Core Viewpoint - The bond market pressure is easing, indicating a potential turning point, with government bonds expected to continue their recovery despite structural pressures and external uncertainties [1] Group 1: Bond Market Insights - The ten-year government bond ETF (511260) tracks the Shanghai Stock Exchange 10-year government bond index, with an average duration of 7.6 years [1] - Since its inception, the ten-year government bond ETF has consistently achieved positive annual returns, making it a valuable asset for navigating market cycles [1] - As of the end of Q2, the one-year return rate is 5.88%, the three-year return rate is 16.13%, the five-year return rate is 22.41%, and the cumulative return since inception is 36.68% [1] Group 2: Unique Advantages of the Ten-Year Government Bond ETF - The ETF allows T+0 trading, enabling same-day buying and selling, which is advantageous in a high-volatility market [2] - The ETF has low trading fees, enhancing capital efficiency for investors [2] - The ETF provides transparency with daily published PCF lists, allowing investors to see holdings [2] - Investors can use the ETF for pledge repurchase, allowing access to funds for other investment opportunities while retaining the ability to redeem the ETF later [2]

Group 1 - The core viewpoint of the article indicates that the bond market has shown significant adjustments since August, particularly in the long end, leading to a bearish trend with interest rate adjustments greater than credit [1][2] - The article suggests that two conditions need to be met for a turning point in the bond market: the pessimistic expectations must be fully released, and a widely recognized bullish signal must emerge [1][2] - Current institutional behavior suggests that pessimistic expectations in the bond market may have been largely released, as indicated by a typical adjustment process of gradual decline followed by stabilization [1][2] Group 2 - A clear and widely accepted bullish signal is needed for the bond market to recover, with potential signals including the end of a unilateral upward trend in equities or the bond market developing an independent trend [2][3] - The article discusses three possible bullish signals: the end of the equity market's unilateral rise, the potential for interest rate cuts by the central bank, and the confirmation of a turning point in social financing growth [2][3] - The article predicts that social financing growth may peak around 9.0% in July-August and gradually decline to approximately 8.2% by the end of the year, with government bond issuance pressures expected to decrease [2][3] Group 3 - The sentiment in the bond market appears to have been largely released, with a higher probability of independent trends in both stocks and bonds, while expectations for central bank interest rate cuts require further observation [3] - The 10-year government bond yield is expected to face strong resistance around 1.8%, suggesting potential investment opportunities arising from the current adjustments in the bond market [3]

Group 1: Investment Rating - No investment rating for the report is provided [1][2][6] Group 2: Core Views - Since August, the bond market has undergone significant adjustments, especially in the long - end, with the overall bond market showing a bear - steepening trend, and the interest rate adjustment exceeding that of credit. The market is concerned about the end of the adjustment and the opportunity and scope for the subsequent recovery. The bond market adjustment inflection point requires two conditions: the full release of pessimistic expectations and the emergence of at least one widely - recognized bullish main line [2][6][15] - Currently, the pessimistic expectations in the bond market may have been basically released. Three possible bullish main lines are: the stock and bond markets moving independently, the central bank's potential interest rate cut from the third quarter to the fourth quarter, and the confirmation of the inflection point of the social financing growth rate. Among them, the first and the third scenarios are more likely, while the expectation of the central bank's interest rate cut needs further observation. The current bond market inflection point signal is clear, and the 10 - year Treasury yield may face strong resistance around 1.8%. It is recommended to seize the bond market opportunities arising from the adjustment [2][10][38] Group 3: Summary by Directory 8 - month Bond Market Adjustment - Since August, the bond market has adjusted significantly, with the long - end adjustment being more prominent. From August 1st to 22nd, the 30 - year Treasury yield rose by 13bps to 2.08%, and the 10 - year Treasury yield rose by 8bps to 1.78%, while the short - end 1 - year Treasury yield slightly declined. The adjustment of 5 - year and 10 - year secondary bonds exceeded 10bps, and the adjustment of other credit products was mostly within 5bps [15] Bond Market Pessimistic Expectations - A typical bond market adjustment process is: slow decline - sharp decline - slow decline - stabilization, corresponding to market expectations of doubt - wavering - panic selling - recovery. If public funds conduct large - scale continuous net selling and insurance allocation power significantly increases, it can be judged that the bond market has probably been fully adjusted [10][17] - During the recent bond market adjustment, from June 17th to July 22nd, the bond market declined slowly; from July 23rd to 29th, it declined sharply, with public funds selling large - scale long - term interest - rate bonds and insurance increasing positions; from July 30th to August 8th, the market recovered; from August 11th to 22nd, it adjusted again, with public funds selling long - term interest - rate bonds and insurance increasing positions. The adjustment may have basically ended [18] - The decline in the liability costs of banks and insurance companies has increased the attractiveness of the bond market to allocation investors after the adjustment. When the 10 - year Treasury yield approaches 1.80% and the 30 - year Treasury yield approaches 2.1%, the adjustment momentum weakens [19] Bullish Main Lines - The most likely main line is that the stock market ends its unilateral upward trend, or the bond market moves independently of the stock market. Recently, the bond market has gradually shown independent movements. The stock - bond seesaw effect may not last. The current PMI data indicates that the fundamentals may still be under pressure, and the central bank has maintained ample liquidity, which is conducive to the bond market's independent movement [10][25][26] - Another possible main line is the central bank's potential interest - rate cut from the third quarter to the fourth quarter. Although the Fed's interest - rate cut may open up space for domestic interest - rate cuts, considering the current deep inversion of the Sino - US interest - rate spread, the "domestic - oriented" monetary policy, and the possible "combination - punch" approach of the central bank, this main line needs further clarification [10][28][29] - The third possible main line is the confirmation of the inflection point of the social financing growth rate. Social financing growth has been declining since August and is expected to continue until the end of the year. The social financing growth rate is predicted to reach a peak of about 9.0% from July to August and then gradually decline to about 8.2% by the end of the year. Even if special refinancing bonds are issued, their impact on social financing is only temporary [10][35][38]

Report Industry Investment Rating No relevant content provided. Core View of the Report - In previous bond bull years since 2019 (excluding 2020), the bond market often reached a low point in August. This year, considering fundamentals, institutional behavior, and bond supply, the previous "anti - involution" trading in the bond market has cooled marginally. Related policies will mainly raise the interest rate fluctuation center, and the probability of driving a significant upward movement in interest rates is low. With the central bank's positive attitude towards protecting the capital market, bond market interest rates are expected to remain volatile [5][23]. Summary by Related Catalogs 1. Review of August Market Trends in Previous Years - **2019**: Intensified Sino - US trade friction pushed bond market interest rates down. However, in August, inflation data exceeded expectations, and financial data also exceeded expectations. The Sino - US trade negotiation showed signs of easing, and the TMLF was absent in October, causing bond market interest rates to rise from August to October [7]. - **2021**: The central bank's full - scale reserve requirement ratio cut in early July led to abundant liquidity and a decline in bond market interest rates. In August, the issuance of local bonds increased, and positive signals from the State Council executive meeting and the increase in new re - loan quotas in September raised expectations of broad credit and drove up interest rates [7]. - **2022**: Multiple rounds of reserve requirement ratio cuts and interest rate cuts led to loose liquidity and a decline in bond market interest rates. In August, the State Council executive meeting proposed an additional 300 billion yuan in policy - based and development - oriented financial instruments, and the PMI entered the expansion range in September, causing bond yields to rise [7]. - **2023**: Disappointing economic data in May and multiple interest rate cuts led to a decline in bond market interest rates. Starting from late August, a series of real - estate stabilization policies were introduced, and economic data in August was better than expected, causing bond market interest rates to rise [8]. - **2024**: The central bank's interest rate cut in July drove bond market interest rates down. In August, the Jiangsu branch of the People's Bank of China required rural commercial banks to pay attention to long - bond holding risks, and the central bank's second - quarter monetary policy implementation report mentioned medium - and long - term interest rate risks, causing interest rates to rise [10]. 2. Reasons for the Frequent Appearance of Inflection Points in August 2.1 Fundamental Factors - After the Politburo meeting in July, a series of growth - stabilizing policies are usually introduced around August, leading to a "first - down - then - up" bond market trend. However, based on this year's Politburo meeting, the probability of interest rate cuts in the short term is low, and the possibility of introducing incremental policies this year is small, with limited impact on the bond market [11][12]. 2.2 Institutional Behavior Factors - From September to the fourth quarter, it is usually the redemption period for wealth management products, increasing the pressure on bond market adjustments. The correlation between the stock market and the bond market strengthens during external shocks, but in other cases, the direct impact of the stock market's rise on the bond market is limited, and the suppression of the bond market by the stock market is expected to gradually weaken [14][15]. 2.3 Supply Factors - Around August, the supply of local bonds is usually large, which is negative for the bond market. However, this year, the issuance rhythm of local special bonds has advanced, and the issuance speed from July to September may be relatively smooth, resulting in limited marginal supply pressure on the bond market in August [18][19]. 3. Outlook on the Current Market - **Fundamentals**: The possibility of introducing incremental policies this year is small, with limited impact on the bond market [22]. - **Institutional Behavior**: The bond - allocating power of wealth management products usually declines marginally from August to September, which may put upward pressure on the bond market. The suppression of the bond market by the stock market is expected to gradually weaken [22]. - **Bond Supply**: The marginal supply pressure on the bond market in August is limited [22].