Report Summary 1. Industry Investment Ratings - **Black Industry**: Iron ore, coal and coke, rolled steel, and glass are rated as "Rebound"; soda ash is rated as "Oscillation" [2]. - **Financial Industry**: Shanghai 50 Index Futures/Options is rated as "Rebound"; CSI 500 and CSI 1000 are rated as "Upward"; 2 - year, 5 - year treasury bonds are rated as "Oscillation"; 10 - year treasury bonds are rated as "Rebound"; gold and silver are rated as "Correction"; Shanghai and Shenzhen 300 is rated as "Oscillation" [2][4]. - **Light Industry**: Pulp is rated as "Weak Oscillation"; logs are rated as "Strong Oscillation"; soybean oil, palm oil, and rapeseed oil are rated as "High - level Oscillation"; soybean meal, rapeseed meal, soybean No.2, and soybean No.1 are rated as "Oscillation with a Bearish Bias" [5]. - **Agricultural Products**: Live pigs are rated as "Rebound" [7]. - **Soft Commodities**: Rubber is rated as "Rebound"; PX, PR, and PF are rated as "Wait - and - See"; PTA and MEG are rated as "Short at High Levels" [9]. 2. Core Views - **Black Industry**: The overall supply of iron ore is increasing, demand is relatively low, and port inventories are entering a stocking cycle. Coal and coke prices have rebounded due to safety inspections and high iron - water production. The supply - demand structure of rolled steel has weakened, and glass prices have rebounded at low levels [2]. - **Financial Industry**: The central bank suggests strengthening monetary policy regulation. The stock market shows different trends, and the bond market rebounds slightly. Gold prices may correct in the short term [4]. - **Light Industry**: Pulp prices are expected to oscillate weakly, while log prices are expected to oscillate strongly. The supply of oils and fats is abundant, and the demand is in the off - season, with prices likely to oscillate at high levels. The soybean market is weak, and prices are expected to oscillate with a bearish bias [5]. - **Agricultural Products**: Live pig prices are expected to continue rising, driven by supply - demand changes and market sentiment [7]. - **Soft Commodities**: Rubber prices are expected to oscillate widely. PX prices follow oil prices, PTA and MEG are suitable for shorting at high levels, and polyester products show different trends [9]. 3. Summary by Category Black Industry - **Iron Ore**: Recent spot trading is weak, and the basis continues to narrow. Global shipments and arrivals are increasing, and the supply - demand surplus pattern remains unchanged. It rebounds in the short term, and attention should be paid to the trend of iron - water production [2]. - **Coal and Coke**: Environmental inspections have led to a decline in coking coal supply, and prices have rebounded strongly. Coke prices are under pressure, and inventories are increasing. Attention should be paid to iron - water production and supply - side trends [2]. - **Rolled Steel**: In the off - season, demand has weakened, production has increased, and inventories have started to rise. The overall demand is difficult to reverse seasonally, and prices may find support at the valley - electricity cost level in the short term [2]. - **Glass**: There is no substantial improvement in fundamentals. The daily melting volume will first decrease and then increase. Demand is expected to weaken, and inventories are at a high level. Prices have rebounded at low levels, and attention should be paid to downstream demand recovery [2]. - **Soda Ash**: It shows an oscillating trend [2]. Financial Industry - **Stock Index Futures/Options**: Different stock indices show different trends. The central bank's policy suggestions and economic data affect the market. It is recommended to hold long positions in stock indices [4]. - **Treasury Bonds**: Market interest rates are consolidating, and treasury bonds are rebounding slightly. It is recommended to hold long positions in treasury bonds with a light position [4]. - **Gold and Silver**: Gold's pricing mechanism is changing. Although the logic driving the price increase has not completely reversed, prices may correct in the short term due to factors such as interest - rate and tariff policies [4]. Light Industry - **Pulp**: Spot prices are stabilizing, costs are decreasing, demand is in the off - season, and prices are expected to oscillate weakly [5]. - **Logs**: Port shipments are increasing, to - be - arrived volumes are expected to decrease, and costs are providing support. Prices are expected to oscillate strongly [5]. - **Oils and Fats**: Palm oil production and exports are high, and inventories are increasing. The supply of soybean oil and palm oil is abundant, and prices are expected to oscillate at high levels [5]. - **Soybean Meal and Others**: The soybean market is weak due to favorable weather and high production. Domestic imports are large, and prices are expected to oscillate with a bearish bias [5]. Agricultural Products - **Live Pigs**: Supply - side sentiment is strong, and prices are rising. The average transaction weight is decreasing, and prices are expected to continue rising [7]. Soft Commodities - **Rubber**: Supply is affected by weather, demand shows a structural recovery, and inventories are in different states. Prices are expected to oscillate widely [9]. - **PX**: Geopolitical tensions are easing, supply is increasing, and prices follow oil prices [9]. - **PTA**: Costs are oscillating after a decline, and the supply - demand situation is weakening in the medium term. Prices follow costs in the short term [9]. - **MEG**: Arrivals are low, and the supply - demand situation is strong in the near term and weak in the long term. Prices are affected by the general market atmosphere [9]. - **PR**: Driven by cost factors, the market may adjust with a bullish bias [9]. - **PF**: Terminal performance is average, and prices are expected to oscillate within a range [9].

Core Viewpoint - The People's Bank of China (PBOC) is adjusting its monetary policy to enhance its effectiveness and responsiveness to the current complex economic environment, indicating a more proactive approach in policy implementation [1][3]. Economic Analysis - The meeting highlighted the increasingly complex and severe external environment, with weakened global economic growth and rising trade barriers. Internally, it emphasized insufficient domestic demand and the new challenge of persistently low prices, providing a more detailed analysis compared to previous meetings [3][4]. Policy Adjustment - The monetary policy committee stressed the importance of maintaining ample liquidity and guiding financial institutions to increase credit supply. It aims to align the growth of social financing and money supply with economic growth and price level expectations, reflecting a coordinated approach between monetary policy and economic development goals [4][5]. - Recommendations were made to strengthen the central bank's policy interest rate guidance and improve the market-based interest rate transmission mechanism, with a focus on reducing overall financing costs [4]. Structural Policy Tools - The meeting called for specific measures to deepen financial supply-side structural reforms, urging large banks to enhance their role in supporting the real economy while smaller banks focus on their core responsibilities. This indicates a clear understanding of the differentiated roles of various financial institutions [5]. - Emphasis was placed on effectively implementing various structural monetary policy tools, particularly in supporting technology innovation and boosting consumption. The meeting also highlighted the need to stabilize the capital market through mechanisms like stock repurchase and loan facilitation [5]. - In the real estate sector, the focus shifted from merely stabilizing the market to consolidating its stability, with calls to enhance the vitality of existing properties and land, reflecting a slight adjustment in policy focus [5].

Domestic News - The 16th meeting of the 14th National People's Congress Standing Committee concluded, passing the newly revised Public Security Administration Punishment Law and the Anti-Unfair Competition Law [2] - The Ministry of Commerce spokesperson stated that China will approve export applications for controlled items that meet conditions, while the U.S. will correspondingly lift a series of restrictive measures against China [2] International News - Trump announced the cessation of all work related to lifting sanctions on Iran, indicating potential airstrikes if Iran continues its enrichment activities [3] - The U.S. Senate rejected a proposal to limit Trump's military action authority against Iran [3] - Trump has terminated all trade negotiations with Canada [3] - The EU and the U.S. are reportedly confident in reaching a tariff agreement before the end of July [3] - U.S. Treasury Secretary Mnuchin suggested that trade negotiations may conclude before September, hinting at a possible extension of the negotiation deadline [3] Economic Indicators - The central bank held its second-quarter meeting, recommending an increase in the intensity of monetary policy adjustments [4] - The China Securities Regulatory Commission is rigorously investigating financial fraud cases, holding accomplices accountable for the first time [4] - The Shanghai and Shenzhen stock exchanges plan to adjust the price fluctuation limit for risk-warning stocks on the main board to 10% [4] - From January to May, the total profit of large-scale industrial enterprises in China reached 27,204.3 billion yuan, a year-on-year decrease of 1.1% [4] - From January to May, the total operating revenue of state-owned and state-controlled enterprises fell by 0.1% year-on-year, with total profits down by 2.8% [4] Market Performance - The S&P 500 and Nasdaq indices both reached new highs [4] - OPEC+ is considering a significant increase in oil production [4] - Federal Reserve's Kashkari expects two rate cuts starting in September, with tariff impacts becoming evident [4] - Russia plans to reduce military spending and is preparing for new negotiations with Ukraine, remaining open to talks with the U.S. [4] - U.S. consumer spending unexpectedly declined in May, with moderate inflation rising, leading traders to increase bets on three rate cuts by the Federal Reserve in 2025 [4]

Domestic News - The Shanghai and Shenzhen Stock Exchanges plan to adjust the price fluctuation limit for risk-warning stocks on the main board to 10% [1] - The State Council, chaired by Li Qiang, reviewed the implementation of the national science and technology conference spirit and approved the draft of the Rural Road Regulations [1] - The China Securities Regulatory Commission (CSRC) is strictly investigating financial fraud cases and will hold accomplices accountable for the first time [1] - The People's Bank of China held its second-quarter meeting on June 23, suggesting an increase in the intensity of monetary policy regulation and a flexible approach to policy implementation based on economic and financial market conditions [1] - The National Internet Information Office released the third edition of the "Data Export Security Assessment Declaration Guidelines," clarifying the conditions and processes for extending the validity of data export security assessment results [1] - The 12th round of negotiations for the second phase of the China-South Korea Free Trade Agreement took place in South Korea from June 23 to 27, with positive progress made on cross-border service trade, investment, financial services, and negative list market access [1] - Li Auto expects to deliver approximately 108,000 vehicles in the second quarter of 2025, down from its previous delivery outlook of 123,000 to 128,000 vehicles [1] International News - Russia plans to reduce military spending, indicating potential shifts in defense-related industries [2] - The S&P 500 and Nasdaq indices both reached new highs, reflecting strong performance in the U.S. stock market [2] - The EU and the U.S. are confident in reaching a tariff agreement before the July deadline, which could impact trade-related sectors [2] - Bessent indicated that trade negotiations may conclude before September, suggesting a possible extension of the negotiation deadline [2] - Federal Reserve's Kashkari anticipates two interest rate cuts starting in September, with tariff impacts potentially delaying further cuts [2] - U.S. consumer spending unexpectedly declined in May, while inflation showed a moderate increase, leading traders to increase bets on three rate cuts by the Federal Reserve in 2025 [2]

Group 1 - The People's Bank of China suggested increasing the intensity of monetary policy adjustments to support technological innovation and boost consumption, while focusing on stabilizing the real estate market [2] - The China Securities Regulatory Commission (CSRC) emphasized strict enforcement against financial fraud, aiming to dismantle the fraud ecosystem while offering leniency for those who cooperate with investigations [2] - The Shanghai and Shenzhen Stock Exchanges proposed to adjust the price fluctuation limit for risk warning stocks from 5% to 10%, aligning it with other main board stocks [3] Group 2 - From January to May, state-owned enterprises reported a slight decrease in total operating revenue by 0.1% year-on-year, totaling 3,280.625 billion yuan, and a profit decline of 2.8%, amounting to 165.145 billion yuan [3] - Shenzhen Dapu Microelectronics Co., Ltd. had its initial public offering application accepted by the Shenzhen Stock Exchange, marking it as the first unprofitable company to be accepted on the ChiNext board [3] Group 3 - Xiaomi's automotive division reported that the order volume for the Xiaomi YU7 exceeded 240,000 units within 18 hours of sale [5] - Qinan Co. is planning to acquire 99% of Yigao Company, leading to a stock suspension starting June 30 [5] - Vanke expressed confidence in its ability to address challenges and is committed to resolving due debts [5] - Tianfeng Securities confirmed that its business operations are normal and there are no undisclosed significant matters [5] - Zhongguang Fanglei reported no significant changes in its operational situation or external environment [5] - Defu Technology's subsidiary signed a designated agreement for lithium battery copper foil products [5] - Ouma Software's controlling shareholder is planning to transfer company shares, which may lead to a change in control [5] - Zhongrun Resources intends to change its stock name to "Zhaojin Gold" [5] - Shijia Photon is planning to acquire control of Fuke Xima, leading to a stock suspension starting June 30 [5] - Dongyue Silicon Material's affiliated company has had its application for listing on the Sci-Tech Innovation Board accepted [5]

Core Viewpoint - The People's Bank of China (PBOC) has acknowledged a more complex and severe external environment, indicating a weakening global economic growth momentum and increasing trade barriers, while also highlighting domestic challenges such as insufficient demand and persistent low prices [1][3]. Monetary Policy Adjustments - The meeting suggested increasing the intensity of monetary policy adjustments, enhancing the foresight, targeting, and effectiveness of these policies, and flexibly managing the implementation pace based on domestic and international economic conditions [3][4]. - The PBOC has shifted its stance on the real estate market from "promoting stabilization" to "continuing to consolidate stability," emphasizing the need to revitalize existing housing and land stocks [3][4]. Interest Rate and Financing - The meeting recommended strengthening the guidance of central bank policy rates and improving the market-based interest rate transmission mechanism, aiming to lower overall financing costs [4]. - The PBOC has implemented a comprehensive reduction in various structural policy tool rates, including those for agriculture and small enterprises, as well as for carbon reduction and technological innovation [6]. Structural Policy Focus - The meeting emphasized the need to effectively utilize existing policies while actively implementing new policies to stimulate domestic demand, stabilize expectations, and invigorate economic growth [6]. - There is a call for more structural tools in monetary policy to support domestic demand expansion and facilitate economic restructuring and industrial upgrading [6].

Core Viewpoint - The external environment is becoming increasingly complex and severe, with the global economic growth momentum shifting from "weak" to "diminishing" compared to the first quarter of 2025, highlighting rising trade barriers and persistent low domestic prices as new challenges [1] Monetary Policy Adjustments - The meeting suggested increasing the intensity of monetary policy adjustments, enhancing its foresight, targeting, and effectiveness, while flexibly managing the implementation strength and pace based on domestic and international economic conditions [3][4] - The central bank's previous recommendation for "timely reserve requirement ratio and interest rate cuts" has been implemented in the second quarter, with a focus on stabilizing employment, enterprises, markets, and expectations [3] Structural Policy Tools - Since the second quarter, the central bank has comprehensively reduced the interest rates of various structural policy tools, including long-term tools for supporting agriculture and small enterprises, as well as temporary tools for carbon reduction and technological innovation [6] - The meeting emphasized the need to effectively utilize existing policies while actively implementing new policies to stimulate domestic demand, stabilize expectations, and invigorate the economy [6][8] Support for Key Areas - The meeting highlighted the importance of supporting technological innovation and boosting consumption, particularly in key areas such as "two heavies" and "two news," while exploring regular institutional arrangements to maintain capital market stability [8] - Experts noted that future monetary policy should increasingly adopt structural tools to support domestic demand expansion and facilitate economic structural transformation and industrial upgrading [8]

Historical Evolution of Deposit Reserve System - The deposit reserve system originated in the early 18th century in the UK, evolving from spontaneous interbank clearing needs to a legal risk buffer mechanism in the early 19th century in the US [5][21] - In China, the system was officially established in 1984 when the People's Bank of China began exercising central bank functions, with significant reforms occurring in 1998 to enhance the payment and clearing functions of reserve deposits [5][10] - Since 2015, China's reserve requirements have been assessed using an average method, providing important liquidity management buffers for banks [5][10] International Comparisons and Practices - Internationally, central banks like the Federal Reserve and the European Central Bank have adopted various reserve management practices, including accepting cash reserves and implementing tiered reserve requirements [13][47] - The experience of developed countries shows a trend of lower legal reserve requirements and higher excess reserves compared to China, which currently operates under a framework of structural liquidity shortage [8][13] Future Directions of Deposit Reserve System Reform - Conditions for breaking the 5% experience lower limit for reserve requirements are gradually maturing, with necessary institutional arrangements in place to support the transition [6][14] - The shift from quantity-based monetary policy to price-based policy is a prerequisite for relaxing the legal reserve requirement system, indicating a potential future direction for reform [6][14] Regulatory Functions and Macro-Prudential Management - The deposit reserve system has evolved to include differential reserve requirements and macro-prudential assessments, enhancing the ability to manage systemic financial risks [5][34] - The introduction of the macro-prudential assessment framework in 2016 marked a significant shift in focus from narrow credit growth to broader credit metrics, integrating various financial indicators into the regulatory framework [34][37] Implications for the Bond Market - If the reform of the reserve requirement system is implemented, it may lead to short-term benefits for the bond market, including increased liquidity and potential for larger fund releases during rate cuts [14] - However, the long-term impact on the bond market may be neutral, as the transition to price-based control could diminish the influence of reserve adjustments on market dynamics [14]

Report Summary 1. Report Industry Investment Rating No information provided. 2. Core Viewpoints - The prices of treasury bond futures generally rose, with the yield of the 10 - year treasury bond active bond falling to 1.627%. The central bank's open - market operation had a net injection of 1586 billion yuan, and previous double - cuts (lowering the deposit reserve ratio by 0.5 percentage points and the 7 - day reverse repurchase operating rate by 10bp) pushed short - term bond interest rates to decline and the market liquidity to loosen [3]. - The Fed kept the federal funds rate unchanged as expected. The UK and the US reached an agreement on tariff trade agreement terms, and the EU announced a retaliatory list of 95 billion euros of US goods. The yield of US treasury bonds rebounded. China decided to contact the US, and the focus will be on the progress of the negotiations [3]. - Affected by external shocks and seasonal changes, the manufacturing prosperity level declined in April, and the real estate market is not yet stable. It is expected that the central bank will increase the intensity of monetary policy regulation, and the market liquidity is expected to remain loose, which will continue to support short - term treasury bond futures prices. The current long - short spread is at a historical low, and the compression space is limited. If the tariff negotiation makes progress, the volatility of long - term treasury bond futures prices may increase [3]. 3. Summary by Relevant Catalogs Futures Market - **Price and Yield Changes**: On the previous trading day, treasury bond futures prices generally rose. For example, the T2506 contract rose 0.19%, and the yields of key - term treasury bonds in China generally declined. The 10Y treasury bond yield declined 1.28bp to 1.63% [2]. - **Position and Volume Changes**: The position of T2506 increased, while some contracts had position decreases and increases. For example, the position of TS2506 decreased by 3076, and that of TS2509 increased by 3615 [2]. - **Arbitrage Situation**: The IRR of CTD bonds corresponding to the main contracts of treasury bond futures was at a low level, and there were no arbitrage opportunities [2]. Spot Market - **Short - term Market Interest Rates**: Short - term market interest rates generally declined. SHIBOR 7 - day interest rate declined 6.7bp, DR007 interest rate declined 6.62bp, and GC007 interest rate declined 7.1bp [2]. - **Key - Term Treasury Bond Yields**: The yields of China's key - term treasury bonds generally declined, and the long - short (10 - 2) treasury bond yield spread was 15.53bp [2]. Overseas Market - **Key - Term Treasury Bond Yields**: On the previous trading day, the 10Y US treasury bond yield rose 11bp, the 10Y German treasury bond yield declined 3bp, and the 10Y Japanese treasury bond yield rose 2.5bp [2]. Macro News - **Central Bank Operation**: On May 8, the central bank carried out a 1586 - billion - yuan 7 - day reverse repurchase operation with a net injection of 1586 billion yuan [3]. - **International Relations**: China and Russia deepened their strategic partnership, and China and the US will conduct tariff negotiations. The UK and the US reached a tariff trade agreement on some items, and the UK central bank cut interest rates [3]. - **Domestic Policies**: The financial regulatory authority established a mechanism to support small and micro - enterprise financing, and the balance of private enterprise credit loans increased year - on - year [3].

Core Viewpoint - The Chinese government has introduced a comprehensive financial policy package aimed at stabilizing the market and expectations, promoting high-quality economic development in response to global economic uncertainties [1][2]. Group 1: Financial Policy Measures - The financial policy package includes measures such as timely reductions in reserve requirement ratios (RRR) and interest rates, with a focus on structural measures to achieve high-quality development [2][4]. - The RRR will be lowered by 0.5 percentage points, providing approximately 1 trillion yuan in long-term liquidity to the market [2]. - The policy interest rate will be reduced by 0.1 percentage points, with the 7-day reverse repurchase rate decreasing from 1.5% to 1.4%, expected to lead to a similar decline in the Loan Prime Rate (LPR) [2]. Group 2: Support for Consumption and Innovation - The central bank will temporarily lower the reserve requirement ratio for auto finance and leasing companies from 5% to 0%, establishing a 500 billion yuan "service consumption and elderly re-loan" to support automotive consumption and service sectors [3]. - An additional 300 billion yuan will be allocated for technology innovation and transformation loans, along with the creation of risk-sharing tools for technology innovation bonds [3]. - The central bank will also increase the re-loan quota for agricultural and small enterprises by 300 billion yuan to support lending to rural and small private businesses [3]. Group 3: Real Estate and Stock Market Stability - The central bank will reduce the personal housing provident fund loan interest rate by 0.25 percentage points to support housing demand [3]. - The China Securities Regulatory Commission (CSRC) will support the Central Huijin Investment Ltd. in stabilizing the stock market, while expanding the pilot scope for insurance funds' long-term investments [4]. - The CSRC has announced an action plan to promote the high-quality development of public funds, aiming to attract more long-term capital into the market [4].