Core Insights - The report analyzes the behavior of institutions in the bond market since July 2025, focusing on their buying patterns and the implications for future bond market trends [11][12][26]. Group 1: Bond Market Weekly Review (2025/10/13-2025/10/17) - The bond market experienced fluctuations influenced by U.S.-China trade news and the performance of the stock market, leading to a flattening of the government bond yield curve [10]. - The yields for 30Y, 10Y, and 1Y government bonds changed by -3.26 basis points, +0.40 basis points, and +7.43 basis points respectively during this week [10]. Group 2: Bond Funds - Since the bond market adjustment began in July 2025, bond funds have exhibited a clear trend of chasing gains and cutting losses, with significant net sales of government bonds, policy bank bonds, and perpetual bonds amounting to CNY 877 billion, CNY 1,549 billion, and CNY 766 billion respectively [12][15]. - The duration of bond funds has gone through three phases: initially reluctant to reduce duration, then forced to sell long-term bonds due to redemption pressures, and finally showing a renewed speculative mindset as yields reached critical levels [20][21]. Group 3: Wealth Management Products - Wealth management products have remained stable in net value and liabilities, serving as a major buying force for credit bonds, with net purchases of medium-term notes, perpetual bonds, and short-term financing bonds totaling CNY 1,484 billion, CNY 1,428 billion, and CNY 677 billion respectively since July 2025 [26][31]. - These products have adopted multiple strategies to stabilize net value, resulting in minimal redemption pressure [26]. Group 4: Banks - Large banks have increased their net purchases of bonds, particularly long-term bonds, acting as a stabilizing force in the bond market, while smaller banks have shown a tendency to take profits [33][37]. - From July to September 2025, large banks net purchased government bonds primarily with maturities of 3Y or less, expanding to 5Y and 10Y bonds in subsequent months [33][34]. Group 5: Insurance - Insurance companies have been cautious in their bond purchases, preferring to invest in 30Y government bonds and local government bonds rather than 10Y bonds due to the lack of expected yield declines [44][45]. - There has been a noticeable increase in equity allocations among large insurance firms, indicating a shift in asset allocation strategies [45][47]. Group 6: Bond Market Strategy - The current market shows a need for continued observation of institutional buying behavior, with a heavy speculative mindset persisting despite a decrease in trading congestion [53]. - The report suggests that the 10Y government bond yield may range between 1.75% and 1.90% (excluding tax) in the near term, with a recommendation to continue reducing duration [53].