Group 1 - The credit bond market continues to show a recovery trend, with short to medium-term bonds outperforming long-term bonds, as evidenced by a narrowing of credit spreads, particularly in 1-year and 3-year AA-rated bonds [1][4] - The overall credit spread for 1-year bonds narrowed by approximately 3-4 basis points, while 5-year and longer bonds saw a reduction of 1-2 basis points [1][9] - Specific sectors such as urban investment bonds and financial bonds experienced significant spread compression, with 1-year AA-rated urban investment bonds showing a notable decrease of 4 basis points [1][9] Group 2 - The overall turnover rate in the credit bond market decreased from 2.34% to 1.99%, indicating a decline in market trading activity [2] - The weighted average transaction duration for all credit bonds fell from 3.4 years to 3.1 years, with urban investment bonds maintaining an average duration of around 3.0 years [2][10] - The proportion of TKN (traded notional) in various credit bond categories generally increased, reflecting a shift in market dynamics [2][10] Group 3 - Investment funds were the primary contributors to the increased allocation in credit bonds, particularly focusing on bonds with maturities of 3 years or less [3] - Insurance funds shifted from net buying to net selling in ultra-long-term secondary capital bonds, indicating a change in investment strategy [3] - The net buying scale of credit bonds by wealth management products decreased, despite a sustained increase in allocation over the past three weeks [3] Group 4 - There is a potential for further spread compression in long-term credit bonds, suggesting that investors should consider opportunities in 3-5 year non-financial credit bonds [4] - The cancellation of the value-added tax exemption on interest income from government and financial bonds has improved the relative attractiveness of non-financial credit bonds [4] - Trading accounts are advised to focus on liquid short to medium-term urban investment bonds or major bank perpetual bonds for better trading opportunities [4]

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the liquidity of local government bonds in China, highlighting the overall weak liquidity with an average liquidity index of 0.21, significantly lower than that of government bonds and credit bonds [1][3]. Core Insights and Arguments - **Liquidity Characteristics**: Local government bonds exhibit better liquidity in the early stages of their lifecycle, with a decline in mid-life and a slight recovery as they approach maturity. Short-term bonds generally have better liquidity than medium to long-term bonds [1][5]. - **Impact of Bond Size**: Bonds with a single issuance size greater than 20 billion RMB have better liquidity, while those smaller than 10 billion RMB show significantly weaker liquidity [1][11]. - **Trading Costs**: The liquidity issues of local government bonds lead to increased trading costs for investors, particularly for smaller bonds that may require higher spreads to sell [2]. - **Preference for General Bonds**: Fund managers prefer 5-7 year medium-term local government bonds, especially general bonds over special bonds due to lower risk capital requirements [3][18]. - **Regional Variations**: Bonds issued in economically developed regions like Jiangsu and Zhejiang have better liquidity due to higher public budget revenues and favorable holding conditions by local financial institutions [1][12][19]. Additional Important Insights - **Lifecycle Performance**: The liquidity of local government bonds is highest shortly after issuance, declines over time, and may recover slightly before maturity [5][10]. - **Turnover Rates**: The average monthly turnover rate for local government bonds is approximately 3%-4%, with initial high turnover rates that decline over time [10]. - **Impact of Early Redemption Clauses**: Bonds with early redemption clauses tend to have lower liquidity compared to those without such clauses, as market demand for flexible repayment options is lower [12][17]. - **Institutional Preferences**: There has been an increase in the proportion of short-term and medium-term pure bond funds held by institutional investors, particularly after September 2023, due to improved yield-to-risk ratios [18]. - **Selection Criteria for Bonds**: When selecting bonds, investors should consider factors such as bond size, type, issuance timing, regional rankings, and fund holding proportions [19]. This summary encapsulates the critical aspects of the local government bond market as discussed in the conference call, providing insights into liquidity dynamics, investor preferences, and regional performance variations.

Report Industry Investment Rating - Not mentioned in the provided content Core Viewpoints - Based on the calculation results of spot bond trading data, the central duration of all pure bond funds increased by 0.07 years to 3.15 years week-on-week this week [3]. - The median duration of medium - and long - term pure bond funds increased and the divergence decreased this week. The median 5DMA of all medium - and long - term pure bond funds reached 2.85 years, a week - on - week increase of 0.19 years, at the 99.3% quantile in the past three years, and the 5DMA of duration divergence was 0.48, a week - on - week decrease of 0.02, at the 57.4% quantile in the past three years [3]. - The median duration of short - term pure bond funds decreased and the divergence increased this week. The median 5DMA of all short - term bond funds reached 0.85 years, a week - on - week decrease of 0.08 years, at the 74.2% quantile in the past three years, and the 5DMA of duration divergence was 0.49, a week - on - week increase of 0.01, at the 74.4% quantile [3]. - The turnover rate of ultra - long - term interest rate bonds decreased and most of the turnover rates of credit bonds increased this week. As of May 23, 2025, the 10DMA of the turnover rate of treasury bonds with a term of over 10 years remained flat week - on - week at 2.40%, at the 80.7% quantile level in the past three years, while the turnover rates of most 3 - 5 - year credit bonds increased [3]. - The leverage ratio of the inter - bank bond market increased by 0.01 percentage points to 107.0% week - on - week this week. The leverage ratio of insurance companies increased by 0.20 percentage points to 125.6%, the leverage ratio of banks increased by 0.02 percentage points to 102.6%, the leverage ratio of securities companies decreased by 2.95 percentage points to 198.1%, and the leverage ratio of broad funds decreased by 0.12 percentage points to 111.8% [3]. - The scale of existing wealth management products in the whole market increased by 59.84 billion yuan week - on - week last week. The increase was in line with the seasonal level, and the net - breaking rate decreased slightly. The performance comparison benchmarks of newly issued wealth management products showed different trends for different terms [3]. Summary by Directory 1. This Week's Bond Fund Duration Central Point Increased - The central duration of all pure bond funds increased by 0.07 years to 3.15 years week - on - week this week [3][8]. - For medium - and long - term pure bond funds, the median duration of different types (interest - rate type, credit type, and all) showed different changes in terms of median and divergence, with most of the median durations increasing and the divergence showing different trends [3]. - For short - term pure bond funds, the median duration decreased and the divergence increased, with different trends for different types (interest - rate type and credit type) [3]. 2. This Week's Ultra - Long - Term Interest Rate Bond Turnover Rate Decreased, and Most Credit Bond Turnover Rates Increased - The turnover rates and their quantiles of different types of bonds (interest rate bonds, credit bonds, short - duration assets) for different terms are presented. For example, the 10 - year - plus treasury bond turnover rate 10DMA was 2.40% and remained flat week - on - week, at the 80.7% quantile in the past three years [3][22]. - The week - on - week changes in the turnover rates of different bonds are shown. Most 3 - 5 - year credit bond turnover rates increased [3][25]. - The turnover rates, their quantiles in the past three years, and the valuation spreads of local government bonds in different provinces and cities are provided. Sichuan, Shandong, and Anhui had relatively high local government bond turnover rates, and the 7 - 10 - year (inclusive) valuation spreads were 14.36bps, 15.03bps, and 15.37bps respectively [3][27]. 3. This Week's Allocation - Oriented Leverage Ratio Increased, and Trading - Oriented Leverage Ratio Decreased - The inter - bank bond market leverage ratio increased by 0.01 percentage points to 107.0% week - on - week. The leverage ratios of insurance companies, banks, securities companies, and broad funds changed differently, with insurance companies and banks increasing, and securities companies and broad funds decreasing [3][29]. 4. Last Week's Wealth Management Scale Increased, and the Net - Breaking Rate Decreased - The scale of existing wealth management products in the whole market increased by 59.84 billion yuan week - on - week last week, in line with the seasonal level. The net - breaking rate decreased to 0.89%, a week - on - week decrease of 0.11pcts [3]. - By term, the scale of wealth management products within 1 month (inclusive) increased significantly, the daily - open type decreased significantly, and the scales of other terms increased slightly. By investment nature, the scale of fixed - income wealth management products increased significantly, the cash - management type decreased significantly, and other investment types increased slightly [3]. - The performance comparison benchmarks of newly issued wealth management products for different terms showed different trends, with those within 1 month (inclusive) and 1 - 3 years (inclusive) increasing, those within 6 months - 1 year (inclusive) remaining flat, and others decreasing [3].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Based on the calculation results of spot bond trading data, the duration center of all bond - type funds decreased by 0.03 years week - on - week to 3.08 years [5]. - Based on the measurement model, the median duration of medium - and long - term pure bond funds increased and the divergence decreased. The median 5DMA of all medium - and long - term pure bond funds reached 2.66 years, a week - on - week increase of 0.23 years, at the 96% quantile in the past three years, and the 5DMA of duration divergence was 0.50, a week - on - week decrease of 0.03, at the 66% quantile in the past three years [5]. - The median duration of short - term pure bond funds decreased and the divergence decreased. The median 5DMA of all short - term bond funds reached 0.93 years, a week - on - week decrease of 0.02 years, at the 92.7% quantile in the past three years, and the 5DMA of duration divergence was 0.47, a week - on - week decrease of 0.01, at the 66.7% quantile [5]. - Most bond turnover rates increased this week, while the turnover rates of some long - term credit bonds decreased. As of May 16, 2025, the 10DMA of the 7 - 10 - year China Development Bank bond turnover rate increased by 3.22 pcts week - on - week to 13.52%, at the 86.6% quantile in the past three years, while the 10DMA of the turnover rate of medium - term notes over 10 years decreased by 0.01 pcts week - on - week to 0.37%, at the 16.4% quantile [5]. - The inter - bank bond market leverage ratio increased by 0.03 percentage points week - on - week to 107.0%. The insurance company leverage ratio decreased by 0.31 percentage points to 125.3%, the bank leverage ratio increased by 0.39 percentage points to 102.6%, the securities company leverage ratio decreased by 28.31 percentage points to 204.2%, and the broad - based fund leverage ratio decreased by 0.36 percentage points to 111.9% [5]. - The total market wealth management outstanding scale increased by 265.511 billion yuan week - on - week last week, in line with the seasonal level, and the net - breaking rate decreased slightly. The net - breaking rate of the total market wealth management unit net value was 1.00%, a week - on - week decrease of 0.35 pcts [5]. 3. Summary According to the Table of Contents 3.1 This week, the duration center of medium - and long - term interest - rate pure bond funds increased, and the divergence decreased - The duration center of all bond funds decreased by 0.03 years week - on - week to 3.08 years [5][10]. - As of May 16, 2025, the duration center of all medium - and long - term pure bond funds rose to the 95.7% quantile in the past three years, and the duration center of all short - term pure bond funds decreased to the 92.7% quantile in the past three years [12]. - The median duration of medium - and long - term interest - rate pure bond funds increased, and the divergence decreased [5][14]. - The median duration of medium - and long - term credit - type pure bond funds increased, and the divergence decreased [5][16]. - The median duration of short - term interest - rate pure bond funds decreased, and the divergence increased [5][18]. - The median duration of short - term credit - type pure bond funds decreased, and the divergence decreased [5][18]. 3.2 This week, most bond turnover rates increased, while the turnover rates of some long - term credit bonds decreased - As of May 16, 2025, the 10DMA of the turnover rates of various bonds with different maturities are presented in detail, such as the 7 - 10 - year China Development Bank bond turnover rate 10DMA was 13.52%, and the 10 - year - plus medium - term note turnover rate 10DMA was 0.37% [22]. - The quantiles of the turnover rates of various bonds in the past three years are also provided, for example, the 7 - 10 - year China Development Bank bond turnover rate was at the 86.6% quantile, and the 10 - year - plus medium - term note turnover rate was at the 16.4% quantile [22]. - The week - on - week changes in the 10DMA of the turnover rates of various bonds are given, like the 7 - 10 - year China Development Bank bond turnover rate 10DMA increased by 3.22 pcts week - on - week, and the 10 - year - plus medium - term note turnover rate 10DMA decreased by 0.01 pcts week - on - week [25]. - The 10DMA of the turnover rates of local government bonds in various provinces and cities as of May 16, 2025, their quantiles in the past three years, and the valuation spreads of 7 - 10 - year and 20 - 30 - year local bonds are listed. Shandong, Jiangsu, and Gansu had relatively high local bond turnover rates, with 7 - 10 - year (inclusive) valuation spreads reaching 15.49 bps, 14.42 bps, and 12.47 bps respectively [27]. 3.3 This week, except for the increase in the bank leverage ratio, the leverage ratios of other non - bank institutions decreased - The inter - bank bond market leverage ratio increased by 0.03 percentage points week - on - week to 107.0% [5][37]. - The insurance company leverage ratio decreased by 0.31 percentage points to 125.3% [5][32]. - The bank leverage ratio increased by 0.39 percentage points to 102.6% [5][33]. - The securities company leverage ratio decreased by 28.31 percentage points to 204.2% [5][36]. - The broad - based fund leverage ratio decreased by 0.36 percentage points to 111.9% [5][36]. 3.4 Last week, the wealth management scale increased, and the net - breaking rate decreased - The total market wealth management outstanding scale increased by 265.511 billion yuan week - on - week last week, in line with the seasonal level [5][38]. - In terms of different terms, the scale of daily - open wealth management increased significantly last week, the scale of 1 - 3 - year (inclusive) wealth management decreased slightly, and the scales of other - term wealth management increased slightly [5]. - In terms of different investment natures, the scales of fixed - income and cash - management wealth management increased significantly, and the scales of other investment types increased slightly [5]. - The net - breaking rate of the total market wealth management unit net value was 1.00%, a week - on - week decrease of 0.35 pcts [5]. - In terms of different terms, the performance comparison benchmarks of daily - open and 1 - 3 - month (inclusive) newly - issued wealth management products increased, while those of other - term varieties decreased [5].