Investment Rating - Industry Rating: Outperform the market (maintained rating) [4] Core Insights - The report emphasizes the dual attributes of bills, highlighting their role as effective indicators for assessing credit conditions due to their high-frequency data updates [1][2] - Bill interest rates are influenced by both funding and credit attributes, with the former primarily determining the pricing center as the market for interest rates becomes more liberalized [2][31] - The report identifies five dimensions to observe bill interest rates, including seasonal trends, supply-demand imbalances, arbitrage behaviors, policy-driven changes, and yield curve expectations [3][4] Summary by Sections 1. Bill Quantity and Price Indicator System - Bill interest rates are categorized into direct discount rates, transfer discount rates, and re-discount rates, with the transfer discount rate becoming the pricing center as market reforms progress [11][12] - The main sources for publicly available bill quantity indicators are the central bank and the Shanghai Bill Exchange, reflecting the financial system's support for the real economy [19][23] 2. Determinants of Bill Interest Rates - Dual Funding and Credit Attributes - The funding attribute of bills is linked to their characteristics as short-term financial assets, impacting liquidity management through transfer discount and repurchase operations [31][32] - The credit attribute of bills is rooted in regulatory frameworks, with bills historically classified as credit assets, thus directly influencing credit scale adjustments [34][35] 3. Relationship Between Bill Interest Rates and Money Market Rates - Bill interest rates generally move in tandem with repo rates and certificate of deposit rates, but can diverge under certain conditions [3][10] - The report notes that during critical assessment periods, such as month-end and quarter-end, bill interest rates exhibit significant fluctuations due to regulatory constraints [50][48] 4. Observing Bill Interest Rate Credit Attributes - Seasonal patterns in bill interest rates are noted, with higher rates typically observed at the beginning of the year and lower rates towards the end [3][4] - The occurrence of "zero interest" scenarios is highlighted, indicating severe supply-demand imbalances in the bill market [3][4] 5. Regulatory Policies Impacting Bill Quantity and Price - New regulations are pushing bills back towards their payment settlement attributes, which may alleviate seasonal fluctuations in quantity and price [5][6] - The report discusses the implications of capital regulations on the supply-demand dynamics of bills, suggesting a potential easing of conflicts in the bill market [5][6]