1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints of the Report - The current credit bond market is at a turning point with both pressure and opportunities. The yield has risen to the high of the year, making the absolute value prominent, especially the allocation cost - performance of the over - adjusted long - term varieties is gradually emerging. The liability side of wealth management has not shown large - scale redemption negative feedback, and the net purchase volume of credit bonds on the investment side remains relatively stable. It is recommended to make an optimal layout under the premise of stable liabilities, adopt a barbell strategy to balance defense and opportunities, control the overall duration within 3 years to maintain flexibility, and pay attention to the structural spread opportunities of credit bonds brought by the new bond VAT regulations [2][6]. 3. Summary According to Relevant Catalogs 3.1 Yield and Spread Overview 3.1.1 Yields and Changes of Each Term - Yields of various bonds such as national bonds, national development bonds, local government bonds, and different types of credit bonds (including urban investment bonds, industrial bonds, etc.) at different terms (0.5Y, 1Y, 2Y, 3Y, 5Y) are presented, along with their weekly changes and historical quantiles. For example, the 0.5Y national bond yield is 1.38%, with a weekly change of 0.3bp and a historical quantile of 9.1% [15]. 3.1.2 Spreads and Changes of Each Term - Credit spreads of various bonds at different terms are shown, including their weekly changes and historical quantiles. For instance, the 0.5Y credit spread of public non - perpetual urban investment bonds is 18bp, with a weekly change of 0bp and a historical quantile of 3.2% [18]. 3.2 Credit Bond Yields and Spreads Classified by Category (Hermite Algorithm) 3.2.1 Urban Investment Bonds by Region - **Yields and Changes of Each Term**: Yields of public non - perpetual urban investment bonds in different provinces at different terms, along with their weekly changes and historical quantiles, are provided. For example, the 0.5Y yield of Anhui's public non - perpetual urban investment bonds is 1.77%, with a weekly change of 4bp and a historical quantile of 3.0% [21]. - **Spreads and Changes of Each Term**: Credit spreads of public non - perpetual urban investment bonds in different provinces at different terms, their weekly changes, and historical quantiles are given. For example, the 0.5Y credit spread of Anhui's public non - perpetual urban investment bonds is 26.11bp, with a weekly change of 1bp and a historical quantile of 4.4% [24]. - **Yields and Changes of Each Implicit Rating**: Yields of different implicit ratings (AAA, AA +, AA, etc.) of public non - perpetual urban investment bonds in different provinces, along with their weekly changes and historical quantiles, are presented. For example, the AAA - rated 0.5Y yield of Anhui's public non - perpetual urban investment bonds is 1.79%, with a weekly change of 5.1bp [28]. - **Spreads and Changes of Each Implicit Rating**: Credit spreads of different implicit ratings of public non - perpetual urban investment bonds in different provinces, their weekly changes, and historical quantiles are shown. For example, the AAA - rated credit spread of Anhui's public non - perpetual urban investment bonds is 21.99bp, with a weekly change of 1.68bp and a historical quantile of 19.4% [33].

Core Viewpoint - The bond market shows a mixed trend with government bond futures mostly rising, while interbank cash yields exhibit a "short-term decline and long-term rise" pattern, indicating strong profit-taking sentiment in the long end, especially in ultra-long bonds [1][2]. Market Performance - Government bond futures closed mostly higher, with the 30-year main contract down 0.02% at 119.320, while the 10-year main contract rose 0.03% to 108.640 [2]. - In the interbank market, the yield on the 30-year government bond rose by 0.5 basis points to 1.917%, while the 10-year government bond yield increased by 0.25 basis points to 1.689% [2]. - The China Securities convertible bond index rose by 0.08% to 467.77 points, with notable gains in several convertible bonds [2]. Primary Market - The first batch of local government bonds after tax policy adjustments showed stable bidding results, with the 10-year "25 Hebei Bond 42" at a winning rate of 1.87% and a total multiple of 23.38 [4]. Liquidity and Funding - The central bank conducted a 1220 billion yuan reverse repurchase operation at a rate of 1.40%, resulting in a net withdrawal of 40 billion yuan for the day [5]. - Shibor rates for short-term products mostly declined, with the overnight rate down 0.06 basis points to 1.3144% [5]. Institutional Insights - Current convertible bond valuations are at historical highs, with a strong pricing expectation for equity upside, but lower pure bond yields compared to previous peaks [6]. - The focus on "anti-involution" in the macroeconomic context raises questions about the appropriateness of interest rate cuts, suggesting that structural policies will become the main focus moving forward [7]. - The implementation of the new value-added tax regulations on bonds has decreased the relative attractiveness of government and financial bonds, while enhancing the comparative advantage of credit bonds, particularly urban investment and industrial bonds [7].

Investment Rating - The industry investment rating is "Overweight (Maintain)" [2] Core Insights - The new bond value-added tax regulation is expected to have a static impact of approximately 0.4% on annual revenue and 0.95% on profit for listed banks [6][14] - The report emphasizes the importance of banks enhancing their trading capabilities in the medium to long term due to the new tax implications [6][11] - The investment recommendation focuses on the stability and sustainability of the banking sector, highlighting two main stock selection strategies: regional banks with strong certainty and large banks with high dividend yields [6][18] Summary by Sections Background - The report discusses the need to adjust fund allocation, optimize the bond market pricing mechanism, and deepen fiscal and tax system reforms [10][11] Impact on Bank Behavior - In the short term, banks can mitigate the impact of increased tax costs through the realization of floating profits in OCI accounts, while in the long term, there will be a greater emphasis on improving trading capabilities [11][12] Impact on Bank Performance - The static assessment indicates that the increase in tax costs will affect annual revenue by about 0.4%, with a projected increase in tax costs of approximately 232 billion yuan for the next year [14][15] - The cumulative tax cost increase over five years is estimated to be around 1,439 billion yuan, representing about 2.7% of the projected revenue for 2025 [14][15] Investment Recommendations - The report continues to recommend focusing on bank sector stocks, particularly emphasizing regional banks with strong advantages and large banks known for their high dividends [18][19]