Core Viewpoint - The bond market is experiencing a significant "duration extension" trend, particularly driven by public funds aggressively purchasing long-duration bonds, leading to a notable compression in credit spreads for bonds with maturities over five years [1][2][4]. Group 1: Market Trends - Recent weeks have seen a clear trend of extending durations in the bond market, especially in the credit bond sector, which has outperformed the interest rate bond market [2]. - As of June 27, the duration of bond funds has increased from approximately 2.5 years at the beginning of June to over 2.7 years [3]. - The total scale of credit bond ETFs has surged to 214.7 billion yuan, marking a 50% increase since the end of May, with notable growth in specific ETFs [4]. Group 2: Market Sentiment and Risks - Despite the ongoing "bull market" in bonds, there are rising concerns about market overcrowding, with credit spreads nearing historical lows and leverage ratios approaching historical highs [5]. - Analysts express a generally optimistic outlook for the bond market, citing supportive fundamentals such as weak domestic demand and a favorable monetary policy stance from the central bank [5][6]. Group 3: Investment Strategies - It is recommended to maintain a focus on long-duration bonds to capitalize on the anticipated bull market following the quarter-end [7]. - Investors are advised to consider bonds with durations between 3 to 5 years, particularly those with higher yields, while remaining cautious of potential market volatility [8].

Market Overview - The bond market is currently characterized by a "divergence" where both bullish and bearish sides have their own beliefs, leading to a state where yields are difficult to move significantly in either direction[1] - The 10-year government bond yield has decreased to 1.65% (-1bp), while the 30-year bond yield has increased to 1.88% (+2bp) during the week of April 14-18[11] Monetary Policy and Market Conditions - The central bank's actions in March and April have resulted in a more relaxed liquidity environment, with R001 and R007 rates averaging 1.72% and 1.77% respectively, indicating a return to a relatively loose funding environment[22] - The expectation of potential interest rate cuts and reserve requirement ratio reductions is seen as favorable for the bond market, as delays in these measures may prolong downward trends in bond yields[29] Trade Relations and Economic Impact - The ongoing U.S.-China tariff negotiations are expected to be prolonged, with both sides showing significant differences in their positions, which may continue to negatively impact trade relations[30] - Recent data indicates a decline in container throughput and cargo handling at ports, reflecting the adverse effects of increased tariffs on trade volumes[31] Real Estate Policy Expectations - There is a growing expectation for stimulus measures in the real estate sector, including potential policies for housing improvement and mortgage rate cuts, although the implementation may be gradual rather than immediate[4][5] - The current state of the real estate market shows marginal improvements, but the overall impact on the economy remains limited, particularly in second and third-tier cities[33] Investment Strategy - The bond market strategy suggests maintaining a cautious approach with room for duration adjustments, as the average duration of interest rate bond funds has decreased to 3.45 years, reflecting a cautious trading sentiment[6] - The upcoming issuance of 30-year special government bonds is anticipated to create a favorable window for extending duration, although this opportunity may be short-lived due to impending PMI data releases[34]