Market Overview and Analysis - The issuance scale of government bonds, local bonds, and policy financial bonds in the primary market last week was 515 billion, 231.6 billion, and 187.5 billion respectively, with net financing amounts of 344.3 billion, 203.2 billion, and 187.5 billion [1][8] - The total issuance scale of non-financial credit bonds was 322.6 billion, with a net financing amount of 151.9 billion. Two new convertible bonds were issued, with an expected financing scale of 2.9 billion [1][8] Secondary Market Review - Interest rates generally declined last week, with long-term bonds and public bonds performing well. Key influencing factors included strong bond allocation demand, increased central bank injections, and stock market fluctuations [2][9] Liquidity Tracking - The net injection in the open market last week was 229.5 billion, with the central bank conducting an excess of 700 billion in MLF, and 150 billion in treasury cash deposits maturing, indicating a relaxed funding environment [3][10] Policy and Fundamentals - The Ministry of Finance stated that the overall fiscal expenditure in 2026 will "only increase, not decrease." The central bank indicated that there is still room for rate cuts and reserve requirement ratio reductions this year. The actual GDP growth for Q4 2025 is projected at 4.5%, with an annual growth of 5% [4][11] Overseas Market - Disputes arose between the US and Europe over Greenland, coupled with Japan's government preparing for fiscal expansion by dissolving the House of Representatives. US and Japanese long-term bond yields rose significantly, while the dollar index fell by 1.9% over the week, and precious metals surged [5][12] Equity Market - The A-share market continued to rise last week, with the total A-share index increasing by 1.81%. The CSI 500 saw a significant rise of 4.34%, while the CSI 300 and SSE 50 fell by 0.62% and 1.54% respectively. The construction, chemical, and real estate sectors led the gains, while communication and banking sectors lagged [6][13] Bond Market Strategy Outlook - The recent recovery in the bond market is essentially a correction of previous overly pessimistic sentiments. However, the urgency for total easing policies remains to be observed as structural policies are gradually implemented. The continuous rise in commodity prices makes short-term inflation expectations difficult to dismiss [7][14] - Attention should be paid to policy signals released during local two sessions and the demand for allocation following the increase in local bond issuance next week. The overall outlook on whether the interest rate center can break downward still requires more confirmation signals [7][14]

Report Investment Rating No investment rating information is provided in the report. Core Viewpoints - Last week (2025.08.25 - 2025.08.29), the bond market continued to fluctuate with improved sentiment, while the stock - bond relationship showed some desensitization. The 1 - year Treasury yield dropped to 1.37%, and the 10 - year yield rose to 1.84%. Credit spreads and term spreads of credit bonds diverged [2][9]. - US Treasury yields declined last week, with the 1 - year yield at 3.83%, the 2 - year at 3.59%, and the 10 - year at 4.23%, due to concerns about Fed independence and strong demand for 2 - year US Treasuries [9]. - The REITs market recovered last week, with the CSI REITs Total Return Index rising 1.06%. The rental housing and consumer infrastructure sectors had the largest rebounds, while the transportation and energy sectors showed defensive characteristics [2][10]. - The approval of "equity - containing" hybrid funds and secondary bond funds has accelerated [2][11]. Summary by Directory 1. Weekly Market Observation 1.1. Pan - Fixed - Income Market Review and Observation - **Bond Market**: Last week, the bond market was volatile with improved sentiment. The 1 - year Treasury yield decreased by 0.09BP to 1.37%, and the 10 - year yield increased by 5.61BP to 1.84%. Credit bonds showed an overall oscillatory recovery, with term spreads and credit spreads diverging. The short - term possibility of further yield decline is low, and the bullish sentiment in the bond market has generally declined. The 10 - year Treasury yield mainly fluctuated between 1.75% - 1.8%. To reduce volatility, one can moderately reduce duration or increase attention to high - coupon assets [2][9]. - **US Treasury Bonds**: Last week, US Treasury yields declined. The 1 - year yield dropped to 3.83%, the 2 - year to 3.59%, and the 10 - year to 4.23%. This was due to concerns about Fed independence after Trump's dismissal of Fed Governor Cook and strong demand for 2 - year US Treasuries [9]. - **REITs Market**: Last week, the REITs market recovered, with the CSI REITs Total Return Index rising 1.06%. The rental housing and consumer infrastructure sectors had the largest rebounds, while the transportation and energy sectors showed low volatility. In the issuance market, 15 REITs have been successfully issued this year as of August 29, 2025. Last week, 2 new - issue and 2 expansion - issue REITs made progress [2][10]. 1.2. Public Fund Market Dynamics - The approval of "equity - containing" hybrid funds and secondary bond funds has accelerated. According to the latest "Institutional Supervision Situation Bulletin" on August 28, 2025, the regulatory authorities have improved the public fund product registration arrangement. The approval speed is set according to the equity position of the product. For example, stock ETFs are registered within 5 working days, active - management equity funds and off - exchange broad - based stock index funds within 10 working days, and hybrid funds and secondary bond funds with a certain minimum stock position within 15 working days. There is also a "rewarding the excellent and supporting the new" regulatory orientation [11]. 2. Pan - Fixed - Income Fund Index Performance Tracking | Index Classification | Last Week | Since Inception | | --- | --- | --- | | Money Enhancement Index | +0.03% | +3.99% | | Short - Term Bond Fund Selection | - 0.03% | +4.15% | | Medium - and Long - Term Bond Fund Selection | +0.07% | +6.21% | | Low - Volatility Fixed - Income + Fund Selection | +0.20% | +3.72% | | Medium - Volatility Fixed - Income + Fund Selection | +0.53% | +4.79% | | High - Volatility Fixed - Income + Fund Selection | +0.23% | +6.29% | | Convertible Bond Fund Selection | - 1.28% | +18.45% | | QDII Bond Fund Selection | +0.20% | +9.13% | 2.1. Money Enhancement Index Tracking - **Index Positioning**: The money enhancement strategy index aims at liquidity management, seeking a curve that outperforms money funds. It mainly invests in money market funds and inter - bank certificate of deposit index funds. The performance benchmark is the CSI Money Fund Index [14]. 2.2. Pure Bond Index Tracking - **Short - Term Bond Fund Selection Index**: It focuses on liquidity management, aiming for a smooth curve with controlled drawdowns. It mainly invests in 5 funds with stable long - term returns, strict drawdown control, and significant absolute - return capabilities. The performance benchmark is 50% Short - Term Pure Bond Fund Index + 50% Ordinary Money Fund Index [15][17]. - **Medium - and Long - Term Bond Fund Selection Index**: It invests in medium - and long - term pure bond funds, aiming for stable returns and controlling drawdowns. It selects 5 funds, balancing coupon strategies and band - trading operations, and adjusting the ratio of credit bond funds and interest - rate bond funds according to market conditions [18]. 2.3. Fixed - Income + Index Tracking - **Low - Volatility Fixed - Income + Selection Index**: The equity center is set at 10%, and 10 funds are selected each period. It focuses on funds with an equity position within 15% in the past three years and recently. The performance benchmark is 10% CSI 800 Index + 90% CBA New Comprehensive Full - Price Index [22]. - **Medium - Volatility Fixed - Income + Selection Index**: The equity center is 20%, and 5 funds are selected each period. It selects funds with an equity position between 15% - 25% in the past three years and recently, emphasizing performance elasticity [25]. - **High - Volatility Fixed - Income + Selection Index**: The equity center is 30%, and 5 funds are selected each period. It selects funds with an equity position between 25% - 35% in the past three years and recently, focusing on performance elasticity and strong stock - picking ability in the equity segment [28]. 2.4. Convertible Bond Fund Selection Index - **Index Positioning**: The sample space consists of bond funds with an average convertible bond investment ratio of at least 60% in the latest period and at least 80% in the past four quarters. An evaluation system is established from multiple dimensions to select 5 funds [30]. 2.5. QDII Bond Fund Selection Index Tracking - **Index Positioning**: The underlying assets of QDII bond funds are overseas bonds, covering regions such as the world, Asia, and emerging markets. Six funds with stable returns and good risk control are selected to form the index [33].

Market Overview - The bond market experienced fluctuations and an upward trend during the week of June 30 to July 4, 2025, with the China Bond Composite Wealth Index (CBA00201) rising by 0.17% and the China Bond Composite Full Price Index (CBA00203) increasing by 0.14% [2][12] - Short-term interest rates showed strong performance, with key yield spreads widening, while credit bond yields generally declined, leading to a narrowing of credit spreads [2][12] - The liquidity in the market improved post-quarter, supporting the bond market's strength, and the demand for coupon assets returned to stability [2][12][13] US Market Dynamics - Strong US non-farm payroll data reduced expectations for interest rate cuts, leading to an upward trend in US Treasury yields [14] - The Federal Reserve's cautious stance and the unexpected strength in employment data contributed to a shift in market sentiment regarding future monetary policy [14] REITs Market Activity - The REITs secondary market saw fluctuations but ultimately rose, with the CSI REITs Total Return Index increasing by 0.66% [15] - Despite some adjustments in the market, the overall trading activity remained robust, indicating a healthy development trend [15] Public Fund Market Developments - The first batch of 10 Sci-Tech Innovation Bond ETFs received approval from the China Securities Regulatory Commission on July 2, 2025, which is expected to provide new credit base options for investors amid a low-interest-rate environment [16][17] Fund Performance Tracking - Short-term bond funds rose by 0.08% last week, with a cumulative return of 4.02% since inception [3] - Medium to long-term bond funds increased by 0.19%, achieving a cumulative return of 6.69% since inception [4] - Low-volatility fixed income plus funds rose by 0.31%, with a cumulative return of 2.79% since inception [5] - Medium-volatility fixed income plus funds increased by 0.54%, with a cumulative return of 2.33% since inception [6] - High-volatility fixed income plus funds rose by 0.40%, achieving a cumulative return of 3.40% since inception [7] - Convertible bond funds increased by 0.74%, with a cumulative return of 10.79% since inception [8] - QDII bond funds decreased by 0.08%, with a cumulative return of 7.87% since inception [9] - REITs funds rose by 1.00%, achieving a cumulative return of 40.41% since inception [10]