1. Report Industry Investment Rating No industry investment rating information is provided in the report. 2. Core Viewpoints of the Report - The current bond market is in a complex situation of "strong expectations, weak reality" due to the multiple games between policy expectations and fundamental realities. Although the central bank's "dual cut" policy in May released a clear loosening signal, the market reaction was relatively restrained, and the 10 - year Treasury bond yield remained in a narrow - range fluctuation around 1.65%, reflecting investors' cautious expectations for subsequent policy space [2][6][16]. - The flat yield curve presents structural opportunities. Institutional investors can optimize the duration structure and strengthen liquidity management to capture these opportunities. The allocation value of 3 - 5 - year credit bonds is worth noting, and it is necessary to closely track the marginal changes in wealth management funds' trends and policy signals [2][6][16]. - It is recommended to adopt a dumbbell - shaped portfolio of "medium - short - duration urban investment bonds + trading of secondary and perpetual bonds + defensive industrial bonds". Focus on AA+ urban investment bonds in economically strong provinces with a 2 - 3 - year term, seize the interest - rate fluctuation opportunities of 4 - 5 - year joint - stock bank secondary and perpetual bonds, and prefer domestic - demand sectors such as public utilities and coal for industrial bonds [9][45]. 3. Summary According to Relevant Catalogs 3.1 Policy and Market Environment - The cautious attitude of investors towards subsequent policy space stems from two factors: the wealth management funds, which increased by 1.93 trillion yuan in April, are still highly concentrated in short - duration varieties, and the large supply pressure of government bonds in May tests the market's carrying capacity [6][16]. - The wealth management market shows seasonal fluctuations. The scale increased by 1.93 trillion yuan in the 14th week but decreased by 0.50 trillion yuan in the 18th week, indicating weak sustainability of capital inflows. The money market sentiment index fluctuated upward from 46 to 50 in late April, showing a temporary tightening of cross - month liquidity without extreme tightness [8][26]. 3.2 Bond Market Performance - From April 28 to April 30, the 3 - 5 - year AAA credit bond index slightly rose (0.06%), while the 5 - 7 - year variety slightly declined (- 0.04%), indicating that medium - term credit bonds have more allocation value. Among financial bonds, the 7 - 10 - year secondary capital bonds of national joint - stock banks performed prominently (rising 0.48%), echoing the strength of the long - end of interest - rate bonds [7][17]. - The credit spreads of bonds below 3 years are at historical lows, and the long - end is suppressed by policy uncertainties. It is suggested to focus on 3 - 5 - year high - grade credit bonds, especially AA+ urban investment bonds in economically strong provinces and secondary and perpetual bonds of joint - stock banks [7]. 3.3 Institutional Behavior - Funds and insurance funds increased their holdings of 3 - 5 - year secondary and perpetual bonds, but wealth management's participation in long - duration varieties was limited [7]. - Different institutions have different preferences for bond varieties and terms. For example, large banks have short - term liquidity management needs for 1 - year Treasury bonds, while insurance funds favor medium - and long - term local government bonds, and wealth management increases its investment in medium - and short - term credit bonds [42][44]. 3.4 Investment Strategy - Adopt a dumbbell - shaped portfolio: focus on 2 - 3 - year AA+ urban investment bonds in economically strong provinces, avoid district - level non - standard financing entities; seize the interest - rate fluctuation opportunities of 4 - 5 - year joint - stock bank secondary and perpetual bonds and avoid long - end liquidity traps; prefer domestic - demand sectors such as public utilities and coal for industrial bonds [9][45]. - Given that the credit spreads of varieties below 3 years are at a low level and there is still some uncertainty at the long - end, it is recommended to focus on 3 - 5 - year credit varieties [45].