1. Report Industry Investment Rating No information provided in the given content. 2. Core Viewpoints of the Report - The traditional credit bond investment strategy centered on "holding to maturity" has gradually become ineffective. Trading to increase returns or reduce drawdowns has become an important approach. "Valuation elasticity" is crucial in different market environments, and the report focuses on measuring the valuation elasticity of credit entities to guide investment decisions [8][9]. - High - elasticity entities show strong offensiveness in the yield - downward stage but perform poorly in the yield - upward stage. Low - elasticity entities are the opposite, showing certain resistance to decline in the yield - upward stage. Medium - elasticity entities' performance is generally between the two [3][26]. - Based on the yield performance of high, medium, and low - elasticity credit entities in different stages, credit bond portfolio rebalancing can be carried out according to the 3 - year AA+ medium - short note yield trend. The upper and lower limits of the 10 - year Treasury bond yield can be used to determine the timing of portfolio rebalancing [4][36]. 3. Summary According to the Catalog 3.1 How to Measure the Valuation Elasticity of Credit Entities - The valuation elasticity of each credit entity is measured by the relative fluctuation range of the spread during the "upward" or "downward" stages of the yield. From 2023, the time period is divided into 5 "upward", 6 "downward", and 2 "oscillating" stages based on the 3 - year AA+ medium - short note yield curve [1][10]. - Using non - guaranteed, public bonds in stock on March 13 as samples, calculate the excess spread change amplitude between individual bonds and the same - term, same - implied rating curve in each stage to obtain the average spread change of each credit entity. If the average upward or downward spread change of an entity is in the top 30% of issuers of the same type, it is defined as "high valuation elasticity"; if it is in the bottom 30%, it is "low valuation elasticity"; otherwise, it is "medium valuation elasticity" [1][12]. - If an entity is defined as "high valuation elasticity" at least 6 times and less than 5 times as "low valuation elasticity" in 11 yield upward or downward stages, it is a "high - elasticity entity"; if it is defined as "low valuation elasticity" at least 6 times and less than 5 times as "high valuation elasticity", it is a "low - elasticity entity"; if it is defined as "medium valuation elasticity" at least 6 times and less than 5 times as "high valuation elasticity" or "low valuation elasticity", it is a "medium - elasticity entity". 1149 issuers with non - guaranteed public bonds in stock are screened out, accounting for 39% of all public bond issuers, including 345 high - elasticity entities, 318 low - elasticity entities, and 486 medium - elasticity entities [2][14]. 3.2 Performance of Various Entities in Different Stages - High - elasticity entities show strong offensiveness in the yield - downward stage, with narrowing excess spreads, but perform poorly in the yield - upward stage. For example, during February 3 - August 4, 2023, and December 12, 2023 - August 5, 2024, the excess spreads of high - elasticity entities were significantly compressed by 31bp and 36bp respectively. In the yield - upward stage, they are sold off, and the excess spreads generally widen [26]. - Low - elasticity entities perform mediocrely in the yield - downward stage but show certain resistance to decline in the yield - upward stage. In 6 yield - downward cycles, the excess spreads of low - elasticity entities widened in 5 cycles, underperforming high - and medium - elasticity entities. In 5 adjustment processes, the excess spreads of low - elasticity entities narrowed by 1 - 5bp, showing better resistance to decline [26]. - The performance of medium - elasticity entities is generally between the two. Since August 2024, their yield trends have been basically consistent with the overall trend, and the excess spreads are mostly around 0bp [26]. - In terms of holding - period yields, high - elasticity entities perform better in the bond market yield - downward period, and low - elasticity entities are more resistant to decline in the bond market adjustment period. This characteristic is more obvious for AAA high - grade entities. In 6 yield - downward stages, the holding - period yields of AAA high - elasticity entities are higher than those of low - elasticity entities, while in 5 adjustment cycles, the losses of low - elasticity entities are smaller, and medium - elasticity entities are in between [30]. 3.3 Using the Upper and Lower Limits of the 10 - year Treasury Bond Yield to Determine the Timing of Portfolio Rebalancing - When the yield is at a high level and is expected to decline, increase the allocation of high - elasticity entities to pursue excess returns from spread compression. When the yield is at a low level and is expected to adjust, switch to medium - or low - elasticity entities, which are more resistant to decline than high - elasticity entities and may obtain excess spreads. It is recommended to choose low - elasticity urban investment entities first [36]. - Since 2025, the yield trend of 3 - year AA+ medium - short notes is basically the same as that of the 10 - year Treasury bond but slightly lags behind. Since the third quarter of 2025, the 10 - year Treasury bond yield has been running in a range of 1.75% - 1.9%. The upper and lower limits of the 10 - year Treasury bond yield can be used to determine the timing of portfolio rebalancing. As of March 16, the 10 - year Treasury bond yield is 1.83%, in the middle of the range. Considering that the spread between the 3 - year AA+ medium - short note and the 10 - year Treasury bond has reached a low point, there may be a risk of valuation adjustment for credit bonds. High - elasticity entities can be reduced, and low - or medium - elasticity entities can be increased [4][36][37].