1. Report Industry Investment Rating No information provided in the report regarding the industry investment rating. 2. Core Viewpoints of the Report - In February 2026, bond supply decreased year - on - year, mainly dragged down by inter - bank certificates of deposit. The year - on - year decline in the supply of inter - bank certificates of deposit and interest - rate bonds in February 2026 was 739.6 billion yuan and 515.2 billion yuan respectively. The combined year - on - year decline in the new custody volume of inter - bank certificates of deposit and financial bonds in February 2026 was 890.4 billion yuan, possibly due to the delayed approval of bank bond issuance quotas. The new custody volume of corporate credit bonds decreased by 69.4 billion yuan year - on - year, mainly due to the decline in urban investment bonds [4][9][19]. - In February 2026, most institutions increased their bond allocations less, except for securities firms. Commercial banks (after considering the central bank's outright reverse repurchase) increased their bond holdings 886.8 billion yuan less year - on - year; asset management accounts (i.e., non - legal person products) increased their bond holdings 240.4 billion yuan less year - on - year, insurance companies increased their bond holdings 183.8 billion yuan less year - on - year, and securities firms increased their bond holdings 42.7 billion yuan more year - on - year [4][22]. - In March 2026, the supply of government bonds decreased by nearly 500 billion yuan year - on - year, possibly due to the decrease in the pressure of stabilizing economic growth. The supply of government bonds in April 2026 may increase slightly year - on - year. The supply of inter - bank certificates of deposit and bank financial bonds continued to decline in March 2026. If the quotas for inter - bank certificates of deposit and bank financial bonds are approved at the end of March or early April, their supply may increase in April [4][40][45]. - In March 2026, the net bond - buying scale of banks in the secondary market increased year - on - year, which was related to the low base last year and the weakening of credit demand in March this year. The net bond - buying scale of insurance companies in the secondary market decreased year - on - year, possibly because insurance companies increased the proportion of equity and other assets. The net bond - buying scale of asset management accounts decreased slightly year - on - year, possibly because the new scale of bank wealth management continued to decline [4][50][51]. 3. Summary by Relevant Catalogs 3.1 Bond Supply in February 2026 - **Overall Situation**: In February 2026, the bond custody balance was 196.39 trillion yuan, with a year - on - year growth rate of 10.42%, a decrease of 0.98 percentage points from the previous month. The new custody scale in February was 1060.4 billion yuan, a year - on - year decrease of 1439.1 billion yuan [4][6]. - **By Bond Type**: Inter - bank certificates of deposit were the main bond type with a year - on - year decline in supply in February. The supply of inter - bank certificates of deposit and interest - rate bonds decreased by 739.6 billion yuan and 515.2 billion yuan respectively year - on - year. Considering January and February together, the new custody volume of national bonds and local bonds this year was roughly the same year - on - year, but the new custody volume of policy - based financial bonds decreased significantly. The combined year - on - year decline in the new custody volume of inter - bank certificates of deposit and financial bonds in February 2026 was 890.4 billion yuan, possibly due to the delayed approval of bank bond issuance quotas. The new custody volume of corporate credit bonds decreased by 69.4 billion yuan year - on - year, mainly due to the decline in urban investment bonds [4][9][19]. 3.2 Bond Allocation by Institutions in February 2026 - **Overall Situation**: Most institutions increased their bond allocations less in February 2026, except for securities firms. Commercial banks (after considering the central bank's outright reverse repurchase) increased their bond holdings 886.8 billion yuan less year - on - year; asset management accounts increased their bond holdings 240.4 billion yuan less year - on - year, insurance companies increased their bond holdings 183.8 billion yuan less year - on - year, and securities firms increased their bond holdings 42.7 billion yuan more year - on - year [22]. - **Banks**: The bond - allocation intensity of banks decreased in February 2026. The scale of banks' increased holdings of government bonds/government bond net supply was 84.9%, significantly higher than the average of 77.9% in the past 12 months, but the bond - allocation intensity in February decreased compared with January, possibly related to the year - on - year decrease in the deposit - loan difference [28]. - **Insurance Companies**: The new bond investment scale of insurance companies decreased year - on - year in February 2026. Structurally, insurance companies mainly increased their allocations of local bonds less. After excluding supply disturbances, the bond - allocation intensity of insurance companies also weakened in February. The scale of insurance companies' increased holdings of government bonds/new government bond custody was about 0.6%, a decrease from January and significantly lower than the average of 9.2% in the past 12 months [29]. - **Asset Management Accounts**: The new scale of wealth management and the supply of inter - bank certificates of deposit both decreased significantly year - on - year in February 2026, leading to a year - on - year decrease in the bond - holding increase of asset management accounts. The new scale of wealth management in February 2026 was - 1.11 trillion yuan, lower than the same period from 2023 to 2025. The contraction of the supply of inter - bank certificates of deposit in February 2026 may also be an important reason for the decline in the bond - allocation intensity of asset management accounts [33]. - **Foreign Capital and Securities Firms**: Foreign capital decreased its bond holdings by 98.2 billion yuan year - on - year, mainly reducing its holdings of inter - bank certificates of deposit. The significant year - on - year decrease in the supply of inter - bank certificates of deposit in February 2026 may have limited the bond - allocation ability of foreign capital. Securities firms increased their bond holdings by 42.8 billion yuan year - on - year, mainly increasing their holdings of local bonds, possibly because the spread between local bonds and national bonds narrowed in February [38]. 3.3 Outlook for Bond Supply and Market Conditions - **Government Bonds**: In March 2026, the supply of government bonds decreased by nearly 500 billion yuan year - on - year, possibly due to the decrease in the pressure of stabilizing economic growth. The supply of government bonds in April 2026 may increase slightly year - on - year. The issuance of new local bonds in April 2026 is expected to increase year - on - year, but the issuance of refinancing bonds after deducting repayments may decrease. After combining various varieties, the supply of local bonds in April may increase slightly year - on - year [40]. - **Inter - bank Certificates of Deposit and Bank Financial Bonds**: The supply of inter - bank certificates of deposit and bank financial bonds continued to decline in March 2026. If the quotas for inter - bank certificates of deposit and bank financial bonds are approved at the end of March or early April, their supply may increase in April [45]. - **Banks, Insurance Companies, and Asset Management Accounts**: In March 2026, the net bond - buying scale of banks in the secondary market increased year - on - year, which was related to the low base last year and the weakening of credit demand in March this year. The net bond - buying scale of insurance companies in the secondary market decreased year - on - year, possibly because insurance companies increased the proportion of equity and other assets. The net bond - buying scale of asset management accounts decreased slightly year - on - year, possibly because the new scale of bank wealth management continued to decline [50][51].

Group 1: Report Industry Investment Rating - No information provided in the report Group 2: Core Viewpoints of the Report - In February 2026, the total bond custody scale increased by 103.83 billion yuan month - on - month, with local government bond custody increasing by nearly 1 trillion yuan and the decline in inter - bank certificate of deposit custody narrowing. The bond market was in a strong and volatile state, with the valuation yields of 10 - year and 30 - year treasury bonds breaking through 1.8% and 2.3% respectively. Although banks' bond - allocation demand was strong, non - bank institutions still had differences in the market outlook, and the market was still full of twists and turns [3][10][12] - The bond market leverage ratio decreased by 0.1 pct to 107.8% in February, remaining at a relatively low level in recent years. The bank leverage ratio decreased by 0.1 pct to 103.1%, and the non - bank institution leverage ratio increased by 0.2 pct to 119.2%, remaining at a neutral level since 2022 [4][50] Group 3: Summary of Each Section 1. February: Bond Custody Increment Rebounds with Large - scale Local Government Bond Issuance and Decreased Net Repayment of Certificates of Deposit - The total bond custody scale increased by 103.83 billion yuan month - on - month, with local government bond custody increasing by nearly 1 trillion yuan and the decline in inter - bank certificate of deposit custody narrowing by nearly 40 billion yuan. In terms of interest - rate bonds, the local government bond issuance scale increased significantly, the treasury bond issuance and maturity scale both decreased, and the policy - financial bond issuance scale declined significantly. In terms of credit bonds, the issuance scale of commercial paper and medium - term notes decreased, and the enterprise bond custody scale decline narrowed [10] 2. General Funds Increase Holdings of Interest - rate Bonds, and Commercial Banks' Willingness to Actively Increase Allocations Weakens after Interest Rate Decline 2.1 General Funds - In February, the bond custody of general funds decreased by 17.19 billion yuan month - on - month, with the decline significantly narrowing by 53.56 billion yuan compared with the previous month. The scale of holdings of local government bonds increased, and the scale of reduction of treasury bonds, policy - financial bonds, and inter - bank certificates of deposit decreased [14] 2.2 Securities Companies - In February, the bond custody scale of securities companies increased by 0.93 billion yuan, with the increase declining by 6.07 billion yuan compared with the previous month. They reduced their holdings of policy - financial bonds, Financial bonds on SHCHE, and treasury bonds, increased their reduction of medium - term notes, but increased their holdings of local government bonds and inter - bank certificates of deposit [25] 2.3 Insurance Companies - In February, the bond custody scale of insurance companies decreased by 3.11 billion yuan month - on - month, with the decline widening by 2.27 billion yuan compared with the previous month. They increased their reduction of Financial bonds on SHCHE and policy - financial bonds, started to reduce their holdings of treasury bonds, inter - bank certificates of deposit, and medium - term notes, but increased their holdings of local government bonds [30] 2.4 Overseas Institutions - In February, the bond custody scale of overseas institutions decreased by 3.04 billion yuan month - on - month, with the decline narrowing by 7.74 billion yuan compared with the previous month. They increased their holdings of treasury bonds, increased the scale of holdings of policy - financial bonds, and decreased the scale of reduction of inter - bank certificates of deposit [32] 2.5 Other Institutions - In February, the bond custody of other institutions increased by 58.43 billion yuan month - on - month, with the increase expanding by 32.52 billion yuan compared with the previous month. They increased their holdings of treasury bonds and local government bonds, decreased their reduction of inter - bank certificates of deposit, and started to reduce their holdings of policy - financial bonds [36] 2.6 Commercial Banks - In February, the bond custody of commercial banks increased by 80.25 billion yuan month - on - month, with the increase narrowing by 32.13 billion yuan compared with the previous month. After excluding the impact of outright repurchase, the bond - increasing scale of banks remained at a high level. They decreased their holdings of treasury bonds, commercial paper, and policy - financial bonds, started to reduce their holdings of medium - term notes, increased their holdings of local government bonds, and started to increase their holdings of inter - bank certificates of deposit [42] 2.7 Credit Unions - In February, the bond custody scale of credit unions decreased from an increase of 7.97 billion yuan in the previous month to a decrease of 14.93 billion yuan. They started to reduce their holdings of treasury bonds, policy - financial bonds, and local government bonds [43] 3. In February, the Leverage Ratio of Non - bank Institutions Rebounds but Remains at a Neutral Level Overall - In February, the bond market leverage ratio decreased by 0.1 pct to 107.8%, remaining at a relatively low level in recent years. The bank leverage ratio decreased by 0.1 pct to 103.1%, and the non - bank institution leverage ratio increased by 0.2 pct to 119.2%, remaining at a neutral level since 2022 [50]

1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints of the Report - In January 2026, the total bond custody scale increased by 75.76 billion yuan month - on - month, with the interest - rate bond custody increment rising significantly. The credit - bond custody increment also increased due to the net financing of short - term commercial paper, while the inter - bank certificate of deposit (NCD) custody scale continued to decline. The domestic bond interest rates first rose and then fell. Commercial banks were the most important driving force for the market to stabilize, with large - scale purchases that pushed interest rates down, while the broad - based funds' reduction in bond holdings reached a three - year high [3][9]. - The bond market leverage ratio increased slightly in January, still at a relatively low level in recent years. Among institutions, the leverage ratio of commercial banks and non - bank institutions increased, with securities companies significantly increasing leverage and the broad - based funds remaining stable [4][54]. 3. Summary by Relevant Catalogs 3.1 1 January: Interest - rate Bond Net Financing Significantly Rebounded, Driving the Custody Scale Higher, but NCDs Continued Net Repayment - The total bond custody scale increased by 75.76 billion yuan month - on - month, 45.5 billion yuan more than in December. The interest - rate bond custody increment was 107.85 billion yuan, about 38 billion yuan higher than the previous month. The custody increments of local bonds, treasury bonds, and policy - financial bonds all increased. The short - term commercial paper turned to net financing, leading to an increase in the credit - bond custody increment. The NCD custody scale decreased by 65.62 billion yuan month - on - month, with the decline expanding by 3.38 billion yuan compared to the previous month [3][9]. 3.2 The Reduction Scale of Broad - based Funds Reached a Three - year High, and Commercial Banks' Active Allocation Drove the Market to Stabilize 3.2.1 Broad - based Funds - In January, the bond custody volume of broad - based funds decreased by 70.75 billion yuan month - on - month, with the decline significantly expanding by 60.82 billion yuan compared to the previous month, reaching a new high since the beginning of 2023. They mainly reduced their holdings of policy - financial bonds, and increased the reduction scale of NCDs and treasury bonds [18]. 3.2.2 Securities Companies - The bond custody volume of securities companies increased from a decrease of 230 million yuan in the previous month to an increase of 699 million yuan in January. They mainly increased their holdings of policy - financial bonds and started to increase their holdings of financial bonds on the Shanghai Clearing House, but reduced their holdings of local bonds and credit - asset - backed securities [27]. 3.2.3 Insurance Companies - The bond custody volume of insurance companies decreased from an increase of 400 million yuan in the previous month to a decrease of 84 million yuan in January. They reduced their increase in holdings of treasury bonds and NCDs, started to reduce their holdings of local bonds and financial bonds on the Shanghai Clearing House, but decreased the reduction scale of policy - financial bonds and started to increase their holdings of medium - term notes [31][33]. 3.2.4 Overseas Institutions - The bond custody scale of overseas institutions decreased by 10.78 billion yuan month - on - month in January, with the decline narrowing by 4.31 billion yuan compared to the previous month. They mainly decreased the reduction scale of NCDs and started to increase their holdings of policy - financial bonds [35]. 3.2.5 Other Institutions - The bond custody of other institutions increased by 25.91 billion yuan month - on - month in January, with the increase expanding by 7.66 billion yuan compared to the previous month. They started to increase their holdings of policy - financial bonds but decreased their increase in holdings of local government bonds and treasury bonds and started to reduce their holdings of NCDs [39]. 3.2.6 Commercial Banks - The bond custody scale of commercial banks increased by 112.38 billion yuan month - on - month in January, with the increase expanding by 25.73 billion yuan compared to the previous month. They mainly increased their holdings of local bonds and treasury bonds, started to increase their holdings of short - term commercial paper, and decreased the reduction scale of NCDs and commercial - bank bonds [45]. 3.2.7 Credit Unions - The bond custody scale of credit unions increased from a decrease of 982 million yuan in the previous month to an increase of 797 million yuan in January. They mainly started to increase their holdings of NCDs, policy - financial bonds, and treasury bonds and increased their increase in holdings of local bonds [46]. 3.3 In January, the Bond Market Leverage Ratio Slightly Rebounded, Slightly Exceeding Seasonality, with Securities Companies Increasing Leverage and Broad - based Funds Remaining Stable - In January, the bond market leverage ratio increased by 0.1 percentage points month - on - month to 107.9%, still at a relatively low level in recent years. The leverage ratio of commercial banks increased by 0.2 percentage points to 103.2%, and the leverage ratio of non - bank institutions increased by 0.1 percentage points to 119.0%. Among non - bank institutions, the leverage ratio of securities companies increased by 6.4 percentage points to 223.7%, while the leverage ratios of insurance and non - legal - person products remained basically flat at 115.8% [4][54].

Core Insights - The report highlights a decrease in the bond custody amount at the Shanghai Clearing House, with a total of 49.71 trillion yuan at the end of January, down from 49.88 trillion yuan, reflecting a net decrease of 176.29 billion yuan [5][7][8] - The total bond custody amount at both the Shanghai Clearing House and China Central Depository & Clearing Co., Ltd. (CCDC) increased to 179.31 trillion yuan, with a net increase of 757.62 billion yuan [7][8] - The report indicates that the overall leverage ratio in the bond market remained stable at 107.14% in January, with commercial banks being the main contributors to bond purchases [11][12] Total Research - The Shanghai Clearing House's bond custody amount decreased by 176.29 billion yuan, while CCDC's increased by 933.91 billion yuan, leading to a combined net increase of 757.62 billion yuan [7][8] - The main contributors to the net increase in bond custody were interest rate bonds, which saw a significant rise, while interbank certificates of deposit experienced a notable decrease [9] - Commercial banks were identified as the primary buyers of bonds, with a net increase of 10.22 trillion yuan in bond custody, while other financial institutions showed negative net increases [10] Market Outlook - The report suggests a target range for the 10-year government bond yield of 2-3%, with a central tendency around 2.5% [12][13] - Economic recovery is not meeting expectations, and there may be a shift towards looser monetary and fiscal policies in early 2026, which could accelerate the economic cycle [12] - The report emphasizes the importance of monitoring inflation trends, particularly the Producer Price Index (PPI), to gauge potential tightening of monetary policy [13]

Group 1: Report Industry Investment Rating - No information provided in the report Group 2: Core View of the Report - The total bond custody volume increased more month-on-month. As of the end of January 2026, the total bond custody volume of China Central Depository & Clearing Co., Ltd. (CCDC) and Shanghai Clearing House was 179.31 trillion yuan, with a net month-on-month increase of 0.76 trillion yuan, and a month-on-month increase of 0.46 trillion yuan compared to the end of December 2025 [11]. - In terms of different bond types, interest rate bonds and credit bonds increased net month-on-month, while financial bonds and interbank certificates of deposit decreased net month-on-month [11]. - In terms of bond holders, allocation portfolios increased their positions, securities companies in trading portfolios increased their positions, non - human products continued to reduce their positions, and overseas institutions continued to reduce their positions [22]. - The balance of bonds to be repurchased increased slightly, the bond market leverage ratio remained flat month-on-month and increased year-on-year. As of the end of January 2026, the estimated balance of repurchase - style repurchase of bonds to be repurchased was 11.96 trillion yuan, with a month-on-month increase of 49.837 billion yuan, and the leverage ratio was 107.14%, remaining flat compared with the previous month and increasing by 0.84 percentage points year-on-year [44]. Group 3: Summary by Directory 1. Bond Custody Volume and Structure - The total bond custody volume was 179.31 trillion yuan as of the end of January 2026, with a net month-on-month increase of 0.76 trillion yuan, and a month-on-month increase of 0.46 trillion yuan compared to the end of December 2025 [11]. - Interest rate bond custody volume was 125.73 trillion yuan, accounting for 70.12% of the inter - bank bond market custody volume, with a net month-on-month increase of 1.10 trillion yuan; credit bond custody volume was 19.40 trillion yuan, accounting for 10.82%, with a net month-on-month increase of 0.25 trillion yuan; non - policy financial bond custody volume was 12.93 trillion yuan, accounting for 7.21%, with a net month-on-month decrease of 2 billion yuan; interbank certificate of deposit custody volume was 19.03 trillion yuan, accounting for 10.61%, with a net month-on-month decrease of 0.66 trillion yuan [11]. 2. Bond Holder Structure and Changes 2.1 Changes in Custody Volume by Institution Month-on-Month - Policy banks increased their positions in interest rate bonds and interbank certificates of deposit and reduced their positions in credit bonds; commercial banks increased their positions in interest rate bonds and credit bonds and reduced their positions in interbank certificates of deposit; credit unions increased their positions in all of interest rate bonds, interbank certificates of deposit and credit bonds; insurance institutions increased their positions in interbank certificates of deposit and credit bonds and reduced their positions in interest rate bonds; securities companies increased their positions in interest rate bonds and reduced their positions in interbank certificates of deposit and credit bonds; non - human products increased their positions in credit bonds and reduced their positions in interest rate bonds and interbank certificates of deposit; overseas institutions reduced their positions in all of interest rate bonds, interbank certificates of deposit and credit bonds [22]. 2.2 Changes in Custody Volume by Bond Type Month-on-Month - Treasury bond custody volume continued to increase month-on-month, with commercial banks continuously increasing their positions and non - human products continuously reducing their positions. Commercial banks were the main buyers, increasing their positions by 453.4 billion yuan [25]. - Local government bond custody volume continued to increase month-on-month, with commercial banks significantly increasing their positions and securities companies changing to reducing their positions. Commercial banks were the main buyers, increasing their positions by 458 billion yuan [25]. - Policy financial bond custody volume continued to increase month-on-month, with commercial banks continuously increasing their positions and non - human products changing to significantly reducing their positions. Policy banks and commercial banks were the main buyers, increasing their positions by 112.3 billion yuan and 123.9 billion yuan respectively [25]. - Interbank certificate of deposit custody volume continued to decrease month-on-month, with credit unions changing to increasing their positions and non - human products continuously reducing their positions. Policy banks and credit unions were the main buyers, increasing their positions by 23.4 billion yuan and 27.8 billion yuan respectively; non - human products were the main sellers, reducing their positions by 533.2 billion yuan [25]. - Corporate bond custody volume continued to decrease month-on-month, with commercial banks and non - human products being the main sellers, reducing their positions by 7.7 billion yuan and 6 billion yuan respectively [26]. - Medium - term note custody volume continued to increase month-on-month, with non - human products continuously increasing their positions and policy banks changing to reducing their positions. Non - human products were the main buyers, increasing their positions by 93.8 billion yuan [27]. - Short - term financing and ultra - short - term financing custody volume changed to increasing, with commercial banks being the main buyers, increasing their positions by 149 billion yuan, and non - human products increasing their positions by 34.3 billion yuan [27]. - Non - publicly - oriented debt instrument custody volume continued to decrease month-on-month, with non - human products being the main sellers [27]. 2.3 Holder Structure of Main Bond Types - As of the end of January 2026, for treasury bonds, commercial banks accounted for 69.65%, overseas institutions 5.14%, policy banks 11.93%, non - human products 7.07%, securities companies 2.48%, insurance institutions 2.55%, and credit unions 1.16% [30]. - For policy financial bonds, commercial banks accounted for 57.14%, non - human products 30.30%, overseas institutions 2.82%, credit unions 3.23%, insurance institutions 1.89%, securities companies 1.24%, and policy banks 3.38% [32]. - For local government bonds, commercial banks accounted for 71.98%, non - human products 9.88%, policy banks 11.71%, insurance institutions 4.87%, securities companies 0.96%, credit unions 0.58%, and overseas institutions 0.02% [33]. - For corporate bonds, non - human products accounted for 55.84%, commercial banks 30.96%, securities companies 9.08%, insurance institutions 3.25%, policy banks 0.56%, credit unions 0.24%, and overseas institutions 0.08% [35]. - For medium - term notes, non - human products accounted for 60.47%, commercial banks 25.11%, securities companies 4.51%, nominal holder accounts (domestic) 3.69%, policy banks 2.91%, insurance institutions 2.26%, overseas institutions 0.20%, others 0.58%, and credit unions 0.26% [37]. - For short - term financing and ultra - short - term financing, non - human products accounted for 62.38%, commercial banks 31.16%, nominal holder accounts (domestic) 2.78%, securities companies 0.86%, policy banks 2.25%, others 0.31%, insurance institutions 0.12%, credit unions 0.02%, and overseas institutions 0.13% [39]. - For non - publicly - oriented debt instruments, non - human products accounted for 61.90%, commercial banks 20.47%, nominal holder accounts (domestic) 7.95%, policy banks 5.12%, securities companies 3.82%, others 0.55%, credit unions 0.13%, overseas institutions 0.06%, and insurance institutions 0.00% [41]. - For interbank certificates of deposit, non - human products accounted for 63.05%, commercial banks 22.78%, policy banks 2.42%, credit unions 2.11%, others 4.11%, nominal holder accounts (domestic) 2.07%, securities companies 0.75%, overseas institutions 2.53%, and insurance institutions 0.18% [43]. 3. Bond Market Leverage Ratio Observation - As of the end of January 2026, the estimated balance of repurchase - style repurchase of bonds to be repurchased was 11.96 trillion yuan, with a month-on-month increase of 49.837 billion yuan, and the leverage ratio was 107.14%, remaining flat compared with the previous month and increasing by 0.84 percentage points year-on-year [44].

1. Report Industry Investment Rating - No information about the industry investment rating is provided in the report. 2. Core Viewpoints of the Report - In December 2025, the bond market remained weak. The ultra - long - end interest rates continued to rise while the short - end rates recovered, steepening the yield curve. The trading desks, represented by securities firms and broad - based funds, continued to reduce their bond allocations, but the reduction intensity of securities firms weakened and they started to increase their allocation to interest - rate bonds. The allocation - oriented institutions such as banks and insurance companies increased their bond allocations, but the scale was limited and difficult to reverse the overall interest - rate trend. The top signal of interest rates might need to wait until the allocation power strengthened to the point where the selling pressure from trading institutions could no longer push interest rates significantly higher [3][13]. 3. Summary According to the Table of Contents 3.1 12 - month Interest - rate Bonds Drag Bond Custody Increment to Drop Significantly, Credit and Certificates of Deposit Also Decline - In December, the total bond custody scale increased by 30.26 billion yuan month - on - month, a significant decrease of 117.73 billion yuan compared with November. The custody increment of interest - rate bonds was 69.59 billion yuan, about 78 billion yuan lower than the previous month. The custody increments of treasury bonds, local bonds, and policy - financial bonds all decreased significantly. The net financing of medium - term notes and short - term commercial papers also decreased significantly, leading to a lower custody increment of credit bonds. The custody scale of inter - bank certificates of deposit continued to decline by 62.24 billion yuan month - on - month, with the decline expanding by 23.66 billion yuan compared with the previous month [3][10]. 3.2 Trading Desks' Reduction of Allocations Continues, Allocation - Oriented Desks Lack Incentive to Increase Allocations 3.2.1 Broad - based Funds - In December, the bond custody volume of broad - based funds decreased by 9.92 billion yuan month - on - month, compared with an increase of 22.16 billion yuan in the previous month. The reduction in inter - bank certificates of deposit was 34.96 billion yuan, an increase of 34.01 billion yuan compared with the previous month. The reduction in treasury bonds, enterprise bonds, short - term commercial papers, PPNs, and credit - asset - backed securities increased, while the increase in medium - term notes and local bonds decreased. The reduction in commercial - bank bonds decreased, and they started to increase their allocation to policy - financial bonds. Relative to the stock, the reduction intensity of broad - based funds on bonds increased, and the reduction in inter - bank certificates of deposit was particularly significant, but the reduction in commercial - bank bonds decreased and the allocation to policy - financial bonds increased [17][19]. 3.2.2 Securities Firms - In December, the bond custody volume of securities firms decreased by 0.23 billion yuan month - on - month, with the decline narrowing by 13.98 billion yuan compared with the previous month. They started to increase their allocation to treasury bonds, policy - financial bonds, and commercial - bank bonds, increased their allocation to local bonds, but started to reduce their allocation to medium - term notes and short - term commercial papers, and the reduction in inter - bank certificates of deposit, PPNs, and enterprise bonds increased. Relative to the stock, the reduction intensity of securities firms on bonds decreased, mainly as they started to increase their allocation to interest - rate bonds but started to reduce their allocation to credit bonds [27]. 3.2.3 Insurance Companies - In December, the bond custody volume of insurance companies increased by 4 billion yuan month - on - month, with the increase expanding by 1.15 billion yuan compared with the previous month. They increased their allocation to treasury bonds, local bonds, and inter - bank certificates of deposit, decreased their reduction in commercial - bank bonds, but started to reduce their allocation to policy - financial bonds and medium - term notes, decreased their allocation to financial bonds on the Clearstream, and increased their reduction in enterprise bonds. Relative to the stock, insurance companies started to increase their allocation to bonds, mainly increasing their allocation to treasury bonds and local bonds [33]. 3.2.4 Overseas Institutions - In December, the bond custody scale of overseas institutions decreased by 15.09 billion yuan month - on - month, with the decline expanding by 3.41 billion yuan compared with the previous month. They started to reduce their allocation to policy - financial bonds, increased their reduction in inter - bank certificates of deposit and treasury bonds, but started to increase their allocation to local bonds and medium - term notes. Relative to the stock, the reduction intensity of overseas institutions on bonds increased slightly, mainly increasing their reduction in policy - financial bonds and inter - bank certificates of deposit, but decreasing their reduction in treasury bonds and increasing their allocation to local bonds and medium - term notes [34]. 3.2.5 Other Institutions - In December, the bond custody volume of other institutions including the central bank increased by 18.24 billion yuan month - on - month, with the increase narrowing by 39.22 billion yuan compared with the previous month. They decreased their allocation to treasury bonds and local bonds, started to reduce their allocation to policy - financial bonds, but increased their allocation to inter - bank certificates of deposit. The change in the bond custody structure of other institutions might indicate that the underlying assets of repurchase agreements were still mainly local bonds, but some were replaced from policy - financial bonds to treasury bonds [39]. 3.2.6 Commercial Banks - In December, the bond custody scale of commercial banks increased by 25.73 billion yuan month - on - month, with the increase narrowing by 52.58 billion yuan compared with the previous month. The increase in local bonds, treasury bonds, financial bonds on the Clearstream, and medium - term notes decreased, the reduction in short - term commercial papers, inter - bank certificates of deposit, and commercial - bank bonds increased, and the increase in policy - financial bonds increased. This also reflected the impact of the change in the structure of repurchase - agreement underlying assets to some extent. Relative to the stock, commercial banks also increased their allocation to bonds to some extent, increasing their allocation to policy - financial bonds and treasury bonds, increasing their allocation to local bonds, decreasing their reduction in inter - bank certificates of deposit, but decreasing their allocation to financial bonds on the Clearstream and medium - term notes, and increasing their reduction in short - term commercial papers and commercial - bank bonds [45]. 3.2.7 Credit Unions - In December, the bond custody scale of credit unions decreased by 9.82 billion yuan month - on - month, compared with an increase of 0.98 billion yuan in the previous month. They started to reduce their allocation to inter - bank certificates of deposit and treasury bonds, increased their reduction in policy - financial bonds and commercial - bank bonds, and decreased their allocation to local bonds. Relative to the stock, the reduction intensity of credit unions on bonds increased, mainly reducing their allocation to certificates of deposit and policy - financial bonds [46]. 3.3 The Bond - market Leverage Ratio Seasonally Rebounded in December, and Securities Firms Reduced Leverage but It Remained at a High Level - In December, affected by short - term disturbances in the liabilities of some institutions at the end of the year and the increase in the demand for borrowing funds, the bond - market leverage ratio increased by 0.6 percentage points month - on - month to 107.8%, which was in line with the seasonal pattern. By institution, the leverage ratio of commercial banks increased by 0.3 percentage points month - on - month to 103.6%; the leverage ratio of non - bank institutions increased by 1.4 percentage points month - on - month to 118.4%, which was also in line with the seasonal characteristics; the leverage ratio of securities firms decreased significantly by 14.1 percentage points month - on - month to 217.3%, but it was still at a high level; the leverage ratio of insurance and non - legal - person products increased by 1.7 percentage points month - on - month to 115.4%, which was at a relatively low level in the past three years. In the broad - based funds, the repurchase balances of various institutions rebounded. Among them, the repurchase balances of money - market funds, other products, and insurance companies reached record highs, and the repurchase balance of wealth - management products reached a new high since 2025, but the repurchase balance of non - money - market funds remained at a relatively low level since 2023 [4][52].

Group 1: Bond Custody Total and Structure - The total bond custody increased month-on-month, reaching 178.25 trillion yuan by the end of November 2025, with a net increase of 1.48 trillion yuan compared to the previous month [4] - By category, the custody of interest rate bonds, credit bonds, and financial bonds increased, while interbank certificates of deposit saw a decrease [4] - The custody of interest rate bonds was 123.94 trillion yuan, with a net increase of 1.46 trillion yuan; credit bonds reached 19.13 trillion yuan, increasing by 0.27 trillion yuan; and financial bonds totaled 12.80 trillion yuan, up by 0.10 trillion yuan [4] Group 2: Bond Holder Structure and Changes - Among major institutions in the bond market, only securities companies and foreign institutions saw a decrease in bond custody, while other institutions reported increases [5] - Policy banks, commercial banks, and non-legal entity products increased their holdings in interest rate bonds and credit bonds, while reducing interbank certificates of deposit [5] - The custody of government bonds continued to increase, with policy banks and commercial banks consistently adding to their holdings, while securities companies significantly reduced theirs [5] Group 3: Bond Market Leverage Observation - The balance of repurchase agreements decreased month-on-month, leading to a decline in the bond market leverage ratio [6] - As of the end of November 2025, the estimated balance of repurchase agreements was 11.05 trillion yuan, down by 360.125 billion yuan, with a leverage ratio of 106.61%, a decrease of 0.29 percentage points month-on-month [6]

1. Report Industry Investment Rating No information about the industry investment rating is provided in the given content. 2. Core Viewpoints of the Report - In November 2025, the overall bond market weakened, especially the ultra - long end, and the decline in the willingness of trading desks to increase interest - rate bonds may be the core factor for the market adjustment. The adjustment of ultra - long bonds in November may be more affected by the sentiment of trading desks, with relatively limited relation to issues such as bank book interest - rate risks. [3][12] - The bond leverage ratio decreased slightly in November, with the securities company's leverage ratio rising but the product account leverage ratio falling. [4][53] 3. Summary by Related Catalogs 3.1 11 - month Interest - rate Bond Custody Increased Significantly but Certificates of Deposit Had Net Repayment, and the Bond Custody Scale Rose Slightly - In November, the total bond custody scale increased by 147.98 billion yuan month - on - month, an increase of 16.75 billion yuan compared with October. Interest - rate bond custody increments increased by nearly one trillion yuan compared with the previous month, and the custody increments of treasury bonds, local bonds, and policy - financial bonds all increased significantly. Due to the increase in the issuance scale of medium - term notes, the credit - bond custody increment also increased, and the custody scale of commercial bank bonds turned from a decline to an increase. However, the custody volume of inter - bank certificates of deposit changed from an increase of 721.4 billion yuan last month to a decrease of 385.7 billion yuan, significantly dragging down the overall bond custody scale. [3][10] 3.2 The Decline in the Willingness of Trading Desks to Increase Interest - rate Bonds May Be the Core Factor for the Market Adjustment in November 3.2.1 Generalized Funds - In November, the bond custody scale of generalized funds increased by 22.16 billion yuan month - on - month, a decrease of 82.29 billion yuan compared with the previous month. They mainly changed from increasing 77.12 billion yuan of inter - bank certificates of deposit last month to reducing 950 million yuan. In addition, they increased their holdings of financial bonds, local bonds, and medium - term notes on the Clearstream, but also increased their reduction of commercial bank bonds, policy - financial bonds, and enterprise bonds, and changed to reducing treasury bonds and inter - bank certificates of deposit. [18] 3.2.2 Securities Companies - In November, the bond custody volume of securities companies changed from an increase of 13.48 billion yuan last month to a decrease of 14.21 billion yuan, mainly due to the reduction of treasury bonds, policy - financial bonds, and financial bonds on the Clearstream, a decrease in the increase of local bonds, and an increase in the reduction of inter - bank certificates of deposit and commercial bank bonds. However, they increased their holdings of medium - term notes and credit - asset - backed securities and increased their holdings of short - term commercial paper. [26] 3.2.3 Insurance Companies - In November, the bond custody volume of insurance companies changed from a decrease of 450 million yuan last month to an increase of 2.85 billion yuan. They slightly increased their holdings of treasury bonds and inter - bank certificates of deposit and increased their holdings of financial bonds and medium - term notes on the Clearstream, but the increase in local bonds decreased, and the reduction of commercial bank bonds increased. [30] 3.2.4 Overseas Institutions - In November, the bond custody scale of overseas institutions decreased by 11.67 billion yuan month - on - month, and the decline was 6.26 billion yuan larger than the previous month. They mainly changed to reducing treasury bonds, increased their reduction of inter - bank certificates of deposit, but slightly increased their holdings of policy - financial bonds. [32] 3.2.5 Other Institutions - In November, the bond custody volume of other institutions including the central bank increased by 57.46 billion yuan month - on - month, and the increase was 21.9 billion yuan larger than the previous month. They increased their holdings of treasury bonds, changed to increasing policy - financial bonds, but the increase in local bonds decreased and changed to reducing inter - bank certificates of deposit. The structural changes in the custody data may be due to the fact that the proportion of treasury bonds in the repurchase of reverse repurchase targets increased. [37] 3.2.6 Commercial Banks - In November, the bond custody scale of commercial banks changed from a decrease of 25.14 billion yuan last month to an increase of 78.3 billion yuan. They mainly increased their holdings of local bonds and financial bonds on the Clearstream, increased their holdings of treasury bonds, policy - financial bonds, and medium - term notes, but increased their reduction of inter - bank certificates of deposit and changed to reducing short - term commercial paper and credit - asset - backed securities. If the impact of outright repurchase is considered, the banks' increase in holdings of treasury bonds and local bonds further increased. [44] 3.2.7 Credit Unions - In November, the bond custody scale of credit unions changed from a decrease of 2.06 billion yuan last month to an increase of 980 million yuan. They mainly increased their holdings of treasury bonds, increased their holdings of local bonds and financial bonds on the Clearstream, decreased their reduction of policy - financial bonds, but decreased their increase of inter - bank certificates of deposit. [46] 3.3 The Bond Leverage Ratio Decreased Slightly in November, with the Securities Company's Leverage Ratio Rising but the Product Account Leverage Ratio Falling - Affected by the increase in the bond custody scale and the decrease in the scale of institutional funds borrowed, the bond market leverage ratio decreased by 0.2 percentage points month - on - month to 107.2% in November, still at a relatively low level. [4][53] - Among them, the commercial bank's leverage ratio decreased by 0.2 percentage points month - on - month to 103.3%, and the non - bank institution's leverage ratio decreased by 0.3 percentage points month - on - month to 117.0%. In non - bank institutions, the securities company's leverage ratio increased by 11.5 percentage points month - on - month to 231.4%, reaching a new high since 2020, while the leverage ratio of insurance and non - legal person products decreased by 0.3 percentage points month - on - month to 113.7%, still at a relatively low level in the past three years. [4][53]

1. Report Industry Investment Rating No information provided in the content. 2. Core Viewpoints of the Report - In October 2025, the year - on - year growth rate of bond custody balance was 14.0%, 0.1 percentage points lower than that in September. The newly - added custody scale was 1.5 trillion yuan, basically the same as the same period last year. The main contributor to the year - on - year increase was inter - bank certificates of deposit, while interest - rate bonds had a negative contribution. Credit bonds also increased significantly year - on - year [3][4]. - In terms of institutions, the bond - allocation power of allocation - type institutions declined, while non - legal person products significantly increased their bond allocation. Banks, insurance and other institutions decreased their bond allocation, especially banks, while non - legal person products and securities firms increased their bond allocation [3]. - Looking ahead, it is expected that the supply of government bonds from November to December will remain at a high level, but the year - on - year growth is expected to decline. The demand in the bond market at the end of the year still has support [3]. 3. Summary by Relevant Catalogs 3.1 Overall Bond Custody in October - The year - on - year growth rate of bond custody balance was 14.0%, 0.1 percentage points lower than that in September. The newly - added custody scale was 1.5 trillion yuan, basically the same as the same period last year [3][4]. 3.2 By Bond Type - Inter - bank certificates of deposit were the main contributor to the year - on - year increase in October, followed by credit bonds. Interest - rate bonds (treasury bonds + local government bonds + policy - based financial bonds) significantly decreased year - on - year, followed by financial bonds [3][9]. - The supply scale of government bonds and policy - based financial bonds decreased in October. The supply of government bonds continued to decline, with treasury bonds decreasing by about 150 billion yuan and local government bonds decreasing by about 410 billion yuan year - on - year. Policy - based financial bonds were at a low level, and financial bond financing also continued at a low level [19]. - Credit bonds increased by nearly 190 billion yuan year - on - year in October, further expanding significantly. This was due to the repair of the corporate balance sheet, the decline in corporate financing costs, and the new policy on science - innovation bonds [20]. - Inter - bank certificates of deposit financing expanded significantly in October. The central bank restarted bond - buying operations, and banks may have increased the supply of inter - bank certificates of deposit to meet credit demand [23]. 3.3 By Institution - **Banks**: Affected by the supply, after considering the net investment of 400 billion yuan in the central bank's outright reverse repurchase, banks' bond investment decreased by 680.4 billion yuan year - on - year in October. They mainly reduced their allocation of treasury bonds, policy - based financial bonds, financial bonds and credit bonds, and slightly increased their allocation of inter - bank certificates of deposit [30][33]. - **Insurance**: Insurance slightly reduced its bond allocation year - on - year in October but continued to increase its allocation of local government bonds. The proportion of its increased government bond scale to the newly - added government bond custody was about 17.5%, significantly higher than the 9.6% in the past 12 months [36]. - **Non - legal person products**: They increased their bond holding by 1.03 trillion yuan in October, with a year - on - year increase of 978.2 billion yuan. They mainly increased their allocation of inter - bank certificates of deposit, followed by credit bonds [37]. - **Foreign capital**: Foreign capital continued to reduce its bond holding in October, mainly increasing its holding of treasury bonds and reducing its holding of inter - bank certificates of deposit. The cost - performance of carry trade income was still insufficient [48]. - **Securities firms**: Securities firms increased their bond holding by 156.1 billion yuan in October, with a year - on - year increase of 131 billion yuan, mainly increasing their holding of treasury bonds and local government bonds [48]. 3.4 Outlook - **Supply**: It is expected that the supply of government bonds from November to December will remain at a high level, with a monthly supply scale exceeding 1 trillion yuan, but the year - on - year growth is expected to decline due to the high base in the same period last year [50]. - **Demand**: - **Banks**: It is expected that from November to December, banks will follow the supply, with a relatively large bond - allocation scale but a year - on - year decrease. The allocation scale is expected to be between 1 and 1.5 trillion yuan [54]. - **Insurance**: Insurance institutions may have a certain willingness to scramble for bond allocation at the end of the year. If the government bond supply from November to December is 2.3 trillion yuan, the insurance allocation scale may exceed 40 billion yuan [58]. - **Asset management accounts**: It is expected that from November to December, asset management accounts will maintain a certain intensity of bond allocation, but it may be lower than that in October when they undertook a large number of inter - bank certificates of deposit [63].

Group 1: Report Industry Investment Rating - No industry investment rating information is provided in the report. Group 2: Core Viewpoints of the Report - In October, the total bond custody scale increased by 131.24 billion yuan month - on - month, ending the two - month trend of less growth. The rebound of inter - bank certificate of deposit custody scale was the main driving force, while the custody increment of interest - rate bonds declined significantly [3][6]. - The bond market performance eased in October. Long - term interest rates showed a recovery trend, and dropped significantly after the central bank announced the restart of treasury bond trading on the 27th. Trading desks' enthusiasm for bond buying increased significantly, while the allocation willingness of allocation - type institutions declined [3][10]. - Due to the increase in institutions' borrowed funds, the bond market leverage ratio increased slightly by 0.1 pct to 107.4% in October, remaining at a relatively low level. Non - bank institutions' leverage ratio increased, but the absolute level was still not high [3][37]. Group 3: Summary by Directory 10 - month Bond Custody Increment Rebounds, and Inter - bank Certificate of Deposit Net Financing is the Main Support - The total bond custody scale increased by 131.24 billion yuan month - on - month in October, with the inter - bank certificate of deposit custody scale turning from decline to increase for the first time since June this year. The net financing scale of short - term commercial paper and medium - term notes increased, while the custody increment of interest - rate bonds decreased significantly [3][6]. - For interest - rate bonds, the custody increment of treasury bonds, local bonds, and policy - bank bonds all decreased compared with the previous month. For credit bonds, the custody increment of short - term commercial paper and medium - term notes increased, while that of enterprise bonds and PPN continued to decline [6]. The Central Bank Restarts Bond Buying, Market Sentiment Improves, and the Willingness of Trading Desks to Increase Bond Holdings is Significantly Restored - In October, the bond market performance eased. After the central bank announced the restart of treasury bond trading, long - term interest rates dropped significantly. The trading desks' enthusiasm for bond buying increased, while the allocation willingness of commercial banks and insurance companies declined [10]. - **General Funds**: The bond custody scale increased by 104.45 billion yuan month - on - month, turning to increase holdings of inter - bank certificates of deposit, medium - term notes, and short - term commercial paper, and reducing the scale of selling financial bonds [15]. - **Securities Companies**: The bond custody volume increased by 134.8 billion yuan month - on - month, reaching a new high since July 2024, mainly due to a large increase in holdings of treasury bonds and policy - bank bonds [17][19]. - **Insurance Companies**: The bond custody volume decreased by 450 million yuan month - on - month, mainly due to the reduction of holdings of treasury bonds and inter - bank certificates of deposit [22]. - **Overseas Institutions**: The bond custody scale decreased by 5.42 billion yuan month - on - month, with an increased scale of selling domestic bonds, but turning to increase holdings of treasury bonds and reduce holdings of policy - bank bonds [24][25]. - **Other Institutions**: The bond custody volume increased by 35.56 billion yuan month - on - month, with an increase in holdings of treasury bonds and certificates of deposit, and a decrease in holdings of policy - bank bonds [27]. - **Commercial Banks**: The bond custody scale decreased by 25.14 billion yuan month - on - month, mainly due to a significant decrease in the scale of increasing holdings of treasury bonds and an increase in the scale of reducing holdings of local bonds [30]. - **Credit Unions**: The bond custody scale decreased by 206 million yuan month - on - month, mainly due to the reduction of holdings of treasury bonds and policy - bank bonds [34]. In October, the Non - bank Leverage Ratio Increased Beyond Seasonality, but the Absolute Level was Still Not High - In October, the bond market leverage ratio increased by 0.1 pct to 107.4% month - on - month, remaining at a relatively low level. The non - bank institutions' leverage ratio increased by 0.3 pct to 117.2%, but the absolute level was still not high in the past three - year dimension [37]. - Among them, the securities companies' leverage ratio decreased by 3.3 pct to 219.9%, while the leverage ratio of insurance and non - legal person products increased by 0.3 pct to 114.0% [37].