Core Viewpoint - The report from CITIC Securities suggests a slightly bullish outlook for the bond market in the short term, indicating a potential phase of recovery after recent declines [1] Short-term Outlook - Historical experience shows that after a significant drop in the bond market, a secondary adjustment typically occurs within about five trading days due to weakened sentiment [1] - Monitored sentiment indicators, such as the speed of changes in bond fund durations and net purchases of long-term bonds by rural commercial banks and insurance companies, have exceeded the threshold for crowded short positions, indicating a possible short-term recovery in the bond market [1] Medium-term Outlook - Following the secondary adjustment, the bond market may experience diminishing marginal impacts on commodity prices and stock markets, potentially entering a phase of narrow fluctuations characterized by chaotic trading logic [1] - A neutral stance with a focus on swing trading is recommended for investors during this period [1] Factors Influencing Future Bond Market Changes - Key factors to watch for future shifts in the bond market include the ongoing US-China trade conflict, as the extension of equal tariffs for another 90 days may alter previous market expectations of a "honeymoon period" between the two countries [1] - With most tariff negotiations between the US and other countries completed, the market's previous assumptions may need to be reassessed, necessitating patience for further observations [1]

Report Industry Investment Rating No relevant content provided. Core Views of the Report - **Hua'an's View**: It is recommended to switch to active bonds to capture the left - hand side of the bond market trend. The trading mainline of the bond market is unclear. Although the overall situation is favorable, there are still negative factors under the high - duration and high - leverage of investors. The fundamentals are not likely to be negative for the bond market, and the central bank has an obvious intention to support the capital market. Holding 10Y/30Y active bonds helps to obtain capital gains when positive factors materialize and stop losses in case of negative factors [2]. - **Seller's View**: The sentiment index has slightly declined, but more than 60% of fixed - income sellers are bullish on the bond market. Among 29 institutions, 19 are bullish, 8 are neutral, and 2 are bearish [2]. - **Buyer's View**: The overall view of fixed - income buyers is still bullish on the bond market, but the sentiment index has declined for two consecutive weeks. Among 24 institutions, 10 are bullish, 13 are neutral, and 1 is bearish [3]. Summary by Relevant Catalogs 1. Seller and Buyer Markets 1.1 Seller Market Sentiment Index and Interest - rate Bonds - The weighted sentiment index this week is 0.48, and the unweighted index is 0.60, down 0.07 from last week. 66% of institutions are bullish, believing that July is an important window for long - positions due to historical patterns, economic weakness, and loose funds, with low bond supply pressure and favorable quarter - end institutional behavior. 27% are neutral, citing limited positive impact of the Lujiazui Forum on further decline of capital interest rates, economic resilience in the context of export rush, and potential unexpected outcomes from Sino - US talks. 7% are bearish, concerned about the stock market driving up bond interest rates and mean - reversion of interest rates [10]. 1.2 Buyer Market Sentiment Index and Interest - rate Bonds - The buyer sentiment index this week is 0.23, unchanged from last week. 42% of institutions are bullish, expecting loose funds and a possible quarter - on - quarter weakening of the economic fundamentals in Q3. 56% are neutral, as the Q2 monetary policy meeting has reduced expectations of broad credit, and the equity market suppresses bond market sentiment. 2% are bearish due to low yields [11][12]. 1.3 Credit Bonds - Market hot - topics include seasonal entry of wealth management funds and expansion of credit ETFs. Seasonal entry of wealth management funds may cause short - term disturbances to the credit market as wealth management scale expands after the quarter - end and institutional allocation power strengthens. The market for credit ETF component bonds is expected to continue [18]. 1.4 Convertible Bonds - Institutions generally hold a neutral - to - bullish view this week. 38% are bullish, noting the relative strength of debt - biased convertible bonds and the catch - up of bottom - position varieties. 62% are neutral, expecting the equity market to strengthen, limited incremental information from the Politburo meeting, and suggesting attention to the central price of convertible bonds [20]. 2. Treasury Futures Tracking 2.1 Futures Trading - Futures prices have all declined. As of June 27, the prices of TS/TF/T/TL contracts are 102.54 yuan, 106.27 yuan, 109.05 yuan, and 120.89 yuan respectively, down 0.002 yuan, 0.01 yuan, 0.11 yuan, and 0.43 yuan from last Friday. - The open interest of futures contracts varies. The open interest of TS/TF/T/TL contracts is 119,000 lots, 166,000 lots, 204,000 lots, and 116,000 lots respectively, with changes of - 183 lots, + 2960 lots, - 8166 lots, and - 318 lots from last Friday. - The trading volume has generally increased. From a 5 - day moving average perspective, the trading volumes of TS/TF/T/TL contracts are 63.7 billion yuan, 59.1 billion yuan, 68.8 billion yuan, and 100.8 billion yuan respectively, with changes of - 3.95 billion yuan, + 2.102 billion yuan, + 5.55 billion yuan, and + 21.726 billion yuan from last Friday. - The trading - to - open - interest ratio has generally increased. The trading - to - open - interest ratios of TS/TF/T/TL contracts are 0.27, 0.37, 0.33, and 0.87 respectively, with changes of - 0.01, + 0.003, + 0.02, and + 0.15 from last Friday [24][25]. 2.2 Spot Bond Trading - The turnover rate of 30Y treasury bonds has increased. On June 27, it reached 7.93%, up 3.34 percentage points from last week and 4.35 percentage points from Monday, with a weekly average of 5.18%. - The weekly average turnover rate of interest - rate bonds has increased. On June 27, it was 1.02%, up 0.05 percentage points from last week and 0.06 percentage points from Monday. - The turnover rate of 10Y China Development Bank bonds has decreased. On June 27, it was 4.46%, down 0.91 percentage points from last week and 1.12 percentage points from Monday [32][36]. 2.3 Basis Trading - The basis of TF and TL main contracts has widened, while the rest have narrowed. As of June 27, the basis (CTD) of TS/TF/T/TL main contracts is - 0.06 yuan, - 0.05 yuan, - 0.02 yuan, and + 0.32 yuan respectively, with changes of + 0.02 yuan, - 0.02 yuan, + 0.02 yuan, and + 0.06 yuan from last Friday. - The net basis of the TS main contract has turned from negative to positive, and the rest have narrowed. As of June 27, the net basis (CTD) of TS/TF/T/TL main contracts is - 0.03 yuan, - 0.05 yuan, - 0.04 yuan, and 0.01 yuan respectively, with changes of + 0.07 yuan, + 0.03 yuan, + 0.07 yuan, and + 0.15 yuan from last Friday. - The IRR of the TF main contract has increased, while the rest have decreased. As of June 27, the IRR (CTD) of TS/TF/T/TL main contracts is 1.85%, 1.92%, 1.86%, and 1.66% respectively, with changes of - 0.05%, + 0.08%, - 0.06%, and - 0.26% from last Friday [43][45]. 2.4 Inter - period and Inter - product Spreads - Inter - period spreads have shown mixed trends. As of June 27, the near - month minus far - month spreads of TS/TF/T/TL contracts are - 0.13 yuan, - 0.08 yuan, - 0.01 yuan, and 0.14 yuan respectively, with changes of + 0.02 yuan, - 0.02 yuan, - 0.01 yuan, and - 0.02 yuan from last Friday. - Inter - product spreads have generally widened. As of June 27, 2*TS - TF, 2*TF - T, 4*TS - T, and 3*T - TL are 98.83 yuan, 103.46 yuan, 301.11 yuan, and 206.27 yuan respectively, with changes of + 0.02 yuan, + 0.08 yuan, + 0.11 yuan, and + 0.11 yuan from last Friday [52].

1. Report Industry Investment Rating No information regarding the report industry investment rating is provided. 2. Core Views of the Report - **Hua'an's View**: The bond market is favorable, but the odds of further decline in interest rates are limited. It is still advisable to adopt a trading mindset. The current market sentiment is rising, with investors both bullish and taking action. The fundamental factors still support the bond market, but the potential for interest rate decline is limited. Given the historical performance of the bond market in June, it is recommended to approach it with a trading perspective [2]. - **Seller's View**: More than half of the fixed - income sellers are bullish on the bond market, with a significant increase in sentiment this week [3]. - **Buyer's View**: The buyer sentiment is relatively cautious, with nearly 60% holding a neutral view. Overall, the fixed - income buyer's view is neutral with a slight bullish bias [3]. 3. Summary by Relevant Catalogs 3.1 Seller and Buyer Markets 3.1.1 Seller Market Sentiment Index and Interest - rate Bonds - The weighted sentiment index this week is 0.43, indicating a predominantly bullish view, up from last week. The unweighted index is 0.54, an increase of 0.12 from last week. Among the institutions, 16 are bullish, 12 are neutral, and 1 are bearish. 55% of the institutions are bullish, 41% are neutral, and 3% are bearish [10]. 3.1.2 Buyer Market Sentiment Index and Interest - rate Bonds - This week's buyer sentiment index is 0.23, showing a neutral - with - a - slight - bullish view, down 0.12 from last week. Among the institutions, 10 are bullish, 16 are neutral, and 1 is bearish. 37% of the institutions are bullish, 59% are neutral, and 4% are bearish [11]. 3.1.3 Credit Bonds - Market hot topics include quarter - end wealth management repatriation and central bank monetary policy. Quarter - end wealth management repatriation poses resistance to credit spread compression and disturbs the credit market in the short term. Monetary policy easing may drive interest rate changes, but the room for further spread compression is limited [16]. 3.1.4 Convertible Bonds - This week, institutions generally hold a neutral - with - a - slight - bullish view. One institution is bullish and 11 are neutral. 8% of the institutions are bullish, and 92% are neutral [17]. 3.2 Treasury Bond Futures Tracking 3.2.1 Futures Trading - As of June 13, the prices of TS/TF/T/TL contracts increased. The contract prices were 102.46 yuan, 106.18 yuan, 109.02 yuan, and 120.5 yuan respectively, up 0.01 yuan, 0.03 yuan, 0.09 yuan, and 0.72 yuan from last Friday. The contract holdings increased, while the trading volumes and trading - to - holding ratios decreased [19][20]. 3.2.2 Spot Bond Trading - On June 13, the turnover rate of 30Y treasury bonds was 3.62%, up 0.06 pct from last week and 0.10 pct from Monday, with a weekly average of 4.33%. The turnover rate of 10Y China Development Bank bonds was 5.90%, up 0.04 pct from last week. The weekly average turnover rate of interest - rate bonds decreased to 0.92% on June 13, down 0.07 pct from last week [31]. 3.2.3 Basis Trading - As of June 13, except for the TF contract, the basis of other contracts narrowed. The net basis of the TS contract narrowed, while that of others widened. The IRR of the TS contract decreased, while that of others increased [36][39]. 3.2.4 Spread Trading - As of June 13, except for the TL contract, the inter - delivery spread of other contracts narrowed. The inter - variety spreads of all main contracts widened [45].

Summary of Conference Call Records Industry Overview - The records primarily discuss the bond market and the implications of U.S.-China relations on interest rates and liquidity in the financial system [1][3][7]. Key Points and Arguments 1. **Global Economic Trends**: There is a consensus that global economic decoupling and fragmentation are long-term trends, with short-term tariff adjustments unlikely to reverse the overall direction of U.S.-China relations [1][7]. 2. **Interest Rate Projections**: - A complete removal of reciprocal tariffs could lead to an estimated interest rate rebound of about 12 basis points, but the impact is expected to be limited [1][3]. - The 10-year government bond yield is projected to have an upper limit adjustment to 1.75% if tariffs are fully removed, although current macroeconomic conditions do not support a strong rebound to 1.4% [6][8]. 3. **Market Sentiment**: - June has seen improved liquidity conditions, with bond market sentiment turning positive and the 2001 bond effectively breaking below 1.4% [1][4]. - The negative factors that suppressed the market in May are dissipating, indicating clear trend opportunities [4][5]. 4. **Central Bank Policies**: - The central bank is maintaining a tightening stance, which, along with a recovering real estate sector, supports market sentiment [8][9]. - Recent announcements of reverse repos by the central bank aim to stabilize market expectations and signal liquidity support [10]. 5. **Future Liquidity Expectations**: - There is a shift towards a more accommodative liquidity outlook, with the DR001 rate breaking below 1.4%, indicating enhanced liquidity sentiment [2][12]. - The central bank's actions suggest potential for further liquidity increases if market conditions remain tight [11][12]. 6. **Investment Opportunities**: - The outlook for medium to long-term bond funds is positive, with expected returns of 2.5-3% this year, encouraging investors to seize current market trends [13][14]. Other Important Insights - The impact of U.S.-China tariffs on market reactions has diminished, with the market forming a consensus that long-term trends will prevail despite short-term fluctuations [3][7]. - Structural tariffs and trade measures, such as Section 301 and Section 232, continue to pose risks to the economic relationship between the U.S. and China [7][9]. - The central bank's flexible approach to liquidity management reflects its responsiveness to uncertainties in U.S.-China relations and domestic economic pressures [10].

Core Viewpoint - The domestic bond market is experiencing significant fluctuations due to changes in institutional expectations, rising funding rates, and a recovery in market risk appetite, indicating that fixed income investment management faces considerable challenges this year [1][2]. Group 1: Market Conditions - The bond market has been influenced by various factors, including a reduction in large banks' lending scale post-Spring Festival, increased government bond supply, and a notable rise in funding prices, leading to a significant inversion of short-term rates [1]. - The recovery of the technology sector in the stock market has enhanced market risk appetite, resulting in a substantial flow of funds into equity assets, which has further pressured bond market sentiment [1][2]. Group 2: Investment Strategies - In a low-interest-rate environment, investment institutions are considering long-term products to earn capital gains, as concerns grow that coupon income may not cover costs [2]. - The overall volatility of the bond market may increase due to differing expectations regarding monetary easing policies among institutional investors [2]. Group 3: Identifying Mispricing Opportunities - The management of fixed income portfolios requires a shift from traditional long-duration strategies to a more refined approach, focusing on capturing mispricing opportunities to accumulate excess returns [2][3]. - Three preferred strategies for managing credit bond investments include: 1. Participating in high-quality new bonds at slightly above reasonable valuation levels to enhance returns through arbitrage between primary and secondary markets [3]. 2. Anticipating the recovery cycle of credit bonds by positioning in overvalued credit bond varieties to capture liquidity premiums [3]. 3. Capturing opportunities from the significant fluctuations in the spreads of actively traded bank subordinated capital bonds and perpetual bonds [3]. Group 4: New Fund Launch - The Western Lide Monthly Fund, managed by the company, is set to launch on April 24, with a 30-day holding period aimed at providing relative stability on the liability side and leveraging the manager's trading advantages [3].