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]

Group 1 - The People's Bank of China (PBOC) announced a 500 billion yuan MLF operation on May 23, with a net injection of 3750 billion yuan after accounting for 1250 billion yuan maturing this month [1] - This marks the third consecutive month of increased MLF operations, with net injections of 630 billion yuan in March and 5000 billion yuan in April [1] - The significant net injection in May is part of a broader strategy to support the real economy amid increased external volatility and includes measures such as interest rate cuts and reserve requirement ratio reductions [1] Group 2 - The PBOC is accelerating interest rate marketization reforms, having adjusted the MLF bidding model to fixed quantity, interest rate bidding, and multiple price bids, moving away from a unified bidding rate [2] - The recent changes in the MLF bidding mechanism allow institutions to better prepare for liquidity arrangements and enhance their market-based pricing capabilities [2] - As the channels for basic currency injection diversify, the reliance on MLF for monetary policy operations is gradually decreasing [2]

Core Viewpoint - The report emphasizes the need for continuous deepening of financial system reforms in China to enhance resilience amid internal and external pressures [1] Group 1: Financial System Components - The report summarizes the construction of six core components of the financial system: financial regulation, financial markets, financial institutions, financial products and services, financial infrastructure, and financial control in 2024 [1] - It outlines future prospects for financial system reforms from the perspectives of reform, regulation, and opening up [1] Group 2: Recommendations for Financial Reform - The first recommendation is to optimize the allocation of financial resources, focusing on maintaining a stable financial environment and supporting strategic emerging industries and technological innovation [1] - The second recommendation is to accelerate the improvement of the central bank system and enhance the transmission mechanism of monetary policy, emphasizing interest rate marketization reform [2] - The third recommendation is to strengthen financial stability guarantees and enhance regulatory frameworks, particularly for small and medium-sized banks [2] - The fourth recommendation is to adhere to the essence of finance and improve service quality, focusing on serving the real economy and enhancing internal governance [2] - The fifth recommendation is to promote high-level financial openness and accelerate the construction of a strong financial nation, including advancing the internationalization of the Renminbi [3]

Group 1 - The core viewpoint of the article emphasizes the future financial system reforms in China, focusing on optimizing financial resource allocation, enhancing the central bank system, ensuring financial stability, improving financial service quality, and promoting high-level financial openness [2][3][4] Group 2 - The importance of maintaining a stable financial environment is highlighted, with a call to improve multi-level capital markets and support long-term funding for strategic emerging industries and technological innovation [2] - The need for deepening interest rate marketization reform and enhancing the effectiveness of policy interest rates is discussed, aiming to optimize the design of structural monetary policy tools [3] - Strengthening regulatory frameworks and enhancing governance capabilities of small and medium-sized banks are emphasized to ensure financial stability [3] - Financial institutions are urged to focus on serving the real economy and improving resource allocation efficiency while preventing excessive speculation [3] - The strategic significance of advancing the internationalization of the Renminbi and developing offshore Renminbi products is noted, alongside the necessity for a robust international financial center [4]

Core Viewpoint - The reduction of comprehensive financing costs for small and micro enterprises is a key focus, with the goal of achieving "maintaining volume, improving quality, stabilizing prices, and optimizing structure" by 2025 to support economic recovery [1] Financing Costs - Comprehensive financing costs for small and micro enterprises include both interest and non-interest costs, with market interest rates (LPR) significantly declining, leading to historically low average loan rates [1] - As of March, the 1-year and 5-year LPR were 3.1% and 3.6%, respectively, both down by 0.35 percentage points year-on-year, while the average interest rate for newly issued loans was approximately 3.4%, down about 0.6 percentage points year-on-year [1] - The average interest rate for newly issued inclusive loans to small and micro enterprises was 4.03% in the first two months of this year, a decrease of 0.33 percentage points from 2024, and a cumulative decline of 3.9 percentage points since 2018 [1] Non-Interest Costs - Despite low loan interest rates, enterprises still perceive financing costs as high due to elevated non-interest costs, which include various fees that are often opaque and layered [2] - The financial regulatory authority emphasizes the need to stabilize credit service prices and improve transparency in loan pricing to help reduce overall financing costs [2] Transparency Initiatives - Starting from September 2024, a pilot program was launched in five provinces to clarify the comprehensive financing costs for enterprises, allowing them to see all interest and non-interest costs in a standardized format [2] - By the end of March 2025, the pilot regions had completed the disclosure of comprehensive financing costs for 270,000 loans totaling 1.53 trillion yuan [2] Collaborative Efforts - Banks are encouraged to adopt a more reasonable approach to credit pricing, utilizing technology to enhance efficiency and reduce operational costs while eliminating barriers to financing for small and micro enterprises [3] - Collaboration with local governments and financial institutions is essential to collectively reduce financing burdens on enterprises [4] - Enterprises are also urged to improve their creditworthiness and internal management to facilitate lower financing costs [4]

"降准降息落地！2.5%，进入倒计时！""警惕！保险市场或现重大调整"……5月12日，北京商报记者注意到，保险业预定利率或再度调降这一"情绪"正在保 险业中蔓延。根据中国人民银行日前更新的常备借贷便利利率表，将各期限常备借贷便利利率下调10个基点，自2025年5月8日起执行。此次降息与5月15日 执行的0.5个百分点全面降准形成政策组合拳。 今年4月21日，中国保险行业协会（以下简称"保险业协会"）组织召开人身保险业责任准备金评估利率专家咨询委员会2025年一季度例会。保险业专家认 为，当前普通型人身保险产品预定利率研究值为2.13%。 据了解，这是今年初监管推出"预定利率挂钩市场利率"机制后，首次公布研究值。今年初，《关于建立预定利率与市场利率挂钩及动态调整机制有关事项的 通知》重磅发布。其中提到，要建立预定利率与市场利率挂钩及动态调整机制，引导公司强化资产负债联动，科学审慎定价。 进一步来看，最新普通型人身险预定利率研究值2.13%，已较前值下降21个基点。根据触发条件，当保险公司在售普通型人身保险产品预定利率最高值连续 2个季度比预定利率研究值高25个基点及以上时，要及时下调新产品预定利率最高值，并在2 ...