1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - In March, the manufacturing PMI exceeded seasonal expectations and returned above the boom - bust line, with the production index seasonally rebounding, both domestic and external demand improving, and enterprises actively replenishing inventories. The service industry PMI returned to the expansion range, while the construction industry was still in the contraction range, and cost - rising pressure emerged. The subsequent focus should be on international situation changes and promoting various economic - stabilizing policies [1][10]. - The improvement in the manufacturing PMI in March led to some adjustments in the bond market. The current core driving factors of the market are the Middle East situation, inflation expectations, and the increasing allocation power in the bond market. Ultra - long - term interest rates have entered a stage of restorative decline, and the bond market is expected to be volatile and bullish. Future attention should be paid to the persistence of the decline in risk appetite, the situation of fundamental recovery, and the special treasury bond issuance plan in Q2 [4][36]. 3. Summary by Relevant Catalogs 3.1 3 - month PMI Data Review - Manufacturing: In March, the manufacturing PMI was 50.4%, a 1.4 - percentage - point increase from the previous month, returning above the boom - bust line after two months. The production index seasonally recovered, both domestic and external demand improved, the price index rebounded significantly, enterprises actively replenished inventories, and procurement volume returned to the expansion range [10]. - Non - manufacturing: The service industry PMI returned to the expansion range, and the construction industry's contraction slowed down. In March, the service industry business activity index rose 0.5 percentage points to 50.2%, and the construction industry business activity index rose 1.1 percentage points to 49.3%. However, the month - on - month performance of both was weaker than the non - epidemic Spring Festival seasonality [12][15]. 3.2 Manufacturing: Simultaneous Improvement in Production and Demand, and a Significant Rebound in the Price Index - Production: The manufacturing PMI production index in March was 51.4%, a 1.8 - percentage - point increase from the previous month, returning to the expansion range. This was due to the return of employees after the Spring Festival, the recovery of market demand, and the further manifestation of policy effects [16]. - Demand: Both domestic and external demand improved. The proportion of manufacturing enterprises reporting insufficient market demand dropped to below 50% for the first time since July 2022. The new order and new export order indexes increased by 3.0 and 4.1 percentage points respectively. SMEs stabilized, and three key industries expanded rapidly [18][20]. - Price: Affected by rising commodity prices and accelerated corporate procurement, the main raw material purchase price index and ex - factory price index rose by 9.1 and 4.8 percentage points respectively. The ex - factory price index reached a new high since April 2022, indicating that the year - on - year growth rate of PPI in March is expected to turn positive [22]. - Inventory: Enterprises actively replenished inventories, and procurement volume returned to the expansion range. The raw material inventory and finished - product inventory indexes increased by 0.2 and 0.9 percentage points respectively, and the procurement volume index rose to 50.9% [23]. 3.3 Non - manufacturing: Service Industry PMI Returns to Expansion, Construction Industry's Contraction Slows Down - Service Industry: In March, the service industry's prosperity increased slightly by 0.5 percentage points, returning above the boom - bust line. Industries such as railway transportation, telecommunications, and finance were in a high - prosperity range, while consumer - related industries declined due to the high base of Spring Festival consumption [29]. - Construction Industry: In March, the construction industry business activity index rose 1.1 percentage points to 49.3%. The civil engineering construction industry showed a significant increase, while the housing construction industry was still below 50%. The overall recovery was slower than in previous post - holiday periods [32]. 3.4 Impact on the Bond Market - In March, the manufacturing PMI exceeded seasonal expectations, the service industry PMI returned to expansion, but the construction industry was still in contraction, and cost - rising pressure emerged. The bond market adjusted due to the improvement in the manufacturing PMI. The current core driving factors are the Middle East situation, inflation expectations, and the increasing allocation power in the bond market. The bond market is expected to be volatile and bullish, and future attention should focus on risk appetite, fundamental recovery, and the special treasury bond issuance plan in Q2 [36].

1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints of the Report - In March 2026, the three major indices returned to the expansion range, indicating an improvement in economic sentiment. The manufacturing PMI increased by 1.4 pct to 50.4%, the non - manufacturing business activity index rose by 0.6 pct to 50.1%, and the composite PMI output index was 50.5%, up 1.0 pct from the previous month [1]. - The manufacturing PMI rebounded beyond the seasonal level after the Spring Festival and returned to the expansion range. The production and demand both expanded, with demand improving more significantly. Price indicators fluctuated slightly, and the cost pressure remained but eased. The gap in enterprise scale narrowed, and small and medium - sized enterprises rebounded strongly. The export orders also increased [1]. - The non - manufacturing PMI returned to the expansion range, with the service industry performing better than the construction industry. The service industry business activity index rose above the critical point, while the construction industry business activity index rebounded but remained in the contraction range [1]. - In 2026, the situation of strong supply and weak demand may continue. The support for consumption policies may decline, and the growth of social retail sales may be weak. Investment in some sub - industries of manufacturing may be under pressure, the decline in real estate investment may narrow significantly due to the low base, and infrastructure investment may remain at a low level. Foreign trade growth is uncertain, and exports may face pressure in the second half of the year. The PPI decline is expected to narrow, with the annual PPI year - on - year high at around 1% [1]. - In 2026, the total supply of the bond market is expected to be stable, and the supply - demand relationship is expected to improve. Long - term bond adjustments may present opportunities, and it is recommended to grasp the band - trading opportunities. The 10 - year treasury bond yield is expected to fluctuate between 1.6% - 1.9%, and the 30 - year treasury bond active bond yield is expected to fluctuate between 1.9% - 2.4%. It is recommended to pay attention to the old 30 - year treasury bonds, 10 - year CDB bonds, and long - duration sinking capital bonds. The Fed's interest rate cut may be postponed to May 2026 or later, and bond market investment may be more favorable in the second half of the year [1]. 3. Summary by Related Catalog Manufacturing PMI - Rebounded beyond the seasonal level after the Spring Festival and returned to the expansion range, mainly driven by the full resumption of work and production of enterprises after the Spring Festival, with significantly increased market activity. The average monthly increase in March in the past five years was about 0.4 pct, and this year's increase was higher than the seasonal level, indicating strong economic recovery momentum [1]. - Production and demand both expanded, with the production index (51.4%) and new order index (51.6%) rising by 1.8 pct and 3.0 pct respectively from the previous month, both entering the expansion range. The new order index increased more than the production index, suggesting that the demand side recovered faster than the supply side, and the supply - demand relationship was further optimized [1]. - Price indicators fluctuated slightly. The purchase price index of major raw materials and the ex - factory price index were 63.9% and 55.4% respectively, up 9.1 pct and 4.8 pct from the previous month. The ex - factory price index was still lower than the purchase price index of major raw materials, indicating that the cost pressure on enterprises remained, but the price difference narrowed, and the profit margin may improve [1]. - The gap in enterprise scale narrowed, with the manufacturing PMI of large, medium, and small enterprises being 51.6%, 49.0%, and 49.3% respectively, up 0.1 pct, 1.5 pct, and 4.5 pct from the previous month. The new export order index was 49.1%, still in the contraction range but up 4.1 pct from the previous month [1]. Non - manufacturing PMI - The service industry business activity index rose above the critical point. In March, it was 50.2%, up 0.5 pct from the previous month, returning to the expansion range. Industries such as railway transportation, telecommunications, radio and television, satellite transmission services, monetary and financial services, and insurance were in the high - level prosperity range above 55.0%. After the Spring Festival, the demand for tourism, accommodation, and catering decreased [1]. - The construction industry business activity index rebounded but remained in the contraction range. In March, it was 49.3%, up 1.1 pct from the previous month, mainly affected by weather factors and project start - up rhythms. With the arrival of spring and the acceleration of project progress, the construction industry's prosperity is expected to further improve [1]. 2026 Economic Outlook - Consumption policy support may decline, and the growth of social retail sales may be weak. In fixed - asset investment, investment in some sub - industries of manufacturing may be under pressure due to over - capacity, the decline in real estate investment may narrow significantly due to the low base, and infrastructure investment may remain at a low level. Foreign trade growth is affected by geopolitical conflicts and trade frictions, and exports may face pressure in the second half of the year. The PPI decline is expected to narrow, with the annual PPI year - on - year high at around 1% [1]. Bond Market Outlook - In 2026, the total supply of the bond market is expected to be stable, and the supply - demand relationship is expected to improve. Long - term bond adjustments may present opportunities. The 10 - year treasury bond yield is expected to fluctuate between 1.6% - 1.9%, and the 30 - year treasury bond active bond yield is expected to fluctuate between 1.9% - 2.4%. It is recommended to pay attention to the old 30 - year treasury bonds, 10 - year CDB bonds, and long - duration sinking capital bonds. The Fed's interest rate cut may be postponed to May 2026 or later, and bond market investment may be more favorable in the second half of the year [1].

Report Industry Investment Rating No information provided in the content. Core Viewpoints of the Report - The central bank maintained liquidity during the quarter - end, with increased net open - market injections. Interest rates in the bond market were generally in a warm - fluctuating pattern, and the 30 - year treasury bond recovered significantly. The CD yield fluctuated, and the net financing of CDs turned positive. Government bond supply declined, and the inter - bank leverage ratio decreased slightly [1][2]. Summary by Related Catalogs 1. Funding Situation - **Central Bank Operations**: The central bank injected 4742 billion yuan through reverse repurchase and 5000 billion yuan through 1 - year MLF this week. Reverse repurchase maturities were 2423 billion yuan, and MLF maturities were 4500 billion yuan, resulting in a net reverse - repurchase injection of 2319 billion yuan and an excess MLF roll - over of 500 billion yuan [1]. - **Funding Prices**: R001 closed at 1.39% (previous value 1.40%), DR001 remained flat at 1.32% (previous value 1.32%), R007 closed at 1.51% (previous value 1.48%), and DR007 closed at 1.44% (previous value 1.42%). The spread between DR007 and the 7 - day OMO was 3.98bp. The 6M national - share bank draft transfer discount rate was 1.06% [1]. - **Bond Yields**: The 1 - year treasury bond yield dropped 0.5bp to 1.25%, the 10 - year treasury bond yield dropped 1.27bp to 1.82%, and the 30 - year treasury bond yield dropped 3.84bp to 2.35% [1]. 2. Inter - bank Certificates of Deposit (CDs) - **Yield Changes**: The 3M CD yield dropped 1.0bp to 1.46%, the 6M CD yield rose 0.75bp to 1.48%, and the 1Y CD yield rose 1.0bp to 1.53%. The spread between the 1 - year CD and R007 narrowed 2.00bp to 1.81bp [2]. - **Net Financing**: The net financing of CDs this week was 738 billion yuan, compared with - 4031 billion yuan previously. In terms of the issuance structure, the weighted - average issuance term this week was 7.9M (previous value 8.0M), with 877.0 billion yuan of 3M CDs issued, 1324.3 billion yuan of 6M CDs issued, and 2286.5 billion yuan of 1Y CDs issued [2]. 3. Institutional Behavior - **Government Bond Supply**: This week, the net issuance of treasury bonds was 948 billion yuan, and the net issuance of local bonds was 1300 billion yuan, with a total net issuance of government bonds of 2249 billion yuan (previous value 7402 billion yuan), and a total net payment of 5930 billion yuan (previous value 6652 billion yuan). Next week, the expected net issuance of local bonds is 406 billion yuan, and the net payment of local bonds is 686 billion yuan [2]. - **Inter - bank Leverage Ratio**: The average daily volume of pledged repurchase transactions this week was 7.94 trillion yuan (previous value 8.37 trillion yuan), and the average daily inter - bank market leverage ratio was 107.12% (previous value 107.26%) [2].

1. Report Industry Investment Rating No specific investment rating information for the industry is provided in the report. 2. Core Viewpoints of the Report - In the fourth week of March 2026, the situation between the US and Iran remained tense, with oil prices rising at a high level. The increase in transportation costs began to support the ex - factory prices of upstream material manufacturing industries. The improvement in weather since March led to an increase in demand for investment products driven by major project construction, and the demand for rebar has significantly increased in the past two weeks [3][30]. - In terms of inflation, food prices continued to decline, and pork prices continued to weaken. In terms of exports, the average monthly throughput of port container shipping in March was relatively weak year - on - year. The main shipping demand was basically stable, and freight rates continued to strengthen due to energy costs. In terms of investment, cement prices rose for two consecutive weeks, the apparent demand for rebar continued to recover rapidly, and major projects supported construction demand [3][30]. - In the real estate sector, the end - of - month sprint effect of new home sales was evident, and the weekly transactions of second - hand homes also showed a small year - on - year positive growth. For the bond market, the geopolitical situation continued to cause disturbances, and the transmission of high oil prices to upstream raw material prices began to materialize. The construction performance in March was not weak, and it is expected that the PMI in March will return above the boom - bust line [3][30]. 3. Summary by Directory 3.1 Inflation - related - Food prices continued to decline. The average wholesale price of pork in the country decreased by 1.8% week - on - week, and the average in March decreased by 9.4% month - on - month, with the decline expanding. Vegetable prices decreased by 0.9% week - on - week. The decline in food prices continued to narrow, with the 200 - index of agricultural product wholesale prices and the wholesale price index of basket products decreasing by 0.8% and 0.9% respectively week - on - week [9]. 3.2 Import and Export - related - Due to continuous geopolitical disturbances, most freight rates increased. The CCFI index increased by 1.6% week - on - week, and the SCFI index increased by 7.0% week - on - week. The tense geopolitical situation continued to affect the relevant shipping markets, and most long - haul shipping routes saw an increase in freight rates this week [10]. - In terms of port transportation volume, from March 16th to March 22nd, the container throughput and cargo throughput of ports increased by 3.7% and 0.8% respectively week - on - week, with a single - week year - on - year increase of 9.4% and a decrease of 2.7%. On a monthly average basis, in March, they increased by 5.5% and decreased by 3.9% year - on - year, indicating a slowdown in the overall export rhythm in March [10]. - The dry bulk freight index mostly declined. Affected by factors such as oil prices, the freight levels of voyage charter routes in the international dry bulk shipping market decreased [10]. 3.3 Industry - related - Coal prices accelerated their rise. The price of thermal coal (Q5500) at Qinhuangdao Port increased by 3.8% week - on - week, turning from a decline to an increase. National temperatures continued to warm, and the load of residential electricity decreased, but industrial electricity consumption provided support. The supply and consumption of power plants remained balanced overall [15]. - The price of rebar remained the same as last week. The social inventory of rebar decreased by 1.6% week - on - week, with a faster inventory reduction than last week. The apparent demand for rebar increased by 8.4% week - on - week, indicating that construction activities were accelerating, and rebar was gradually entering the consumption peak season [15]. - The asphalt production rate continued to decline. This week, the production rate of asphalt plants decreased by 2.5 percentage points to 19.3%. Geopolitical factors increased the uncertainty of asphalt raw material supply, and asphalt production decreased week - on - week [15]. - The decline in copper prices continued to widen. This week, the average price of copper in the Yangtze River Non - ferrous Metals market decreased by 3.3% week - on - week, with the decline further expanding. Geopolitical conflicts remained unresolved, risk appetite was suppressed, and the strong US dollar continued to suppress copper prices [18]. - The decline in glass futures prices narrowed. This week, the spot trading sentiment weakened slightly. The purchasing enthusiasm of middle and downstream enterprises decreased slightly, and enterprises mainly focused on digesting inventory. The supply - demand pattern of glass was weak, and it is expected that prices will fluctuate in the short term [18]. 3.4 Investment - related - Cement prices continued to rise. This week, the cement price index increased by 0.3% week - on - week, rising for the second consecutive week, but the increase was narrower than last week. The cement shipping rate increased slightly by 2.3 percentage points to 32.9%, but it was still lower than the same period last year [21]. - New home sales increased further, showing an end - of - month sprint effect. As of Friday this week, the transaction area of new homes in 30 cities increased by 12.4% week - on - week and 25% year - on - year. As of March 27th, the transaction area of new homes in 30 cities (7 - day rolling sum) increased by 41.8% year - on - year on a lunar - aligned basis, showing an improvement compared to last week [25]. - Second - hand home sales continued to recover. As of Friday this week, the transaction area of second - hand homes in 17 cities increased by 4.6% week - on - week and decreased by 10.9% year - on - year, with the year - on - year decline slightly expanding. As of March 27th, the transaction of second - hand homes (7 - day rolling sum) increased by 5.6% year - on - year on a lunar - aligned basis, and the "spring market" performance was slightly better than the same period last year [25]. 3.5 Consumption - related - In the third week of March, the retail sales of passenger cars showed a year - on - year negative growth. From March 16th to March 22nd, the retail sales of the national passenger car market reached 512,000 units, a year - on - year decrease of 7% and a month - on - month increase of 62% compared to the same period in February. From March 1st to 22nd, the retail sales of the national passenger car market reached 920,000 units, a year - on - year decrease of 16% and a month - on - month increase of 19% [27]. - The average daily subway passenger volume in 25 cities decreased slightly. From last Saturday to this Friday, the average daily subway passenger volume in 25 cities was 3.241 million person - times, a week - on - week decrease of 0.5% and a year - on - year decrease of 4.9%. The travel enthusiasm continued to decline [28]. - International oil prices remained high and rose. As of March 27th, the prices of Brent crude oil and WTI crude oil increased by 0.3% and 1.4% respectively week - on - week compared to last Friday, reaching $112.6 per barrel and $99.6 per barrel. The reduction in supply from major Middle Eastern oil - producing countries supported the rise in oil prices [28].

Group 1: Central Bank Operations - The central bank conducted a 7-day reverse repo operation of 78.5 billion yuan at a fixed rate of 1.40% on March 25, resulting in a net injection of 58 billion yuan after accounting for 20.5 billion yuan in reverse repos maturing that day [3][5] - The central bank also initiated a 500 billion yuan MLF operation, marking the 13th consecutive month of increased MLF issuance, in response to the 450 billion yuan MLF maturing [14] Group 2: Market Liquidity - The interbank market remains stable with the D R001 weighted average interest rate slightly declining to around 1.32%, while overnight rates on the X-repo system are stable at 1.30% [5] - The latest overnight financing rate in the U.S. is reported at 3.62% [5] Group 3: Interbank Certificates of Deposit - The latest transaction for one-year interbank certificates of deposit in the secondary market is around 1.5325% [8] Group 4: Bond Yield Rates - The yield rates for various government bonds show slight declines, with the 1-year yield at 1.2500%, and the 10-year yield at 1.8200%, reflecting a downward trend in fixed-income asset yields [11] Group 5: Investment Products - There has been a notable increase in failed issuance cases of bank wealth management products, with at least 35 products failing to meet the minimum fundraising scale since the beginning of 2026, significantly higher than in previous years [15] Group 6: Global Macro Developments - There are signs of easing tensions in the Middle East, with the U.S. government proposing a ceasefire plan to Iran through Pakistan, which includes 15 conditions related to nuclear programs and regional issues [17] Group 7: Bond Market Events - Several companies have reported significant negative events, including Huaneng International announcing a 2.128 billion yuan impairment provision for 2025, and Zhengrong Real Estate facing a major lawsuit involving 358 million yuan [19][20]

Group 1 - The report highlights three important questions regarding the adjustment of the statutory deposit reserve requirement, focusing on the potential impact of reforming the implicit lower limit of the reserve requirement [6][7][10] - The report indicates that the current weighted statutory reserve requirement rate is approximately 6.2%, providing significant room for a potential reduction, with a long-term liquidity release of over 1 trillion yuan possible from a 50 basis point cut [11][12] - It is noted that previous reductions in reserve requirements have not led to a significant decrease in long-term bond yields, indicating that while the direction is positive, the impact on both ends of the bond market may be limited [12][13] Group 2 - The report discusses the implications of adjusting the implicit lower limit of the statutory reserve requirement, emphasizing its role in enhancing long-term liquidity and improving the efficiency of bank fund utilization [10][11] - It is suggested that the necessity for a reduction in reserve requirements is currently low due to the diversification of liquidity tools available to the central bank, such as reverse repos and MLF [10][11] - The report also mentions that the current reserve requirement rate of 1.62% has not followed broader interest rate adjustments, leading to a high opportunity cost for released funds [13][18]

Market Overview - The central bank conducted a 175 billion yuan reverse repurchase operation with a fixed rate of 1.40% on March 24, resulting in a net withdrawal of 335 billion yuan for the day [3][4]. Funding Conditions - The interbank market remains stable and loose, with the D R001 weighted average interest rate slightly rising to around 1.32%. Overnight quotes on the anonymous click system (X-repo) are still around 1.30%, with supply exceeding 100 billion yuan [5][7]. Interbank Certificates of Deposit - The latest transaction for one-year interbank certificates of deposit in the secondary market is around 1.535% [9]. Major Interest Rate Bonds Yield - The yields for various government bonds are as follows: - 1Y: 1.2450% - 5Y: 1.6905% - 10Y: 1.8310% [10]. Recent City Investment Bonds (AAA) Spread Trends - The article discusses the trends and data regarding the yield spreads of city investment bonds, indicating ongoing market dynamics [11]. Government Bond Futures Closing - The closing prices for government bond futures show a 0.52% increase for the 30-year main contract, a 0.02% increase for the 10-year contract, and a 0.02% decrease for the 2-year contract [13]. Key News - The People's Bank of China announced a 500 billion yuan MLF operation scheduled for March 25, 2026, with a one-year term to maintain liquidity in the banking system [14]. - The trading association optimized the registration and issuance mechanism for debt financing tools, integrating the fourth category of enterprises into the third category for unified registration [14]. - The Minister of Commerce emphasized China's commitment to high-quality development and a stable business environment during a meeting with U.S. business representatives [14].

Group 1: Monetary Policy and Market Operations - The central bank conducted a 7-day reverse repurchase operation of 8 billion yuan at a fixed rate of 1.40% on March 23, with a net withdrawal of 129.3 billion yuan for the day due to 137.3 billion yuan in reverse repos maturing [3][4]. Group 2: Funding Conditions - The interbank market remains stable and loose, with the weighted average rate of D R001 slightly decreasing to around 1.32%. Overnight rates on the anonymous click system (X-repo) are still around 1.30%, with supply exceeding 100 billion yuan [5][6]. - Non-bank institutions are using certificates of deposit and credit bonds as collateral for overnight borrowing, with rates concentrated between 1.46% and 1.48% [5]. Group 3: Interbank Certificates of Deposit - The latest transaction for one-year interbank certificates of deposit in the secondary market is around 1.53% [8]. Group 4: Bond Yields - The yields for major interbank government bonds are as follows: 1Y at 1.2400%, 3Y at 1.2850%, 5Y at 1.5560%, 7Y at 1.6910%, and 10Y at 1.8375% [9]. Group 5: Fiscal Policy Insights - The Minister of Finance, Lan Fan'an, stated that fiscal policy will focus more on investing in people, increasing public service spending, and enhancing government investment in people's livelihoods. A total of 250 billion yuan in special government bonds will be allocated to support consumer goods replacement, along with 100 billion yuan for a special fund to promote domestic demand [12]. Group 6: Global Macro Events - The Iranian Defense Council announced that non-combatant vessels wishing to pass through the Strait of Hormuz must coordinate with Iran, emphasizing a commitment to retaliate against attacks on its infrastructure [16]. Group 7: Bond Market Developments - Recent negative events in the bond market include significant debt defaults by companies such as Huayang Year Group, which failed to repay 14.026 billion yuan in due debts, and Zhengrong Real Estate, which is projected to incur a net loss of 17-18 billion yuan in 2025 [20].

1. Report Industry Investment Rating There is no information about the industry investment rating in the provided content. 2. Core Viewpoints of the Report - The intensity of selling long - term and ultra - long - term bonds by trading desks did not increase this week, which limited the rapid rise of ultra - long - term bond yields to some extent. The willingness of allocation desks to buy long - term and ultra - long - term bonds is still relatively limited, and the 10Y Treasury bond yield may remain volatile at a high level in the short term. It is recommended to moderately participate in long - term bonds during adjustments, and pay attention to the opportunities of spread compression [1][2][10][16]. - This week, affected by the economic start - up, inflation recovery expectations, and external market fluctuations, the bond market was in a tug - of - war between bulls and bears, with intensified fluctuations. The yields of 10Y and 30Y Treasury bonds both rose by 2bp [9]. - The economic data from January to February generally improved, with obvious upward industrial growth and moderate consumption recovery. Since March, automobile consumption has been sluggish, while port throughput has been strong [62][63]. - The Federal Reserve maintained the interest rate range of 3.5% to 3.75%, and the dot - plot implied a hawkish tendency. Overseas bond markets, including US and European bonds, declined, and most emerging market bond markets also fell [71][72]. - The prices of live pigs and Shanghai gold fell this week. The performance of major asset classes was: crude oil > Chinese - funded US dollar bonds > Chinese bonds > rebar > US dollar > CSI 300 > convertible bonds > Shanghai copper > CSI 1000 > Shanghai gold > live pigs [77]. 3. Summary by Relevant Catalogs 3.1 Review and Outlook of the Bond Market - This week, the bond market fluctuated sharply due to the economic start - up, inflation recovery expectations, and external market fluctuations. The yields of 10Y and 30Y Treasury bonds rose by 2bp. The market showed different trends on different days, affected by various factors such as economic data, oil prices, and equity market performance [9]. - From the perspective of trading desks, the selling intensity of long - term and ultra - long - term bonds did not increase. From the perspective of allocation desks, large - scale banks increased their allocation of short - term bonds, and insurance institutions began to increase their allocation of ultra - long - term Treasury bonds in the past two weeks. The 10Y Treasury bond yield may remain volatile at a high level in the short term. It is recommended to moderately participate in long - term bonds during adjustments and pay attention to spread compression opportunities [1][10][14][16]. 3.2 Bond Market Review 3.2.1 Funding Situation - The central bank made a net injection of funds this week, and the funding sentiment was balanced. From March 16th to March 20th, the central bank's open - market net injection was 2458 billion yuan. The R001 and DR001 rates changed by +0.4bp and - 0.09bp respectively compared with March 13th, reaching 1.40% and 1.32%. The 3M certificate of deposit issuance rate first decreased, then increased, and then decreased again. The FR007 - 1Y swap rate first increased, then decreased, and then rebounded. As of March 20th, the 3M national - share bank acceptance bill transfer discount price was 1.43%, down 5bp from March 13th [20][23]. 3.2.2 Secondary Market Trends - This week, bond yields fluctuated sharply, and short - term bonds performed better. The yields of 3m, 1y, 3y, and 20y Treasury bonds declined, while those of 5y, 10y, and 30y Treasury bonds rose. Except for the 7Y - 5Y and 3Y - 1Y, the term spreads of other key - term Treasury bonds widened. As of March 20th, the yields of 10Y and 30Y Treasury bonds rose by 2bp compared with March 13th, reaching 1.83% and 2.39% respectively, and the term spread between them rose by 1bp to 56bp [25]. 3.2.3 Bond Market Sentiment - As of March 20th, the weekly turnover rate of 30Y Treasury bonds fell to 31%. The spread between 50Y - 30Y Treasury bonds widened by 2bp compared with March 13th, and the spread between 30Y - 10Y Treasury bonds widened significantly by 0.6bp to 56bp. The inter - bank leverage ratio dropped to 107.4%, and the exchange leverage ratio dropped to 121.7%. The median duration of medium - and long - term pure - bond funds increased by 0.02 years to 2.57 years compared with March 13th, while the median duration of interest - rate bond funds decreased by 0.03 years this week. The implied tax rate of 10 - year China Development Bank bonds narrowed [38]. 3.2.4 Bond Supply - This week, the net financing of interest - rate bonds increased significantly. From March 16th to March 20th, the net financing of interest - rate bonds was 818 billion yuan, a significant increase of 562.8 billion yuan compared with last week. The net financing of Treasury bonds and local government bonds increased, while that of policy - financial bonds decreased. The net financing of Treasury bonds was 525 billion yuan, an increase of 521.9 billion yuan; the net financing of local government bonds was 255.4 billion yuan, an increase of 147.3 billion yuan; the net financing of policy - financial bonds was 3.77 billion yuan, a decrease of 10.63 billion yuan. The net repayment of inter - bank certificates of deposit increased, and the average issuance rate continued to decline, dropping 1.7bp to 1.53%. Next week, a 7Y coupon - bearing Treasury bond 260007.IB will be newly issued [52][55][59]. 3.3 Economic Data - The economic data from January to February generally improved, with the year - on - year increase of industrial added value of above - scale industries at +6.3%, the year - on - year increase of social consumer goods retail at +2.8% (forecast +2.6%), and the year - on - year increase of fixed - asset investment (excluding rural households) at +1.8% (expected - 5.0%). The LPR quotation has remained unchanged for 10 consecutive months. Since March, automobile consumption has been relatively sluggish, while port throughput has been stronger than the Spring Festival seasonality. Industrial production has continued to improve marginally [62][63]. 3.4 Overseas Bond Market - The Federal Reserve maintained the federal funds rate target range at 3.5% to 3.75%. The dot - plot implied a hawkish tendency. Overseas bond markets, including US and European bonds, declined, and most emerging market bond markets also fell. The 2Y US Treasury bond rate rose 15bp to 3.88%, the 10Y US Treasury bond rate rose 11bp to 4.39%, and the 10Y - 2Y US Treasury bond spread narrowed 4bp to 51bp [71][72]. 3.5 Major Asset Classes - The CSI 300 index adjusted this week, closing at 4567.0 points as of March 20, 2026, a decrease of 2.19% compared with March 13th. This week, the Nanhua Crude Oil Index continued to rise, while the Nanhua Live Pig Index, Shanghai Gold, and Shanghai Copper all declined. The performance of major asset classes was: crude oil > Chinese - funded US dollar bonds > Chinese bonds > rebar > US dollar > CSI 300 > convertible bonds > Shanghai copper > CSI 1000 > Shanghai gold > live pigs [77]. 3.6 Bond Market Calendar - From March 23rd to March 27th, there will be liquidity injections and expirations, government bond supplies, and the release of fundamental data. There are also important domestic and international events, such as the Boao Forum for Asia Annual Conference 2026 and the 14th WTO Ministerial Conference [82].

1. Report Industry Investment Rating The document does not provide the industry investment rating. 2. Core Views of the Report - Since the beginning of the year, inflation has shown the characteristics of "CPI increase under the influence of the Spring Festival effect and PPI price increase accelerated by imported inflation". The government work report during the Two Sessions maintained the target of the consumer price increase at 2%, and pointed out that promoting stable economic growth and reasonable price recovery should be important considerations for monetary policy. With the repeated geopolitical conflicts and high oil prices recently, the market sentiment remains cautious under the expectation of inflation turning positive. Looking forward, inflation is mainly affected by two factors: on one hand, the domestic supply is abundant, and the consumer price trend is relatively stable; on the other hand, affected by the intensifying geopolitical risks in the Middle East, the global inflation rate may rise significantly, increasing the risk of imported inflation in the later stage. Coupled with the relatively low base in 2025, it is expected that the CPI growth rate will continue a moderate recovery, and the turning point of the PPI year - on - year growth rate to positive will be advanced. The cost - performance of bonds has increased, and it is difficult for the 10 - year Treasury bond yield to break through the previous high, and it may maintain a volatile trend [6]. - The impact of the base period rotation on the CPI year - on - year index is limited, and the CPI is expected to have a moderate recovery, with the annual central value at about 0.8% [6]. - The turning point of the PPI year - on - year growth rate to positive may be advanced under the impact of oil prices. If the oil price drops to $65 per barrel and remains stable, the PPI is likely to turn positive in the second half of Q2; if the oil price remains at about $80 per barrel or rises to $108 per barrel, the PPI may turn positive rapidly in Q2, or even in March. Based on the EIA assumption, the PPI may turn positive in March, and the central value of the PPI in 2026 will be about 1.07% [7]. - When the inflation center rises, the interest rate center does not necessarily rise, and the monetary policy does not necessarily tighten. This round of inflation recovery is mainly driven by the cost side, and the probability of monetary policy tightening is low. The cost - performance of bonds has increased, and it is difficult for the 10 - year Treasury bond yield to break through the previous high, and it may maintain a volatile trend. It is recommended to moderately participate in long - term bonds during the adjustment. With the continuous loosening of the capital side, the short - end is more certain, and at the same time, pay attention to the opportunities for spread compression, such as the spread between China Development Bank bonds and Treasury bonds, and the spread between local government bonds and Treasury bonds [8]. 3. Summary by Directory 3.1. The Impact of Base Period Rotation on CPI Is Limited, and CPI Shows a Moderate Recovery - **Base Period Rotation and Classification Adjustment**: China conducts a base period rotation for CPI and PPI every five years. On February 11, 2026, the National Bureau of Statistics released CPI data based on the 2025 base period. The number of major categories and basic classifications remains unchanged, with 8 major categories and 268 basic classifications. New commodity and service classifications reflecting new consumption content have been added, and some category names have been modified. A travel service price index has been newly calculated [14]. - **Weight Changes**: Compared with the 2020 base period, the overall weight changes of each CPI classification in this base period are not significant. Structurally, the weight of services in CPI has increased, while the weight of consumer goods has decreased. In terms of classification, the weights of five major categories, including food, tobacco, alcohol and dining out, transportation and communication, education, culture and entertainment, medical care, and other supplies and services, have increased. In the category of food, tobacco, alcohol and dining out, the weight of food has decreased, while the weight of dining out has increased. The weights of three major categories, including clothing, housing, and household goods and services, have decreased [16][18]. - **Impact on CPI Year - on - Year Index**: The National Bureau of Statistics pointed out that the average impact of this base period rotation on the monthly year - on - year index of CPI and PPI is about 0.06 and 0.08 percentage points respectively, which is relatively small. The calculation shows that the impact of CPI weight changes on the monthly CPI year - on - year index is about 0.04 percentage points, which is highly consistent with the data released by the National Bureau of Statistics in terms of direction and order of magnitude, indicating that the impact of CPI weight adjustment on the CPI year - on - year trend is limited and controllable [20]. - **CPI Recovery Trend**: From January to February 2026, the average CPI year - on - year increase was 0.75%, showing a moderate recovery trend. Affected by the Spring Festival misalignment effect, consumer demand pulsed in February, pushing the CPI up from 0.2% in January to 1.3%. The core CPI also showed a significant upward trend. Overall, CPI operation is mainly dominated by historical seasonal laws. With the marginal improvement of food and energy prices and the high - level volatility of international oil prices, CPI is expected to continue the recovery trend. In 2026, the CPI center is expected to rise moderately compared with 2025, with the annual central value at about 0.8% [23]. 3.2. The Turning Point of PPI Year - on - Year Growth Rate to Positive May Be Advanced under the Impact of Oil Prices - **PPI Industry Weights**: PPI is calculated by the weighted average of 40 industry prices. Using the average operating income share of corresponding industries from 2017 to 2025 as a substitute for weights, it is found that industries such as computer, communication and other electronic equipment manufacturing (11.1%), automobile manufacturing (7.5%), electrical machinery and equipment manufacturing (7.2%), and chemical raw materials and chemical products manufacturing (6.6%) have relatively high weights. Since 2021, the weights of electrical machinery and equipment manufacturing, computer, communication and other electronic equipment manufacturing, and power and heat production and supply industries have increased significantly [27]. - **PPI Industry Contribution**: The contribution of high - weight industries to PPI is not necessarily large. The top 7 industries with high contribution rates to PPI fluctuations, including oil, coal and other fuel processing, ferrous metal smelting and rolling processing, chemical raw materials and chemical products manufacturing, coal mining and washing, non - ferrous metal smelting and rolling processing, non - metallic mineral products, and oil and gas extraction, contribute about 80% of the total fluctuations [29][31]. - **Core Influencing Factors of PPI**: Crude oil, coal, ferrous metals, and non - ferrous metals are the core influencing factors of PPI. They are widely used in the upstream, mid - stream, and downstream industrial chains. The top 10 industries with high contribution rates to PPI fluctuations are mostly directly related to these four factors, and the relevant industries with high correlations to them contribute about 90% of the PPI fluctuations [32][36]. - **Analysis of Crude Oil Price Trends**: Affected by the continuous geopolitical conflicts in the Middle East, international oil prices have continued to rise. In March 2026, oil prices experienced a roller - coaster trend of "soaring - plummeting - rebounding". Although the International Energy Agency coordinated the release of strategic petroleum reserves, the market still worried that the scale and rhythm of the release might not be able to make up for the supply gap in the Middle East, so international oil prices continued to rise [41][44]. - **Impact of Crude Oil Prices on PPI**: Crude oil is widely used in the upstream, mid - stream, and downstream industrial chains, and the relevant industries account for about 12.4% of PPI. A 10% increase in oil prices may push up PPI by about 0.4 percentage points. The actual impact of oil prices on China's inflation depends on the subsequent development of the conflict. Different scenarios of oil price changes have different impacts on China's PPI, and the EIA predicts that the PPI may turn positive in March, with the central value in 2026 at about 1.07% [47][50][53]. 3.3. The Impact of Inflation Center Rise on the Bond Market - **Fundamental Reasons for Interest Rate Center Rise**: According to the causes, inflation can be divided into demand - pull inflation, cost - push inflation, and structural inflation. Since the 21st century, there have been six obvious inflation processes in China. When the inflation center rises, the interest rate center does not necessarily rise, and the monetary policy does not necessarily tighten. Demand - pull inflation often drives the interest rate center up, while cost - type and structural inflation do not necessarily [58]. - **Analysis of Previous Inflation Rounds**: The first four rounds of inflation were mostly demand - pull inflation, accompanied by rising interest rates. The central bank tightened the money supply through measures such as raising the reserve requirement ratio and interest rates. The last two rounds of inflation were more in line with cost - push inflation, and interest rates remained flat or declined. The central bank implemented a relatively loose monetary policy to maintain economic growth [59][70]. - **Analysis of the Current Round of Inflation**: This round of inflation recovery is mainly driven by the cost side. Affected by geopolitical factors, the prices of commodities such as crude oil have risen significantly, pushing the PPI year - on - year to recover rapidly. The government work report in 2026 clearly stated to continue implementing a moderately loose monetary policy, so the probability of monetary policy tightening is low. The cost - performance of bonds has increased, and it is difficult for the 10 - year Treasury bond yield to break through the previous high, and it may maintain a volatile trend. It is recommended to moderately participate in long - term bonds during the adjustment, pay attention to the short - end with higher certainty, and also pay attention to the opportunities for spread compression [74].