1. Report Industry Investment Rating - No information provided regarding the industry investment rating 2. Core Viewpoints of the Report - The decline in capital interest rates in December may be for two reasons: preparing for an interest - rate cut or being related to the Vanke incident [3][5] - The decline in capital interest rates does not necessarily indicate an upcoming interest - rate cut, considering the recent equity market fluctuations and the lessons of 2015 [4] - The target range for the 10 - year Treasury bond is 2 - 3%, with a central value of around 2.5% [6] 3. Summary by Related Catalogs 3.1 Event Review - Since December, the capital interest rate has declined first and then rebounded. The overnight interest rate DR001 dropped from 1.3 - 1.5% to below 1.3% (minimum 1.24%), and then rose to 1.33% on January 12 [2][3] 3.2 Reasons for the Decline in Capital Interest Rates in December 3.2.1 Preparing for an Interest - Rate Cut - Similar to the situation in late April 2025 when the capital interest rate declined before the central bank cut interest rates on May 7, 2025. However, the State Council's executive meeting on January 9 focused on structural policies rather than overall interest - rate cuts [3] - Considering the fluctuations in the equity market and the negative effects of excessive monetary loosening, the decline in capital interest rates does not necessarily mean an interest - rate cut [4] 3.2.2 Related to the Vanke Incident - The Vanke incident started to ferment at the end of November, and the capital interest rate began to decline. It further declined in mid - December. In previous major credit risk events (the Baoshang incident in 2019, the Yongmei incident in 2020, and the Vanke incident in 2025), the capital interest rate declined significantly. The central bank may aim to protect liquidity and prevent risk contagion [5] - The decline in capital interest rates in the Baoshang incident lasted for 1.5 months, in the Yongmei incident for 2 months. The current decline has lasted for 1.5 months, so it is reasonable for the interest rate to return to the previous range (DR001 1.3 - 1.5%) in mid - January [5] 3.3 Bond Market Views 3.3.1 Fundamental Analysis - The falsification of the under - expected economic recovery, combined with possible loose credit and fiscal policies at the beginning of 2026, will accelerate the cyclical recovery [6] 3.3.2 Monetary Policy - If there is a loose monetary policy (such as reserve requirement ratio cuts, interest - rate cuts, bond purchases), it will be a chance for under - allocation, similar to the situation in 2025 [6] 3.3.3 Inflation - Inflation is rising. Attention should be paid to whether the PPI month - on - month growth can remain positive [6] 3.3.4 Capital Interest Rates - If the month - on - month inflation continues to rise, there is a possibility of capital tightening, and the yield of short - term bonds will also start to rise [6] 3.3.5 Real Estate - Real estate is not used as a means to stabilize growth this time. Similar to the situation in the US after 2008, real estate is a lagging indicator. It may bottom out after the recovery of various economic indicators and the rise of the stock market [6] 3.3.6 Bonds - The target range for the 10 - year Treasury bond is 2 - 3%, with a central value of around 2.5% [6]