Report Industry Investment Rating - Not provided in the report Core Viewpoints - Instead of predicting, it's better to respond. Different response strategies should be formulated based on different policy scenarios in the China-US trade conflict [1][14] - The current conflict is closer to the first scenario, but the future scenario evolution is uncertain. Specific response measures should be taken according to the actual development of the economic and trade conflict [3][16] - For interest rates, the variable lies in the downward space rather than the direction. 30-year treasury bonds, 10-year China Development Bank bonds, and 5-year secondary perpetual bonds are expected to benefit from both the overall interest rate decline and the spread contraction, and are more worthy of allocation [4][17] - It is recommended to actively allocate using a barbell strategy, increasing the allocation of high-elasticity varieties such as 30-year treasury bonds, 10-year China Development Bank bonds, and 5-year secondary perpetual bonds [24] Summary by Related Catalogs China-US Trade Conflict Situation - Recently, the China-US economic and trade conflict has escalated again, leading to significant fluctuations in the global capital market. On October 10, the Nasdaq index fell 3.56%, and the Nasdaq Golden Dragon China Index fell 6.1% [1][8] - Similar to the situation in early April, bond interest rates have also significantly declined. On October 11, interest rates across all maturities generally declined significantly, with the 30-year treasury bond dropping 5.01bps and the 10-year treasury bond dropping 2.54bps compared to the previous day [1][8] - The current China-US economic and trade conflict is significantly less intense than in early April this year, in terms of both the magnitude of tariff implementation and the scope involved [13] Different Scenarios of China-US Trade Conflict and Their Impact on the Bond Market - **Scenario 1**: The US exerts extreme pressure but the measures are not implemented or have limited impact, and China remains restrained. The impact on the market is relatively limited. The significant decline of 3 - 5bps in long-term interest rates on October 11 may have already reflected the policy impact, and then the bond market will return to being dominated by fundamentals and the asset shortage, with interest rates showing a fluctuating downward trend [14] - **Scenario 2**: The US significantly implements tariff increases and other policies, and China conducts effective countermeasures. The conflict intensifies, and domestic policies remain on the sidelines in the short term. In this case, long-term interest rates are expected to decline by about 10 - 20bps, similar to the decline in April [2][15] - **Scenario 3**: The China-US trade conflict escalates, and China promptly responds with active macro policies, especially loose monetary policies. Interest rates are expected to decline more significantly, and long-term interest rates may hit new lows [2][15] Bond Investment Recommendations - 30-year treasury bonds, 10-year China Development Bank bonds, and 5-year secondary perpetual bonds are expected to benefit from both the overall interest rate decline and the spread contraction, and are more worthy of allocation [4][17] - It is recommended to use a barbell strategy, maintaining a duration above neutral and actively increasing the allocation of high-elasticity varieties such as 30-year treasury bonds, 10-year China Development Bank bonds, and 5-year secondary perpetual bonds [24]