1. Report Industry Investment Rating No information provided in the content. 2. Core Viewpoints of the Report - In the second quarter, the growth rate of fixed - asset investment slowed down. Given the external uncertainties in the second half of the year, the necessity of stabilizing investment has increased. The new policy - based financial instruments proposed in the April Politburo meeting have attracted high market attention. There is a high probability that the instruments will be implemented in the short term, and the third quarter may be the period for the implementation of broad - credit policies, which will affect the bond market sentiment [1][24]. - The risk of crossing the half - year is controllable, but the institutional fund arrangement is relatively slow. The large - bank net lending scale has significantly increased, and the inter - bank cross - quarter fund progress is relatively slow [3]. - Since June, the bond market's spread exploration has shifted from the mid - term to the ultra - long - term. However, investors should flexibly stop losses and realize profits [4]. - In the bond market this week, the LuJiaZui Conference did not meet expectations, and the yield fluctuated within a narrow range. The central bank's OMO continued net withdrawals, and the capital market was balanced and loose. The net financing of national bonds and policy - based financial bonds decreased, while that of local bonds and inter - bank certificates of deposit increased. The term spread of national bonds widened, and that of China Development Bank bonds narrowed [10][54]. 3. Summary According to the Directory 3.1 New Policy - based Financial Instruments: Progress - The necessity of stabilizing investment has increased due to the slowdown of fixed - asset investment growth in the second quarter and external uncertainties in the second half of the year. Since May, local governments have accelerated the project reserve of policy - based financial instruments, with a possible quota of 500 billion yuan, and the support for science and technology and consumption infrastructure construction may be prioritized [1][14]. - Referring to the experience in 2022, it took about two months from the release of the instrument quota to the completion of the investment, with a relatively fast pace. The policy - based financial supply in 2022 had a leverage ratio of over 4.7 times for credit and over 10 times for infrastructure investment [17]. - The third quarter may be the period for the implementation of broad - credit policies, and attention should be paid to the impact on the bond market sentiment [24]. 3.2 Cross - half - year Risk is Controllable, and Institutional Fund Arrangement is Slow - This week, the tax period passed smoothly. After the tax period, the capital sentiment tightened briefly, which may be related to the increase in the bond market leverage level. The central bank's operations remained relatively active, and the reverse - repurchase balance was at a seasonal high [3]. - The large - bank net lending scale has significantly increased, with the single - day net lending scale reaching 5.3 trillion yuan, a record high for the same period. As of June 20, the inter - bank cross - quarter fund progress was 12%, lower than the previous level. The cross - half - year risk is expected to be relatively controllable [28]. 3.3 Bond Market Strategy: Spread Exploration Shifts from the Mid - term to the Ultra - long - term, but Flexibly Stop Losses and Realize Profits - From April to May, the bond market fully explored the spreads of mid - term interest - rate varieties. The spread quantile of mid - term varieties decreased from 75% - 96% to 44% at the end of May, with limited room for further compression [34]. - In June, the spread exploration shifted to the ultra - long - term. The best - performing maturities since April have experienced two rounds of "short - term → mid - term → ultra - long - term" rotation. The recent ultra - long - term market, mainly driven by trading desks such as funds and other products, is due to the strong demand for capital gains in a low - interest - rate environment and the expected opening of the bond - allocation space for insurance companies in the third quarter [4][37]. - Investors should continue to pay attention to the cost - effectiveness of the ultra - long - term bonds and stop losses and realize profits at appropriate times, such as when the ultra - long - term spreads are fully explored, if the central bank announces bond purchases at the end of June, and in July [5]. 3.4 Bond Market Review: The LuJiaZui Conference did not Meet Expectations, and the Yield Fluctuated within a Narrow Range - **Funding**: The central bank's OMO continued net withdrawals, and the capital market was balanced and loose. The weighted price of DR001 fell back to around 1.37%, and the issuance price of 1 - year national - share bank certificates of deposit dropped to 1.63% [11]. - **Primary Issuance**: The net financing of national bonds and policy - based financial bonds decreased, while that of local bonds and inter - bank certificates of deposit increased [59]. - **Benchmark Changes**: The term spread of national bonds widened, and that of China Development Bank bonds narrowed. The short - term performance of national bonds was better than that of the long - term, while the long - term performance of China Development Bank bonds was better than that of the short - term [54].