1. Report Industry Investment Rating The provided content does not mention the industry investment rating. 2. Core Viewpoints of the Report - Since Q4 last year, there have been strong concerns about the supply of ultra - long bonds in the market. In January this year, the issuance scale of ultra - long government bonds increased significantly year - on - year, with the increment mainly from new special bonds, indicating a decent demand for capital for major project construction at the beginning of the year. The central bank's relatively active liquidity injection and banks' increased purchases at the ultra - long end have alleviated market concerns to some extent [3]. - From the perspective of achieving the annual economic target, the annual fiscal increment may exceed market expectations, and fiscal policies may be supplemented in the second half of the year. It is estimated that the net financing of government bonds in 2026 will be 15.1 trillion yuan, and the issuance of ultra - long government bonds will be 7.12 trillion yuan, a year - on - year increase of 0.7 trillion yuan. For Q1, the issuance of ultra - long government bonds is expected to be 2.24 trillion yuan, a year - on - year increase of 416.7 billion yuan, with certain supply pressure in February and March [3]. - Insurance is likely to have a good start, with an expected annual premium growth of 6.6% and the growth rate of the balance of funds utilization remaining at around 15%. It is estimated that in 2026, the proportion of ultra - long bonds allocated by insurance in the annual issuance of ultra - long bonds will drop to about 31%, and the proportion in its own bond investment will remain basically flat at about 71%, corresponding to an investment scale of about 2.2 trillion yuan, basically the same as in 2025 [3]. - It is estimated that the investment scale of commercial banks in ultra - long bonds in 2026 will be about 4.82 trillion yuan, accounting for about 67.7% of the annual issuance of ultra - long bonds, a year - on - year increase of 0.66 trillion yuan [3]. - For trading institutions, based on a neutral judgment of the interest rate trend, the investment scale of funds and securities firms in ultra - long bonds may be higher than that in 2025 but lower than that in 2024, totaling about 10 billion yuan [3]. - The 30 - 10 - year term spread in 2025 mainly widened due to the contraction of trading desks' demand for ultra - long bonds and frictions in the trading process, rather than being mainly determined by primary supply [3]. 3. Summary According to the Directory 3.1 How is the supply of ultra - long government bonds this year calculated according to the upper limit? - It is estimated that the net financing of government bonds in 2026 will be 15.1 trillion yuan, including 7.143 trillion yuan for treasury bonds and 7.938 trillion yuan for local bonds. In terms of issuance, the issuance of general treasury bonds will be 14.1377 trillion yuan, special treasury bonds 2 trillion yuan, new general bonds 80 billion yuan, new special bonds 550 billion yuan, special refinancing bonds 200 billion yuan, and ordinary refinancing bonds 325.8 billion yuan [7]. - The issuance of ultra - long government bonds in 2026 is expected to be 7.12 trillion yuan, a year - on - year increase of 0.7 trillion yuan. Among them, the issuance of ultra - long treasury bonds will be 1.74 trillion yuan, a year - on - year increase of 225 billion yuan, and the issuance of ultra - long local bonds will be 5.38 trillion yuan, a year - on - year increase of 475 billion yuan [8]. - For Q1, the issuance of ultra - long government bonds is expected to be 2.24 trillion yuan, a year - on - year increase of 416.7 billion yuan. The issuance of ultra - long treasury bonds in Q1 is usually low because special treasury bonds need to be approved by the Two Sessions and are expected to start issuing at the end of April. The planned issuance of local bonds in Q1 is about 2.38 trillion yuan, with a relatively high refinancing ratio, and the issuance of replacement bonds is expected to be in the front, making room for new bonds for construction projects later. The issuance progress of new special bonds is expected to be faster than last year [9][10]. 3.2 How is the demand for ultra - long bonds? 3.2.1 Insurance - In 2025, the premium income of insurance companies from January to November was 5.76 trillion yuan, a year - on - year increase of 7.56%. Property insurance increased by 2.48% year - on - year, with auto insurance as the main source of income, accounting for over 52% and highly correlated with the growth rate of vehicle ownership. Personal insurance increased by 9.2% year - on - year, with life insurance accounting for about 77% and growing by 11.47%, mainly driven by the popularity of savings - type insurance products [12][13]. - In 2026, the probability of a "good start" for premium income is high. Favorable factors include high - interest fixed - deposit maturities, the correlation between the stock market's good start in January and premium income growth, and a low base in 2025. Unfavorable factors include pressure on traditional life insurance and the over - consumption of demand due to previous "panic - buying" promotions. It is expected that the annual premium income will achieve stable growth, with property insurance growing by about 2% and personal insurance by about 8%, and the overall insurance premium income increasing by about 6.6% [14][15]. - At the end of Q3 2025, the balance of insurance funds utilization was 37.46 trillion yuan, a year - on - year increase of 16.5%. In 2026, it is expected that the year - on - year growth rate of the balance of insurance funds utilization will decline slightly to 15%. The proportion of bank deposits is expected to drop to 7%, the proportion of stock investment to rise to 11.5%, the proportion of fund investment to rise to 6%, the proportion of long - term equity investment to be stable at 8%, and the proportion of other investments to drop to 16%. The proportion of bonds will remain stable at 51.5%, with a net increment of about 3.1 trillion yuan [20][21]. - From 2022 - 2025, the net purchases of ultra - long bonds by insurance institutions in the secondary market were 0.48, 0.73, 1.71, and 2.28 trillion yuan respectively, accounting for 13.62%, 20.7%, 31.3%, and 35.5% of the annual issuance of ultra - long bonds, and 48%, 41%, 67%, and 72% of the annual bond investment respectively. In 2026, it is expected that the proportion of ultra - long bonds in the annual issuance of ultra - long bonds will drop from 35.5% in 2025 to about 31%, and the proportion in its own bond investment will drop slightly from 72% in 2025 to 71%, corresponding to an investment scale of about 2.2 trillion yuan [25][26]. 3.2.2 Banks - In 2025, the proportion of banks' bond allocation increased significantly. The government bond custody volume of commercial banks was 63.85 trillion yuan, accounting for 67.17% of the outstanding government bonds. The incremental custody of government bonds by commercial banks in 2025 was 10.8 trillion yuan, accounting for 78% of the net financing of government bonds in 2025 [29]. - It is estimated that in 2026, the passive allocation scale of commercial banks for government bonds will be 10.56 trillion yuan, and the scale of bond purchases will be 17.56 trillion yuan. The scale of ultra - long bonds that commercial banks need to undertake may be 4.48 trillion yuan. It is also expected that the excess allocation scale of commercial banks for ultra - long bonds in 2026 will increase slightly to 0.34 trillion yuan compared with last year. Overall, the scale of commercial banks' allocation of ultra - long bonds in 2026 is estimated to be about 4.82 trillion yuan [30][32]. - After the implementation of the redemption new rules at the beginning of this year, part of the banks' entrusted - out investment has been transferred back to self - operated allocation. The probability of using this part of the funds to increase the allocation of ultra - long bonds is not high due to certain indicator pressures [33]. 3.2.3 Trading Institutions - In 2025, securities firms mainly increased their allocation of treasury bonds, reduced their allocation of local bonds, and shortened the duration of government bonds. The investment scale of securities firms in ultra - long bonds decreased by 1.493 billion yuan. In 2026, it is expected that the investment scale of securities firms in ultra - long bonds will be basically the same as in 2025 [40][41]. - At the end of 2025, non - monetary funds held 12.51 trillion yuan in bond investments. In 2025, funds only net - bought 5.82 billion yuan of ultra - long interest - rate bonds. In 2026, due to the implementation of the fund sales new rules and concerns about the cancellation of tax exemption, the liability side of bond - type funds is unstable. It is expected that the investment scale of funds in ultra - long bonds will be higher than that in 2025 but lower than that in 2024, about 10 billion yuan [41][42]. 3.3 Does the 30 - 10 - year term spread depend on primary supply? - The widening of the 30y - 10y treasury bond spread in 2025 mainly occurred in the second half of the year, mainly due to the significant improvement in the stock market sentiment, the fund sales new rules, and the interest - rate adjustment, which led to the selling of ultra - long bonds by trading - like desks. If primary supply were the decisive factor, the spread should have widened in Q2 2025 [45]. - The widening of the 30y - 10y local bond spread also shows that primary supply is not the main influencing factor, as the power of allocation desks is sufficient to hedge the selling pressure [45]. - For the secondary interest - rate trend, the willingness of trading desks to increase holdings and short - term frictions seem to be more crucial [48].