1. Report Industry Investment Rating No information provided in the content. 2. Core Views of the Report - The market anticipates regulatory adjustments to the inter - bank certificate of deposit (CD) quota management method, potentially integrating it with other financial bond quotas. If implemented, the bank's liability - side financing structure may adjust, with a long - term trend of reduced CD supply and a short - term possibility of some banks increasing CD issuance [2]. - The bond market's trading theme may shift back to marginal changes in the domestic liquidity environment. With the central bank's continuous support for liquidity and the fading of cross - quarter factors, the bond market may enter a phased "buying window." The next potential disruptions are the April tax period and the issuance of ultra - long - term special treasury bonds [2][90]. - In terms of strategy, it is recommended to moderately increase the aggressiveness of the portfolio, maintain a portfolio duration of 3 - 5 years, and appropriately increase trading positions in long - term and ultra - long - term bonds. Specific bond varieties such as 250003 and 260003 are recommended, and trading opportunities for 250016, 250022, and 260005 can be noted [2][90]. 3. Summary by Relevant Catalogs 3.1 Important Matters - On March 25, 2026, the central bank conducted 500 billion yuan of 1 - year MLF operations, with a net injection of 5 billion yuan. As of March 2026, MLF has achieved net injections for 13 consecutive months [5]. - On March 27, 2026, the central bank held a financial stability work meeting, emphasizing the need to prevent and resolve systemic financial risks, dispose of key - area financial risks, and strengthen the financial stability guarantee system [9]. 3.2 Money Market 3.2.1 Open Market Operations and Fund Rate Trends - From March 23 to March 27, 2026, the central bank conducted 7 - day reverse repurchase operations, injecting a total of 474.2 billion yuan, with 242.3 billion yuan maturing, resulting in a net injection of 231.9 billion yuan. From March 30 to April 3, 2026, it is expected that 474.2 billion yuan of base currency will be matured and withdrawn [10][11]. - As the cross - quarter period approached last week, the funding situation tightened marginally, with R007 rising above 1.5%. As of March 27, 2026, R001, R007, DR001, and DR007 were 1.387%, 1.507%, 1.318%, and 1.440% respectively, with changes of - 0.90BP, 3.00BP, - 0.28BP, and 1.89BP compared to the close on March 23 [16]. 3.2.2 CD Rate Trends and Repurchase Transaction Situations - In the primary market, last week's inter - bank CD issuance volume was 772.02 billion yuan, with a net financing volume of 73.82 billion yuan. The CD issuance volume of city commercial banks was the largest, with a net financing volume of 47.6 billion yuan. The issuance rates of inter - bank CDs of various banks decreased compared to the previous week [21][23][25]. - In the secondary market, affected by the approaching quarter - end, the overall yield of inter - bank CDs increased. The yield of AAA - rated 1 - month inter - bank CDs decreased by 3.00BP to 1.43%, while the yields of 3 - month, 6 - month, 9 - month, and 1 - year inter - bank CDs increased [27]. 3.3 Bond Market 3.3.1 Primary Market - Last week, 97 interest - rate bonds were issued, with an actual issuance amount of 664.559 billion yuan, a maturity amount of 405.651 billion yuan, and a net financing amount of 258.907 billion yuan. In March 2026, the issuance pace of treasury bonds was slightly behind that of local bonds, but the issuance scales of both were higher than the average levels of the same period from 2022 - 2025 [30]. - As of March 27, 2026, the cumulative net financing scale of special refinancing bonds in 2026 reached 950 billion yuan, mainly in long - term and ultra - long - term tenors. Regions with relatively large issuance scales include Jiangsu, Henan, Sichuan, Inner Mongolia, and Zhejiang [40]. 3.3.2 Secondary Market - Last week, in a weak equity market, long - term bonds performed better overall, and the 10 - 1 - year treasury bond term spread narrowed. The turnover rate of the 10 - year treasury bond active bond increased, while that of the 10 - year CDB bond active bond (250220) decreased [30][44][47]. - The 10 - 1 - year treasury bond term spread reached 56.54BP, and the 30 - 1 - year treasury bond term spread widened to 109.79BP. The spreads between long - term local bonds and long - term treasury bonds and between ultra - long - term local bonds and ultra - long - term treasury bonds widened overall last week [57][59]. 3.4 Institutional Behavior Tracking - Last week, the overall scale of leveraged trading decreased as the quarter - end approached, with an average of about 794 billion yuan. In the cash bond market, large banks became net sellers, small and medium - sized banks adjusted their bond - holding structures, insurance companies' overall buying strength declined marginally, securities firms' selling scale decreased, and funds continued to prefer policy - based financial bonds [63][74]. - In February 2026, the leverage ratio of all institutions in the inter - bank market was about 118.41%, a decrease of about 0.89 percentage points compared to January 2026. The leverage ratios of commercial banks, securities firms, and other institutions in the inter - bank market were about 110.72%, 189.40%, and 130.57% respectively [63]. 3.5 High - Frequency Data Tracking - Last week, the settlement price of rebar futures decreased by 0.58% week - on - week, the settlement price of wire rod futures remained flat, the settlement price of cathode copper futures increased by 1.22% week - on - week, the cement price index increased by 0.91% week - on - week, and the Nanhua Glass Index decreased by 1.67% week - on - week [88]. - The CCFI index increased by 1.64% week - on - week, and the BDI index decreased by 1.22% week - on - week. The wholesale price of pork decreased by 1.56% week - on - week, and the wholesale price of vegetables decreased by 1.85% week - on - week. The settlement prices of Brent crude oil futures and WTI crude oil futures decreased by 3.73% and 3.91% respectively week - on - week. The central parity rate of the US dollar against the RMB was 6.91 [88][89]. 3.6 Market Outlook - Looking ahead, the inflation trading driven by geopolitical conflicts is gradually cooling down, and the bond market's trading theme may return to marginal changes in the domestic liquidity environment. With the central bank's continuous support for liquidity and the fading of cross - quarter factors, the bond market may enter a phased "buying window." Attention should be paid to the April tax period and the issuance pace of ultra - long - term special treasury bonds [2][90]. - In terms of strategy, it is recommended to moderately increase the aggressiveness of the portfolio, maintain a portfolio duration of 3 - 5 years, and appropriately increase trading positions in long - term and ultra - long - term bonds. Specific bond varieties such as 250003 and 260003 are recommended, and trading opportunities for 250016, 250022, and 260005 can be noted [2][90].

Core Viewpoint - The probability of interest rate cuts within the year has decreased, and demand-side policies may sustain inflation expectations, leading to continued pressure on the bond market, with the window for bullish positions likely pushed further back [1] Group 1: Interest Rate Cut Probability - The probability of interest rate cuts has further declined due to the "fiscal substitution for monetary policy, structural substitution for total volume, and expectation management" effects [7] - Fiscal subsidies are equivalent to targeted interest rate cuts, reducing the necessity for central bank total monetary policy tools [7] - The personal consumption loan subsidy policy is expected to last until August 31, 2026, with the next potential interest rate cut window likely pushed to the first quarter of 2026 [2][21] Group 2: Inflation Expectations - The "anti-involution" policy has reinforced inflation expectations through a path of supply contraction leading to price signals and self-reinforcing expectations [12] - The market has begun to draw parallels with the supply-side reform of 2016, betting on re-inflation, although the sustainability of inflation narratives based solely on supply contraction may be weak [18] - Demand-side policies, including the personal consumption loan subsidy, are expected to provide better support for price increase expectations, further boosting the "anti-involution" trade [18] Group 3: Bond Market Outlook - The bullish window for the bond market may be pushed further back due to the combination of fiscal support and structural interest rate cuts, significantly compressing the central bank's total monetary policy easing space [21] - The strong performance of the equity market in the short term may continue to exert pressure on the bond market, with the yield on the 10-year government bond surpassing 1.73% [21] - The probability of a steepening yield curve is increasing, with long-term bonds likely to be more significantly pressured by the equity market [21]