1. Report Industry Investment Rating - Not mentioned in the provided content 2. Core Viewpoints of the Report - The bond market has been continuously recovering in the past two weeks, especially for allocation - type varieties such as Tier 2 and perpetual bonds and those with a maturity of less than 10 years. The bond market has emerged from a non - bearish situation in the short term. The long - and short - term players are adding chips, and the "showdown moment" for the long - short battle in the bond market is approaching around the Spring Festival [1]. - The short - term interest rate of the 10 - year bond may further decline to 1.75%, and the short - term lower limit of the 30 - year bond may be around 2.15%, with an elasticity of about 10BP in the 30 - year bond [2]. 3. Summary by Relevant Catalogs 3.1 Bond Market Trends - In the past two weeks, the bond market has recovered. For 10 - year - and - below varieties, the bond market has shown a "bullish allocation" trend. The 30 - year bond, which had a weak performance before, has seen a significant recovery this week, with the yield dropping by 4BP to 2.25%, performing the best among all key tenors [1][5]. - There is a divergence in the bond market. The old bonds and the TL contract fell in the first half of the week, while the 25 Special 6 Treasury bond remained relatively stable, indicating a "divergence moment" between the long and short positions [7]. 3.2 Short - Seller's Logic - **Medium - and short - term logic**: The logic of price increases in various assets driven by the technology industry and the supply - demand contradiction in the bond market itself are solid reasons for the bond market to weaken in the medium - term view. In the short - term trading strategy, the short - seller's logic for adding positions is clear [1][8]. - **Concerns about the increase in local bond supply**: The disclosed issuance plan shows that the supply in February is considerable, with a total scale close to 770 billion yuan. The local bonds are under selling pressure, which drives the interest rate of old Treasury bonds to rebound, such as the 2105 Treasury bond [8]. - **Changes in the relative value of the 25 Special 6 Treasury bond**: The spread between old local bonds and the 25 Special 6 Treasury bond has widened, and the basis between the 25 Special 6 Treasury bond and the TL main contract has risen again. The relatively high valuation gives the short - sellers more room to bet. The borrowing concentration of the 25 Special 6 Treasury bond reached a new high on February 5th, close to 39%, with securities firms being the main force for increasing borrowing [10]. 3.3 Long - Buyer's Logic - **Less affected by other assets**: The bond market has not been significantly affected by the high volatility of other assets. Compared with other assets with high volatility, bonds have become an asset with a higher Sharpe ratio under low volatility [13]. - **Continuous long - bond purchases by large banks**: Large banks have been continuously buying long - term bonds since the beginning of the year. As of February 6th, they have been the only net buyers of the 10 - year Treasury bond active bond 250016, with a cumulative net purchase of 99.3 billion yuan. This is mainly due to position replenishment after the year - end indicator assessment and the relatively weak demand for banks to issue certificates of deposit to supplement liabilities at the beginning of the year [15]. - **Fewer chips for funds to sell bonds**: After the "re - inflation trading" led by non - ferrous metals and the "risk - preference trading" led by technology, the bond market has not fallen significantly. The median duration of pure - bond funds has dropped to the 10% quantile level since last year, and the position of funds in Treasury bond cash bonds has decreased. Funds are gradually turning to net buying [19]. - **High borrowing concentration of the 25 Special 6 Treasury bond**: The short - sellers' continuous increase in the borrowing concentration of the 25 Special 6 Treasury bond has become a chip for the long - buyers to play against the short - sellers and repair the market [20]. 3.4 "Showdown Moment" of the Bond Market - The continuous recovery of the bond market has shaken the determination of some short - position holders. There are significant differences between the well - structured short - seller's logic and the fragmented long - buyer's clues, which are also reflected in the technical consolidation [21]. - In the trading structure of Treasury bond futures, the T contract is dominated by long positions, with the long positions still strong this week, actively increasing positions and pushing up the price above the annual line. The short positions in the 30 - year Treasury bond futures (TL contract) are more "stubborn" but have begun to waver this week [22][24]. - There is a divergence between the "short - term trend" and the "long - term trend". The allocation disk supports the recovery of cash bonds with a maturity of less than 10 years, which is a boost for the long - buyers to increase positions in the T contract. However, approaching the delivery month, there may be potential conditions for a "short - squeeze" in this round of Treasury bond futures [27]. 3.5 Boundary of Bond Market Recovery - The 30 - year bond interest rate is expected to decline further, and the downward space for the 10 - year interest rate may be reopened. The 30 - year bond may be repaired to 2.15%, and the 10 - year bond may further decline to 1.75% [28][32]. - The short - sellers in the current bond market may face negative carry costs. Assuming the borrowing concentration is reduced to the beginning - of - the - year level (20% - 25%), there may be a valuation repair space of 8 - 11BP, corresponding to a valuation yield range of 2.13% - 2.16%, which is the basis for the judgment of the 30 - year bond repair point of 2.15% [30].

Group 1 - The report indicates that since mid-December, the bond market has experienced a rapid correction primarily due to the absence of institutional long positions and the emergence of short positions [4][8] - The report highlights that the cost of shorting has significantly decreased in 2025, leading to increased motivation for institutions to engage in short selling during periods of weak market sentiment [10][11] - The report notes that the bond market is facing structural issues with insufficient allocation power, as institutional investors are less active in positioning ahead of year-end [8][11] Group 2 - The report identifies three signs of a retreat in short selling momentum since December 17: a noticeable trend of short positions taking profits, a decline in bond borrowing volumes, and the resilience of local government bonds [23][24][26] - The report suggests that the bond market may enter a new equilibrium phase as short selling momentum diminishes, with a lack of drivers for further interest rate declines [27][28] - The report emphasizes that the current yield curve is becoming steeper, and the long-end spread is expected to stabilize around 40 basis points [27][28] Group 3 - The report provides a weekly recap of the bond market, indicating that the central bank conducted reverse repos totaling 6,575 billion yuan, resulting in a net withdrawal of 110 billion yuan [32][33] - The report states that the yields on various government bonds have generally decreased, with the 2-year, 5-year, 10-year, and 30-year yields down by 2.0bp, 2.6bp, 0.9bp, and 2.4bp respectively [34][35] - The report mentions that the bond market is expected to return to a range-bound trading pattern, focusing on short-term trading strategies [28][31] Group 4 - The report indicates that the yield spreads for government bonds across various maturities have mostly expanded, while the spreads for local government bonds show mixed trends [43][44] - The report highlights that credit spreads for various types of corporate bonds have generally widened, although the 10-year spreads relative to government bonds have narrowed [45]