1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - After the holiday, the bond market strengthened. With the recent escalation of Sino - US trade frictions, on October 11, interest rates declined, and the long - term bond yields of 10Y and 30Y national bonds fell below 1.75% and 2.10% respectively, increasing the market's long - buying expectations [5][11]. - In the case of tariff war escalation, interest - rate bonds are more cost - effective overall, followed by perpetual secondary bonds. The impact of tariff shocks on the bond market is mostly one - time, presenting mainly trading opportunities. If priced within 2 trading days, the overall benefit is within 5bp [5][11]. - Recent institutional behaviors support a wave of long - buying opportunities for interest rates. Banks are continuously buying bonds on the left side, funds have emptied their ultra - long bond positions, and securities firms are closing their positions, all of which are positive for the bond market [5][12]. - Large banks are extending the duration of their bond investments. Their increased buying of 7 - 10Y national bonds since the end of September reduces the upward space for interest rates [5][12]. - Compared with the tariff shock in April, the current funds are looser. The long - short term spread has opened up the downward space for interest rates. If the central bank's trading of national bonds is implemented, the interest - rate center may decline overall [5][13]. 3. Summary According to Relevant Catalogs 3.1 Trade Frictions and Interest - Rate Opportunities 3.1.1 Opportunities in Interest Rates under Tariff War Escalation - In the tariff war escalation scenario, from an odds perspective, interest - rate bonds are more cost - effective, followed by perpetual secondary bonds. The impact of tariff shocks on the bond market is mainly trading - oriented, and if priced within 2 trading days, the benefit is within 5bp [5][11]. - Institutional behaviors support long - buying opportunities for interest rates. Banks are buying on the left side, funds have "nothing left to sell", and securities firms are closing positions [5][12]. - Large banks are extending the duration of their bond investments, reducing the upward space for interest rates. The current funds are looser, and the long - short term spread has opened up the downward space for interest rates [5][12][13]. 3.1.2 Yield Curve - Compared with September 26, as of October 10, the yields of national bonds and China Development Bank bonds declined overall. For national bonds, the 1Y - 15Y yields mostly declined, while the 30Y yield rose. For China Development Bank bonds, the 1Y - 10Y yields mostly declined, and the 15Y and 30Y yields rose [14][15][16]. 3.1.3 Term Spread - Compared with September 26, as of October 10, the spreads of national bonds (1Y - DR001, 1Y - DR007) increased, and the spreads of China Development Bank bonds showed a differentiated trend. The short - term term spread narrowed, and the long - term spread widened [17]. 3.2 Bond Market Leverage and Funding Situation 3.2.1 Leverage Ratio - From September 29 to October 10, the leverage ratio fluctuated and declined. As of October 10, it dropped to 107.07% [19]. 3.2.2 Repurchase Transaction Volume - From September 29 to October 10, the average daily trading volume of pledged repurchase was 6.3 trillion yuan, with an average daily overnight trading volume accounting for 68.96%. Compared with the week from September 22 to September 26, both the overall volume and the overnight volume decreased [23][24]. 3.2.3 Funding Situation - From September 29 to October 10, the funds lent by banks first decreased and then increased. The net lending of large and policy banks on October 10 was 4.6 trillion yuan, and the net borrowing of joint - stock, city, and rural commercial banks was 0.95 trillion yuan. The main borrowing party was securities firms, and the lending of money market funds fluctuated and increased. DR007 and R007 declined, and 1YFR007 and 5YFR007 first decreased and then increased [27]. 3.3 Duration of Medium - and Long - Term Bond Funds 3.3.1 Median Duration of Bond Funds (Including Leverage) - As of October 10, the median duration of medium - and long - term bond funds (including leverage) dropped to 2.66 years, and the median duration (excluding leverage) was 2.60 years. Both were lower than those on September 26 [40][41]. 3.3.2 Median Duration of Interest - Rate Bond Funds (Including Leverage) - As of October 10, the median duration of interest - rate bond funds (including leverage) dropped to 3.48 years, and the median duration of credit bond funds (including leverage) dropped to 2.39 years. The median durations (excluding leverage) of interest - rate and credit bond funds also decreased compared with September 26 [46]. 3.4 Comparison of Generic Strategies 3.4.1 Sino - US Interest - Rate Spread - As of October 10, the Sino - US interest - rate spread showed a narrowing trend, and the inversion of the spread between the 10Y Chinese national bond and the 10Y US national bond improved [49]. 3.4.2 Implied Tax Rate - As of October 10, the implied tax rate (the spread between China Development Bank bonds and national bonds) generally widened, and the spread between the 10Y China Development Bank bond and the 10Y national bond rose to 19bp [50]. 3.5 Changes in Bond Lending Balances - As of October 10, the bond lending balance of the 10Y national bond 250011.IB recovered, and the bond lending balance of the 30Y national bond 2500002.IB maintained a volatile trend [51].