Summary of Conference Call Notes Industry Overview - The conference call primarily discusses the bond market and its pricing dynamics, highlighting the differences in the current economic environment compared to the previous year [1][4][5]. Key Points and Arguments 1. **Policy Context**: The policy environment on September 22, 2025, differs from September 24, 2024, due to changes in deflation expectations, global financial conditions, and economic growth targets, leading to an expectation of no significant incremental policies [1][4]. 2. **Market Divergence**: The bond market is characterized by a lack of consensus among accounts based on risk preferences. Low-risk accounts focus on interest rate cuts and allocation opportunities, while high-risk accounts are more concerned with potential market risks [1][7]. 3. **Market Status**: The current market is in a state of fluctuation without a clear bull or bear trend, as there is no significant inflow of funds or negative feedback from asset management [1][9]. 4. **Investment Opportunities**: Three short-term investment opportunities are identified: - Steepening of the yield curve, contingent on institutional capabilities in managing long-term positions [10]. - Relative value recovery of national development bonds, limited to the short term [11]. - Secondary market value drop for 3 to 5-year bonds, provided redemption risks are covered [11][13]. 5. **Interest Rate Adjustments**: Recent changes in the 14-day operation interest rates aim to smooth the short-end curve, with a target range of 1.45% to 1.5% [12]. 6. **Liquidity Focus**: The upcoming quarter-end fiscal injections are crucial, as they will provide a stable environment for bank liabilities, suggesting a strategy of holding bonds through the holiday period [14][15]. Additional Important Content - **Market Influencing Factors**: The bond market is influenced by both fundamental economic data and institutional behaviors, with weak economic performance and expectations of central bank actions being significant drivers [3]. - **Expectations from Upcoming Meetings**: The upcoming meetings are expected to focus on the achievements of financial services to the real economy, support for capital market development, and the progress of RMB internationalization, with no major new policies anticipated [6]. - **Risk Management**: Different institutions have varying perspectives on market trends based on their liability stability, affecting their investment strategies [8]. This summary encapsulates the essential insights from the conference call, providing a comprehensive overview of the current bond market dynamics and strategic considerations for investors.

Group 1 - The report from CITIC Securities indicates that the recent performance of domestic stock and bond markets shows signs of a diminishing seesaw effect, suggesting that the risk appetite's suppressive impact on the bond market is weakening [1] - It further states that the continuation of equity market trends requires a supportive liquidity environment, indicating that the performance of the bond market is not necessarily in opposition to equities [1] - The expectation is that the future pricing of the bond market will reflect a dominant self-referential characteristic, comprehensively reflecting the pricing of the funding environment and fundamentals [1]

Summary of Conference Call Notes Industry Overview - The current bond market interest rates fluctuate between 1.85% and 2.0%, significantly influenced by market sentiment, making it difficult to return to the lower bound of 1.6% in the short term [1][2] - Local government bond issuance has increased, with good trading performance, but demand depends on whether the issuance rates can attract cornerstone investors [1][4] - The convertible bond market has recently corrected but is stabilizing with the equity market; however, high-priced convertible bonds' performance relies on the equity market and economic conditions [1][3] Key Points and Arguments - **Bond Market Pricing**: The bond market's interest rates should theoretically be priced based on fundamentals, but actual pricing is influenced by market sentiment and institutional behavior, leading to a wide range of rates [2] - **Convertible Bonds**: The convertible bond market is experiencing weak sentiment, with valuations at historical highs. Future performance will depend on the equity market's stability [3][14] - **Local Government Bonds**: The demand for local government bonds will depend on their issuance rates being attractive enough to draw in cornerstone investors. Current economic data, such as CPI, supports this stability [4][11] - **Institutional Buyers**: Banks, insurance companies, and hedge funds are the main buyers in a weak bond market, but they face challenges such as high funding costs and insufficient policy support [5][6] - **Long-term Bond Rates**: Long-term bond rates need to align with natural rates and general loan rates. The current environment shows a shift from pricing based on interest rate cuts to pricing based on inflation [7][9] Additional Important Insights - **Local Bond Issuance Trends**: Local government bond issuance has concentrated in the third quarter, particularly in August and September, to alleviate fiscal pressure [12] - **Market Opportunities**: There are trading opportunities in the widening yield spreads between 15-year and 10-year local bonds, especially as supply is expected to decrease in the fourth quarter [13] - **Future Market Expectations**: The bond market is expected to experience significant fluctuations in 2026, with a shift in focus from interest rate cuts to inflation points, affecting asset management strategies [10][20] - **Convertible Bond Risks**: Concerns about strong redemption risks in convertible bonds are present, but increased financing demand and regulatory speed may mitigate these risks [19][20] This summary encapsulates the key insights and trends discussed in the conference call, providing a comprehensive overview of the current state and future expectations of the bond market and related sectors.

1. Report Industry Investment Rating No information provided regarding the report industry investment rating. 2. Core Viewpoints of the Report - The issuance rhythm of government bonds in the first half of 2025 was significantly faster than in previous years, with the net financing progress reaching about 58.66% of the annual forecast. The supply pressure of treasury bonds is expected to ease in the second half of the year, while the supply of local bonds is likely to accelerate. The game between the increased supply after the early - trading and policy expectations is the key point in the bond market [8][2][3]. - The net financing peak of government bonds in the second half of the year is expected to be in July - August, and the supply peak may appear as early as late July. By the end of the third quarter, as the supply of government bonds weakens and the "14th Five - Year Plan" nears completion, there may be a new expectation of increased government bond issuance. The 9 - 11 months are the policy observation windows [3][37][40]. 3. Summary According to the Directory 3.1 Treasury Bonds: The Issuance Rhythm is Generally Fast, and the Supply Pressure Tends to Ease in the Second Half of the Year 3.1.1 H1 Review: The Overall Net Financing Progress Exceeds Half, and the Issuance of Special Treasury Bonds is Significantly Ahead - In the first half of 2025, treasury bonds were issued in large quantities, with a cumulative issuance of 7.89 trillion yuan and a net financing of 3.38 trillion yuan. The net financing progress reached 51.45% of the annual forecast, significantly faster than the average level of the past five years [9]. - For ordinary treasury bonds, the issuance was 6.83 trillion yuan, and the net financing was 2.53 trillion yuan, an increase of 343.8 billion yuan year - on - year. The number of issuance periods decreased, and the single - period scale increased [12]. - For special treasury bonds, the issuance was 105.5 billion yuan, and the net financing was 85.5 billion yuan, an increase of 60.5 billion yuan year - on - year. The issuance was ahead of schedule, with 55.5 billion yuan of ultra - long - term special treasury bonds and 50 billion yuan of capital - injection special treasury bonds issued [14]. 3.1.2 H2 Outlook: The Issuance of Special Treasury Bonds is Advanced, and the Supply Pressure of Treasury Bonds is Weakened - It is estimated that about 7.78 trillion yuan of treasury bonds are to be issued in the second half of the year, with an expected net financing of 3.19 trillion yuan. The supply pressure is expected to ease. The issuance of ordinary treasury bonds is about 6.94 trillion yuan, with a relatively stable rhythm. The net financing peaks may occur in August and November [16]. - There are 745 billion yuan of special treasury bonds to be issued, and the single - period scale may increase. The issuance will focus on the peak - shifting effect to relieve the instantaneous issuance impact. The issuance peak of all treasury bonds may be concentrated from July to September, and the net financing peaks may occur in August, September, and November [18][20]. 3.2 Local Bonds: The Main Line of Debt Resolution Switches to Steady Growth, and the Supply is Expected to Accelerate in the Second Half of the Year 3.2.1 H1 Review: Debt Resolution was the Main Line in the First Half of the Year, and the Issuance of New Bonds Accelerated at the End of the Second Quarter - In the first half of 2025, local bonds were issued cumulatively at 5.49 trillion yuan, with a net financing of 4.41 trillion yuan, completing 65.81% of the annual progress. The issuance of new local bonds increased year - on - year, with 452 billion yuan of new general bonds and 2.16 trillion yuan of new special bonds issued [22][24]. - The issuance of local refinancing bonds was mainly for debt resolution, with a total issuance of 2.88 trillion yuan, an increase of 1.21 trillion yuan year - on - year. Among them, the special refinancing special bonds for repaying existing debts were issued at 1.8 trillion yuan [26]. 3.2.2 H2 Outlook: The Supply of Local Bonds is Expected to Accelerate, and the Peak May Come in Late July - As of July 6, the planned issuance of local bonds in the third quarter in 29 provincial - level administrative regions and planned -单列 cities is 2.61 trillion yuan. It is expected that the total supply scale of local bonds in the second half of the year will be about 4.2 trillion yuan, forming a net financing scale of 2.27 trillion yuan. The issuance may accelerate in late July [33][34]. 3.3 Bond Market: The Game between the Increased Supply after the Early - trading and Policy Expectations is the Key Point - The net financing peak of government bonds in the second half of the year is expected to be in July - August, and the supply peak may appear as early as late July. The supply pressure may ease in the fourth quarter, but attention should be paid to the impact of the maturity volume fluctuation of treasury bonds from November to December [37]. - By the end of the third quarter, as the supply of government bonds weakens and the "14th Five - Year Plan" nears completion, there may be a new expectation of increased government bond issuance. Historically, fiscal policies have been dynamically adjusted beyond the initial plan from September to November. The 9 - 11 months are the policy observation windows [40][41]. - The game between the supply pressure change of government bonds and policy expectations is one of the logical main lines of bond - market pricing. The early - trading in the bond market contradicts the actual supply pressure in July - August. There may be a new market expectation of policy efforts from the end of the third quarter to the fourth quarter [50].

Report Overview - Report Title: "Currency Easing Materializes, Bond Market Pricing Weight Shifts Towards Fundamentals" [1] - Report Date: May 8, 2025 - Report Type: Fixed Income Comment Report - Analysts: Lin Jinlu, Tian Xinyu 1) Report Industry Investment Rating - The provided content does not mention the industry investment rating. 2) Report's Core View - The implementation of reserve requirement ratio (RRR) cuts and interest rate cuts indicates that future monetary policy is likely to remain loose. The bond market pricing weight is shifting towards fundamentals. In the short - term, interest - rate bonds may maintain a narrow - range oscillation, while in the long - term, bond yields are expected to decline in an oscillatory manner [3][6]. 3) Summary by Related Content Event Introduction - On May 7, the State Council Information Office held a press conference to introduce the "package of financial policies to support market stability and expectation stabilization." The central bank, the financial regulatory authority, and the China Securities Regulatory Commission proposed specific policy measures [3]. Policy Analysis RRR Cut - The central bank will lower the RRR by 0.5 percentage points, providing about 1 trillion yuan of long - term liquidity to the financial market. After the cut, the average RRR will drop from 6.6% to 6.2%. In April, the central bank also carried out a 120 - billion - yuan outright reverse repurchase operation, with a net MLF investment of 500 billion yuan and a net outright reverse repurchase withdrawal of 500 billion yuan, adjusting the term structure of liquidity injection [4]. Interest Rate Cut - **Policy Interest Rate**: The policy interest rate will be lowered by 0.1 percentage points from 1.5% to 1.4%. It is expected to drive the loan prime rate (LPR) down by 0.1 percentage points. The central bank will also guide commercial banks to lower deposit rates through the interest rate self - regulatory mechanism, which is expected to open up a downward space for capital interest rates [5]. - **Structural Monetary Policy Tool Interest Rates**: All structural monetary policy tool interest rates will be reduced by 0.25 percentage points. Newly established 50 - billion - yuan service consumption and pension relending, an increase in the science and technology innovation and technological transformation relending quota from 50 billion to 80 billion, and an increase in the overall agricultural and small - business relending quota by 30 billion to 300 billion are planned to support economic structural transformation [5]. - **Personal Housing Provident Fund Loan Interest Rate**: The personal housing provident fund loan interest rate will be reduced by 0.25 percentage points. The first - home mortgage rate for terms over 5 years will drop from 2.85% to 2.6%. It is expected to save residents over 20 billion yuan in annual provident fund loan interest, which is beneficial for supporting rigid housing demand and stabilizing the real estate market [5]. Investment Strategy - In the short - term, due to external demand pressure, domestic fundamental instability, and the implementation of RRR cuts and interest rate cuts, interest - rate bonds may maintain a narrow - range oscillation. In the long - term, considering domestic employment, real estate, and population structure issues leading to insufficient demand, bond yields are expected to decline in an oscillatory manner. It is recommended to conduct band trading of 10 - year treasury bonds in the 1.60% - 1.70% range and choose 10 - year active bonds with high liquidity [6].

Core Viewpoint - The recent financial policies announced by Chinese authorities aim to stabilize the market and expectations, with a focus on providing long-term liquidity and lowering interest rates to support economic recovery [1][2]. Group 1: Market Performance - As of May 8, 2025, the 30-year government bond ETF (511090) increased by 0.22%, with the latest price at 124.39 yuan [1]. - The trading volume for the 30-year government bond ETF was 10.76%, with a total transaction value of 1.746 billion yuan, indicating active market trading [1]. - The average daily trading volume for the 30-year government bond ETF over the past month was 9.21 billion yuan, and its latest scale reached 16.193 billion yuan [1]. Group 2: Policy Measures - The People's Bank of China announced a 0.5 percentage point reserve requirement ratio cut, injecting approximately 1 trillion yuan into the market, along with a 0.1 percentage point reduction in policy interest rates [1][2]. - The current economic environment is characterized by external demand pressures and an unstable domestic economic foundation, prompting further policy interventions in the second quarter [2]. Group 3: Investment Characteristics - The 30-year government bond ETF closely tracks the China Bond 30-Year Government Bond Index, which includes publicly issued bonds with maturities of 25 to 30 years [2]. - The ETF serves as an effective tool for portfolio management, offering low trading thresholds and high trading efficiency, with a minimum transaction unit of 100 shares, approximately 10,000 yuan [3]. - Multiple market makers provide liquidity for the ETF, ensuring immediate transaction execution and ample counterparty availability [3].

Report Summary 1. Report Industry Investment Rating No investment rating information is provided in the report. 2. Core Viewpoints - Standing at the end of April and looking forward to May, investors' preference for long - term and ultra - long - term bonds has increased, while their attention to credit products has decreased month - on - month, but there may be a characteristic of "being bullish but not taking action" [1][10]. - According to the bond market survey questionnaire results released at the end of April, six mainstream expectations of investors for the May bond market are summarized: preference for long - term and ultra - long - term bonds has increased significantly; Trump's tariff policy may promote the early implementation of reserve requirement ratio (RRR) and interest rate cut policies, and the positive impact on the bond market can continue; the current expectation of monetary easing is still strong, with most investors expecting an RRR cut in May - June and an interest rate cut more likely in the third quarter; most investors believe that the bond market will strengthen overall in May, and the probability of a bull - flattening curve is high; most investors' judgments on the operating ranges of 10 - year and 30 - year Treasury bond yields are narrow, and the market is expected to be mainly volatile; in terms of operations, most investors are neutral in practice and prefer to keep their positions basically stable, possibly showing "being bullish but not taking action" [1][10]. 3. Summary by Relevant Catalogs 3.1 Survey Background - A bond market questionnaire "What to expect from the May bond market?" was released on April 25, 2025, targeting the main concerns of the May 2025 bond market. As of 24:00 on April 27, a total of 331 valid questionnaires were received, covering various institutional investors such as bank self - operation, securities firm self - operation, public funds/special accounts, and individual investors [8]. 3.2 Expectations for Treasury Bond Yields - **10 - year Treasury Bond Yields**: 48% of investors think the lower limit of the 10 - year Treasury bond rate is below 1.60%, and 45% think it is between 1.60% - 1.70% (inclusive). 76% of investors believe the upper limit of the 10 - year Treasury bond rate may be within 1.80%, and 11% think it may be between 1.80% - 1.85% (inclusive). Most investors expect the bond market in May to trade around the tariff policy, and the 10 - year Treasury bond rate is unlikely to return to the previous high in April [11]. - **30 - year Treasury Bond Yields**: 41% of investors think the lower limit of the 30 - year Treasury bond operating range in May will be less than 1.8%, and 43% think it is between 1.80% - 1.85% (inclusive). 53% of investors believe the upper limit of the 30 - year Treasury bond operating range in May is between 1.90% - 2.00% (inclusive), and 31% think it is within 1.90%. The overall bond market in May may be volatile and slightly stronger [14]. 3.3 Expectations for the Second - Quarter Economic Trend - 62% of investors think the economic trend in the second quarter will be "both year - on - year and month - on - month weakening", a significant increase compared with the April questionnaire results. 22% of investors think it will show the characteristic of "year - on - year recovery but month - on - month weaker than the seasonal level". 10% of investors think it will be "year - on - year recovery and month - on - month in line with the seasonal level", and 5% think it will be "year - on - year recovery and month - on - month exceeding the seasonal level", a significant decrease compared with the April questionnaire results. The deviation between the economic fundamental expectation and the reality needs a certain verification period [19]. 3.4 Expectations for RRR and Interest Rate Cuts - **RRR Cut**: 66% of investors think an RRR cut will occur in May - June, and 17% think it will be in the third quarter. Investors have a high expectation for an RRR cut and expect it to happen earlier [21]. - **Interest Rate Cut**: 49% of investors think an interest rate cut will occur in the third quarter, 31% think it will be in May - June. 12% of investors think there will be no interest rate cut in 2025. Investors' expectation for an interest rate cut has further strengthened, and the proportion of those who think there will be no interest rate cut in 2025 has decreased significantly [21]. 3.5 Impact of Trump's Tariff Policy on the Bond Market - 46% of investors think it may promote the early implementation of RRR and interest rate cut policies, and the positive impact on the bond market can continue. 27% think the subsequent focus will be on the expectation of tariff policy cooling, and the positive impact on the bond market has ended. 15% think it may trigger non - US countries to impose tariffs on China, and the positive impact on the bond market can continue. 12% think it may strengthen the policy - makers' determination to stabilize the capital market, and the positive impact on the bond market has ended. Overall, investors generally think the subsequent impact of Trump's tariff policy on the bond market is still positive [23]. 3.6 Expectations for the May Bond Market行情 - 27% of investors think the interest rate curve will strengthen overall and show a bull - flattening trend in May. 26% think it will strengthen overall and show a bull - steepening trend. 16% think it is difficult to judge the trend of the interest rate curve in May. 10% think the short - end of the interest rate curve will be strong and the long - end will be weak, and 10% think the short - end will be weak and the long - end will be strong. Overall, more investors are optimistic about the May bond market, but there is some divergence between the expectations of a bull - flattening and a bull - steepening curve [25]. 3.7 Bond Market Operation Suggestions - 49% of investors think they should keep their positions basically stable. 23% think they should hold cash and wait, and then add positions after the market回调 to the expected level. 13% think they can start adding positions. 11% think they should take appropriate profits and reduce positions. 4% think they should reduce the duration to control risks. Most investors are neutral in practice, and keeping positions stable is the mainstream view [29]. 3.8 Preferred Bond Varieties in May - 18% and 17% of investors think the opportunities for long - term and ultra - long - term interest - rate bonds are relatively certain. 15%, 10%, and 10% of investors are more optimistic about medium - short - term interest - rate bonds, inter - bank certificates of deposit, and local government bonds respectively. About 9% of investors prefer medium - low - grade urban investment bonds. Investors have a higher preference for interest - rate products such as interest - rate bonds, certificates of deposit, and government bonds, and their preference for credit products has decreased month - on - month. The preferred varieties have shifted from the short - end to the long - end and ultra - long - end [32]. 3.9 Main Logic of Bond Market Pricing in May - 31% of investors think the central bank's monetary policy attitude and the trend of the capital market are still the main pricing logics for the May bond market. 16% and 15% of investors think fiscal stimulus, government bond issuance, and fundamental data such as real estate and PMI are the main pricing logics. 13% of investors think the implementation of the US tariff policy is the main pricing logic. The central bank's monetary policy attitude and the trend of the capital market are still the most concerned factors for investors [34].