No. 62 from 2017 [1]

Core Viewpoint - The People's Bank of China (PBOC) maintains a supportive monetary policy stance, implementing various measures to bolster economic recovery and stabilize financial markets, with expectations for further easing in the second half of the year [1][2][3]. Group 1: Quantity Tools - In May, the PBOC lowered the reserve requirement ratio by 0.5 percentage points, providing approximately 1 trillion yuan in long-term liquidity [1]. - From March to June, the PBOC conducted four consecutive months of excess renewals of the Medium-term Lending Facility (MLF) and utilized reverse repos to manage liquidity [1]. - The PBOC's flexible use of quantity-based monetary policy tools has maintained ample liquidity, supporting the ongoing economic recovery [1]. Group 2: Price Tools - In May, the PBOC reduced the policy interest rate by 0.1 percentage points, leading to a corresponding decrease in the Loan Prime Rate (LPR) [2]. - The average interest rate for newly issued corporate loans was approximately 3.2% in May, down about 50 basis points year-on-year, while the average for personal housing loans was around 3.1%, down about 55 basis points [2]. - The continuous deepening of interest rate marketization reforms has created a favorable environment for price-based monetary policy tools [2]. Group 3: Structural Tools - The PBOC increased the quotas for re-lending to support agriculture and small enterprises by 300 billion yuan each, and established a 500 billion yuan re-lending facility for consumer services and elderly care [3][4]. - The central bank is expected to continue enhancing structural monetary policy tools to support key sectors such as technology innovation and consumption [3][4]. - New policy tools are anticipated to be introduced, focusing on technology, consumption, foreign trade, and real estate [4][5].

Core Viewpoint - Major banks in China are withdrawing long-term large-denomination certificates of deposit (CDs), indicating a significant market adjustment with interest rates dropping to the "1" range [1][2][3] Group 1: Market Changes - Several large and medium-sized banks, including Industrial and Commercial Bank of China, China Construction Bank, and China Merchants Bank, have completely removed five-year large-denomination CDs from their offerings [2] - The majority of banks now primarily offer large-denomination CDs with a maximum term of two years, with three-year products becoming increasingly scarce [2][3] - Interest rates for large-denomination CDs have significantly decreased, with rates for two-year products generally ranging from 0.9% to 1.4%, and three-year products hovering between 1.55% and 1.75% [2] Group 2: Bank Strategies - Banks are withdrawing long-term large-denomination CDs to avoid high-cost deposits and reduce interest payment costs, reflecting a structural shift in response to monetary policy [3] - The trend indicates a move towards a shorter-term deposit structure, which may become the norm, impacting both banks and depositors [3] - This shift is expected to alleviate net interest margin pressures for banks while increasing the need for effective liquidity management [3] Group 3: Implications for Depositors - The exit of long-term large-denomination CDs will reshape traditional conservative investment paths for depositors [4] - Depositors are encouraged to explore alternative products such as government bonds, cash management products, money market funds, fixed-income products, and insurance products [4] - Future trends suggest a normalization of declining interest rates and a reduced reliance on long-term high-interest liabilities, with banks potentially offering differentiated interest rates through mechanisms like "white lists" [4] Group 4: Innovation and Service Upgrades - Banks are encouraged to innovate in product offerings, such as introducing "principal-protected + floating return" structured deposits to balance safety and yield [5] - There is a push for integrated wealth management services, creating one-stop accounts that combine deposits and investments to enhance service efficiency [5] - Banks should focus on digital transformation to improve service efficiency and reduce operational costs [5]

Core Viewpoint - The recent reduction in the Loan Prime Rate (LPR) and deposit rates by major banks is expected to stimulate the real economy and support high-quality development in the banking sector [2][5][8] Group 1: LPR Adjustment - The LPR for one year and five years has decreased by 10 basis points to 3% and 3.5% respectively, marking the first adjustment of the year [1][3] - The adjustment follows a reduction in the 7-day reverse repurchase rate by 10 basis points, which is now seen as a new pricing anchor for the LPR [4][3] - The LPR's decline is part of a broader monetary policy easing aimed at reducing borrowing costs for medium to long-term financing [5][8] Group 2: Deposit Rate Changes - Major banks, including six state-owned commercial banks, have lowered their RMB deposit rates by 5 to 25 basis points [1][6] - The adjustments include a 5 basis point reduction in demand deposit rates and a 15 to 25 basis point reduction in various term deposit rates [6][7] - This move is anticipated to help banks lower funding costs and stabilize net interest margins, enhancing their ability to support the real economy [7][8] Group 3: Impact on the Real Economy - The dual reduction in lending and deposit rates is expected to lower overall financing costs, thereby encouraging investment and production [8] - Continuous policy support from fiscal, monetary, and industrial sectors is enhancing market confidence and directing more funds towards capital markets and real enterprises [8] - The banking sector is urged to utilize various structural monetary policy tools to direct credit resources towards key areas of the real economy [8]

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]