Group 1 - The manufacturing PMI for July recorded at 49.3%, a decrease of 0.4 percentage points, indicating a continued contraction in the manufacturing sector [5][6][10] - The non-manufacturing PMI stood at 50.1%, also down by 0.4 percentage points, with the construction sector PMI declining significantly by 2.2 percentage points to 50.6% [5][17] - The overall PMI output index decreased to 50.2%, reflecting a 0.5 percentage point drop from the previous month [5][6] Group 2 - Both supply and demand sides of the manufacturing PMI showed marginal weakening, but prices improved significantly due to anti-involution policies, leading to a situation of reduced volume but increased prices [4][10][11] - New orders, production, and material inventory all contributed negatively to the PMI, with new orders dropping 0.8 percentage points to 49.4% [6][11][20] - The price index for factory output and major raw material purchases increased by 2.1 percentage points and 3.1 percentage points respectively, indicating substantial improvement [11][20] Group 3 - The construction sector's PMI was adversely affected by weather conditions and a weak real estate market, leading to a notable decline [17][20] - The service sector PMI remained relatively stable at 50.0%, supported by seasonal improvements in industries such as aviation and dining due to holiday travel [17][20] - The overall economic outlook remains weak, with both internal and external demand showing signs of fatigue, which continues to support long-term interest rates [20]

Report Industry Investment Rating - The short - term (1 - 3 months), medium - term (3 - 6 months), and long - term (6 - 12 months) trend ratings for treasury bonds are all "oscillating" [5] Core Viewpoints of the Report - The fundamental situation is favorable for treasury bonds, with the bullish sentiment more obvious in the first half of the second half of the year, but the potential for further bullishness is limited. The market is expected to experience fluctuations, and investors are advised to adopt appropriate trading strategies [1][3][64] - Monetary policy is moderately loose, but the central bank may warn about interest - rate risks. Market sentiment is more cautious, and there are differences in institutional behavior and bond valuations compared to previous years, which limit the upward space of the bond market [2][65][88] - The bond market trend in the second half of the year is divided into three stages. Investment strategies include unilateral band operations, cross - variety strategies, and positive - arbitrage strategies for short - term varieties [3][92][96] Summary by Directory 1. 2025Q1 Treasury Bond Trend Review - In the first half of 2025, treasury bond futures went from weak to strong and then to narrow - range oscillation, experiencing three stages: decline from the beginning of the year to mid - March, rise from late March to early April, and narrow - range oscillation from mid - April to mid - June [15] - The yield curve first flattened and then oscillated. The basis of medium - and short - term varieties gradually returned to normal from a low level, while the basis of TL did not deviate significantly from the seasonal level [18] - The bond market showed new features this year, such as being insensitive to domestic economic fundamentals but sensitive to trade frictions, with the central bank having stronger regulatory ability, persistent negative carry for short - term varieties, and institutional behavior causing occasional disturbances [21] 2. Fiscal and Fundamental Aspects: The Trade War is Complex, and Domestic Low - Volatility Will Continue - **Trade War is Long - Term, Complex, and Has a "Stagflation" Effect**: The trade war is a long - term measure for the US to address its credit crisis. It is complex in its progress, and high tariffs will lead the US into a stagflation environment [24][27][31] - **Export Decline Pressure Becomes Apparent, and Domestic Demand Weakening Pressure Increases**: Trade frictions lead to a decline in overseas demand, which in turn reduces China's export growth. Domestic demand also faces challenges, especially in the real estate market, and consumption and private investment are also under pressure. Fiscal support is crucial for stabilizing demand [33][42][54] - **Fiscal Policy Supports the Economy, and Domestic Macroeconomy Runs with Low Volatility**: The proportion of functional finance is increasing. Fiscal policy should be moderately proactive, with a higher probability of quasi - fiscal policies. Fiscal policy will support economic growth, but the supply - demand imbalance will persist, and inflation will remain low [55][58][63] 3. Monetary Policy and Bond Market Valuation: Similar Policy Rhythms, Different Mindsets and Valuations - **Exchange - Rate Depreciation Pressure Eases, and Monetary Policy is Moderately Loose**: The RMB exchange - rate depreciation pressure has significantly eased. Monetary policy is moderately loose, with a high probability of a 10BP interest - rate cut in August - September. The central bank may warn about long - term interest - rate risks [65][66][73] - **Market Mindset, Institutional Behavior, and Bond Valuations Differ from Previous Years**: The market mindset is more cautious. Institutional behavior is affected by "liability shortage," and bond valuations are high, which limit the upward space of the bond market [78][81][87] 4. Market Outlook and Strategy: Actively Explore Futures Strategies - **Market Rhythm: Gradually Accelerate, Then Decline**: The bond market in the second half of the year is expected to go through three stages: strengthening from July - August, a high probability of decline from September - October, and slow strengthening from November - December [92][93] - **Strategy Analysis: Band - Operation Thinking, Explore Futures Strategies**: Unilateral strategies suggest that allocation portfolios should buy mid - term long positions on dips, and trading portfolios should conduct band operations. Cross - variety strategies recommend paying attention to the strategy of going long on 2TS and short on T. Positive - arbitrage strategies suggest seizing the tail - end opportunities of short - term varieties. Hedging strategies recommend paying attention to short - hedging strategies from September - October [96][98][103]