Core Viewpoint - The article discusses the recent behavior of institutional investors in the bond market, highlighting a slight increase in the duration of bond funds and a decrease in leverage ratios within the bond market [2] Group 1: Institutional Behavior - Institutional investors have slightly increased the duration of bond funds, indicating a potential shift in investment strategy towards longer-term bonds [2] - The leverage ratio in the bond market has decreased, suggesting a more cautious approach by institutions in their investment practices [2] Group 2: Market Implications - The changes in duration and leverage may reflect broader market conditions and investor sentiment, potentially impacting future bond yields and market stability [2]

Group 1: Report Industry Investment Rating - No information provided in the report Group 2: Core Viewpoints of the Report - In February 2026, the total bond custody scale increased by 103.83 billion yuan month - on - month, with local government bond custody increasing by nearly 1 trillion yuan and the decline in inter - bank certificate of deposit custody narrowing. The bond market was in a strong and volatile state, with the valuation yields of 10 - year and 30 - year treasury bonds breaking through 1.8% and 2.3% respectively. Although banks' bond - allocation demand was strong, non - bank institutions still had differences in the market outlook, and the market was still full of twists and turns [3][10][12] - The bond market leverage ratio decreased by 0.1 pct to 107.8% in February, remaining at a relatively low level in recent years. The bank leverage ratio decreased by 0.1 pct to 103.1%, and the non - bank institution leverage ratio increased by 0.2 pct to 119.2%, remaining at a neutral level since 2022 [4][50] Group 3: Summary of Each Section 1. February: Bond Custody Increment Rebounds with Large - scale Local Government Bond Issuance and Decreased Net Repayment of Certificates of Deposit - The total bond custody scale increased by 103.83 billion yuan month - on - month, with local government bond custody increasing by nearly 1 trillion yuan and the decline in inter - bank certificate of deposit custody narrowing by nearly 40 billion yuan. In terms of interest - rate bonds, the local government bond issuance scale increased significantly, the treasury bond issuance and maturity scale both decreased, and the policy - financial bond issuance scale declined significantly. In terms of credit bonds, the issuance scale of commercial paper and medium - term notes decreased, and the enterprise bond custody scale decline narrowed [10] 2. General Funds Increase Holdings of Interest - rate Bonds, and Commercial Banks' Willingness to Actively Increase Allocations Weakens after Interest Rate Decline 2.1 General Funds - In February, the bond custody of general funds decreased by 17.19 billion yuan month - on - month, with the decline significantly narrowing by 53.56 billion yuan compared with the previous month. The scale of holdings of local government bonds increased, and the scale of reduction of treasury bonds, policy - financial bonds, and inter - bank certificates of deposit decreased [14] 2.2 Securities Companies - In February, the bond custody scale of securities companies increased by 0.93 billion yuan, with the increase declining by 6.07 billion yuan compared with the previous month. They reduced their holdings of policy - financial bonds, Financial bonds on SHCHE, and treasury bonds, increased their reduction of medium - term notes, but increased their holdings of local government bonds and inter - bank certificates of deposit [25] 2.3 Insurance Companies - In February, the bond custody scale of insurance companies decreased by 3.11 billion yuan month - on - month, with the decline widening by 2.27 billion yuan compared with the previous month. They increased their reduction of Financial bonds on SHCHE and policy - financial bonds, started to reduce their holdings of treasury bonds, inter - bank certificates of deposit, and medium - term notes, but increased their holdings of local government bonds [30] 2.4 Overseas Institutions - In February, the bond custody scale of overseas institutions decreased by 3.04 billion yuan month - on - month, with the decline narrowing by 7.74 billion yuan compared with the previous month. They increased their holdings of treasury bonds, increased the scale of holdings of policy - financial bonds, and decreased the scale of reduction of inter - bank certificates of deposit [32] 2.5 Other Institutions - In February, the bond custody of other institutions increased by 58.43 billion yuan month - on - month, with the increase expanding by 32.52 billion yuan compared with the previous month. They increased their holdings of treasury bonds and local government bonds, decreased their reduction of inter - bank certificates of deposit, and started to reduce their holdings of policy - financial bonds [36] 2.6 Commercial Banks - In February, the bond custody of commercial banks increased by 80.25 billion yuan month - on - month, with the increase narrowing by 32.13 billion yuan compared with the previous month. After excluding the impact of outright repurchase, the bond - increasing scale of banks remained at a high level. They decreased their holdings of treasury bonds, commercial paper, and policy - financial bonds, started to reduce their holdings of medium - term notes, increased their holdings of local government bonds, and started to increase their holdings of inter - bank certificates of deposit [42] 2.7 Credit Unions - In February, the bond custody scale of credit unions decreased from an increase of 7.97 billion yuan in the previous month to a decrease of 14.93 billion yuan. They started to reduce their holdings of treasury bonds, policy - financial bonds, and local government bonds [43] 3. In February, the Leverage Ratio of Non - bank Institutions Rebounds but Remains at a Neutral Level Overall - In February, the bond market leverage ratio decreased by 0.1 pct to 107.8%, remaining at a relatively low level in recent years. The bank leverage ratio decreased by 0.1 pct to 103.1%, and the non - bank institution leverage ratio increased by 0.2 pct to 119.2%, remaining at a neutral level since 2022 [50]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The overall leverage ratio of the bond market decreased in February 2026, and it is expected that the target range of the 10 - year Treasury bond yield will be 2 - 3%, with a central value of around 2.5% [8]. - The economic recovery in early 2026, combined with possible loose credit and fiscal policies, will accelerate the cyclical upturn. If there are loose monetary policies, bond yields may decline briefly and then rise. Inflation is expected to pick up, and attention should be paid to whether the month - on - month increase in PPI can remain positive. If inflation rises month - on - month, there is a possibility of tightened funds, and short - term bond yields will also start to rise. Real estate is a lagging indicator and may bottom out after the recovery of various economic indicators and the rise of the stock market [8]. 3. Summary by Relevant Catalogs Overall Bond Custody - The total bond custody volume of Shanghai Clearing House and China Central Depository & Clearing Co., Ltd. (CCDC) in February 2026 was 180.35 trillion yuan, with a net monthly increase of 1.038335 trillion yuan, and the month - on - month increase rebounded. The custody volume of Shanghai Clearing House decreased by 215.928 billion yuan, and the decrease was more than that in January. The custody volume of CCDC increased by 1.254263 trillion yuan, and the month - on - month increase continued to rise [4][5]. Bond Types - In Shanghai Clearing House, credit bonds contributed the main increase in February, with a net monthly increase of 16.183 billion yuan; corporate credit - related bonds increased by 38.683 billion yuan; interest - rate bonds decreased by 7 billion yuan; negotiable certificates of deposit (NCDs) decreased by 259.02 billion yuan. In CCDC, local government bonds contributed the main increase, with a net monthly increase of 999.629 billion yuan; interest - rate bonds increased by 1.294138 trillion yuan; credit bonds decreased by 39.875 billion yuan. Overall, interest - rate bonds contributed the main increase. The custody volume of interest - rate bonds was 125.51 trillion yuan, with a net monthly increase of 1.287138 trillion yuan; the custody volume of credit bonds was 34.12 trillion yuan, with a net monthly decrease of 19.446 billion yuan; the custody volume of NCDs was 18.77 trillion yuan, with a net monthly decrease of 259.02 billion yuan [6]. Institutions - In Shanghai Clearing House, policy banks and deposit - taking financial institutions increased their bond holdings, with net monthly increases of 7.23 billion yuan and 126.445 billion yuan respectively. Insurance, securities, broad - based funds, and overseas institutions had negative net increases, which were - 31.21 billion yuan, - 19.822 billion yuan, - 216.392 billion yuan, and - 75.992 billion yuan respectively. In CCDC, commercial banks were the main force in increasing bond holdings, with a net monthly increase of 693.31 billion yuan. The custody volume of rural credit cooperatives decreased by 166.56 billion yuan. Overall, commercial banks were the main force in increasing bond holdings. The custody volume of commercial banks was 96.35 trillion yuan, with a net monthly increase of 800.668 billion yuan; the custody volume of securities companies was 3.23 trillion yuan, with a net monthly increase of 9.27 billion yuan; the custody volume of broad - based funds was 47.98 trillion yuan, with a net monthly decrease of 171.878 billion yuan; the custody volume of overseas institutions was 3.32 trillion yuan, with a net monthly decrease of 30.372 billion yuan [7]. Leverage - The overall leverage ratio of the bond market in February was 106.82%, a month - on - month decrease. By institution, the leverage ratios of commercial banks, non - bank institutions, and securities companies all decreased. The leverage ratio of commercial banks was 104.81%, a month - on - month decrease of 0.18 percentage points; the leverage ratio of non - bank institutions was 109.25%, a month - on - month decrease of 0.48 percentage points; among them, the leverage ratio of securities companies was 142.14%, a month - on - month decrease of 0.96 percentage points [8].

1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints of the Report - In January 2026, the total bond custody scale increased by 75.76 billion yuan month - on - month, with the interest - rate bond custody increment rising significantly. The credit - bond custody increment also increased due to the net financing of short - term commercial paper, while the inter - bank certificate of deposit (NCD) custody scale continued to decline. The domestic bond interest rates first rose and then fell. Commercial banks were the most important driving force for the market to stabilize, with large - scale purchases that pushed interest rates down, while the broad - based funds' reduction in bond holdings reached a three - year high [3][9]. - The bond market leverage ratio increased slightly in January, still at a relatively low level in recent years. Among institutions, the leverage ratio of commercial banks and non - bank institutions increased, with securities companies significantly increasing leverage and the broad - based funds remaining stable [4][54]. 3. Summary by Relevant Catalogs 3.1 1 January: Interest - rate Bond Net Financing Significantly Rebounded, Driving the Custody Scale Higher, but NCDs Continued Net Repayment - The total bond custody scale increased by 75.76 billion yuan month - on - month, 45.5 billion yuan more than in December. The interest - rate bond custody increment was 107.85 billion yuan, about 38 billion yuan higher than the previous month. The custody increments of local bonds, treasury bonds, and policy - financial bonds all increased. The short - term commercial paper turned to net financing, leading to an increase in the credit - bond custody increment. The NCD custody scale decreased by 65.62 billion yuan month - on - month, with the decline expanding by 3.38 billion yuan compared to the previous month [3][9]. 3.2 The Reduction Scale of Broad - based Funds Reached a Three - year High, and Commercial Banks' Active Allocation Drove the Market to Stabilize 3.2.1 Broad - based Funds - In January, the bond custody volume of broad - based funds decreased by 70.75 billion yuan month - on - month, with the decline significantly expanding by 60.82 billion yuan compared to the previous month, reaching a new high since the beginning of 2023. They mainly reduced their holdings of policy - financial bonds, and increased the reduction scale of NCDs and treasury bonds [18]. 3.2.2 Securities Companies - The bond custody volume of securities companies increased from a decrease of 230 million yuan in the previous month to an increase of 699 million yuan in January. They mainly increased their holdings of policy - financial bonds and started to increase their holdings of financial bonds on the Shanghai Clearing House, but reduced their holdings of local bonds and credit - asset - backed securities [27]. 3.2.3 Insurance Companies - The bond custody volume of insurance companies decreased from an increase of 400 million yuan in the previous month to a decrease of 84 million yuan in January. They reduced their increase in holdings of treasury bonds and NCDs, started to reduce their holdings of local bonds and financial bonds on the Shanghai Clearing House, but decreased the reduction scale of policy - financial bonds and started to increase their holdings of medium - term notes [31][33]. 3.2.4 Overseas Institutions - The bond custody scale of overseas institutions decreased by 10.78 billion yuan month - on - month in January, with the decline narrowing by 4.31 billion yuan compared to the previous month. They mainly decreased the reduction scale of NCDs and started to increase their holdings of policy - financial bonds [35]. 3.2.5 Other Institutions - The bond custody of other institutions increased by 25.91 billion yuan month - on - month in January, with the increase expanding by 7.66 billion yuan compared to the previous month. They started to increase their holdings of policy - financial bonds but decreased their increase in holdings of local government bonds and treasury bonds and started to reduce their holdings of NCDs [39]. 3.2.6 Commercial Banks - The bond custody scale of commercial banks increased by 112.38 billion yuan month - on - month in January, with the increase expanding by 25.73 billion yuan compared to the previous month. They mainly increased their holdings of local bonds and treasury bonds, started to increase their holdings of short - term commercial paper, and decreased the reduction scale of NCDs and commercial - bank bonds [45]. 3.2.7 Credit Unions - The bond custody scale of credit unions increased from a decrease of 982 million yuan in the previous month to an increase of 797 million yuan in January. They mainly started to increase their holdings of NCDs, policy - financial bonds, and treasury bonds and increased their increase in holdings of local bonds [46]. 3.3 In January, the Bond Market Leverage Ratio Slightly Rebounded, Slightly Exceeding Seasonality, with Securities Companies Increasing Leverage and Broad - based Funds Remaining Stable - In January, the bond market leverage ratio increased by 0.1 percentage points month - on - month to 107.9%, still at a relatively low level in recent years. The leverage ratio of commercial banks increased by 0.2 percentage points to 103.2%, and the leverage ratio of non - bank institutions increased by 0.1 percentage points to 119.0%. Among non - bank institutions, the leverage ratio of securities companies increased by 6.4 percentage points to 223.7%, while the leverage ratios of insurance and non - legal - person products remained basically flat at 115.8% [4][54].

Core Insights - The report highlights a decrease in the bond custody amount at the Shanghai Clearing House, with a total of 49.71 trillion yuan at the end of January, down from 49.88 trillion yuan, reflecting a net decrease of 176.29 billion yuan [5][7][8] - The total bond custody amount at both the Shanghai Clearing House and China Central Depository & Clearing Co., Ltd. (CCDC) increased to 179.31 trillion yuan, with a net increase of 757.62 billion yuan [7][8] - The report indicates that the overall leverage ratio in the bond market remained stable at 107.14% in January, with commercial banks being the main contributors to bond purchases [11][12] Total Research - The Shanghai Clearing House's bond custody amount decreased by 176.29 billion yuan, while CCDC's increased by 933.91 billion yuan, leading to a combined net increase of 757.62 billion yuan [7][8] - The main contributors to the net increase in bond custody were interest rate bonds, which saw a significant rise, while interbank certificates of deposit experienced a notable decrease [9] - Commercial banks were identified as the primary buyers of bonds, with a net increase of 10.22 trillion yuan in bond custody, while other financial institutions showed negative net increases [10] Market Outlook - The report suggests a target range for the 10-year government bond yield of 2-3%, with a central tendency around 2.5% [12][13] - Economic recovery is not meeting expectations, and there may be a shift towards looser monetary and fiscal policies in early 2026, which could accelerate the economic cycle [12] - The report emphasizes the importance of monitoring inflation trends, particularly the Producer Price Index (PPI), to gauge potential tightening of monetary policy [13]

Group 1: Report Industry Investment Rating - No information provided in the report Group 2: Core View of the Report - The total bond custody volume increased more month-on-month. As of the end of January 2026, the total bond custody volume of China Central Depository & Clearing Co., Ltd. (CCDC) and Shanghai Clearing House was 179.31 trillion yuan, with a net month-on-month increase of 0.76 trillion yuan, and a month-on-month increase of 0.46 trillion yuan compared to the end of December 2025 [11]. - In terms of different bond types, interest rate bonds and credit bonds increased net month-on-month, while financial bonds and interbank certificates of deposit decreased net month-on-month [11]. - In terms of bond holders, allocation portfolios increased their positions, securities companies in trading portfolios increased their positions, non - human products continued to reduce their positions, and overseas institutions continued to reduce their positions [22]. - The balance of bonds to be repurchased increased slightly, the bond market leverage ratio remained flat month-on-month and increased year-on-year. As of the end of January 2026, the estimated balance of repurchase - style repurchase of bonds to be repurchased was 11.96 trillion yuan, with a month-on-month increase of 49.837 billion yuan, and the leverage ratio was 107.14%, remaining flat compared with the previous month and increasing by 0.84 percentage points year-on-year [44]. Group 3: Summary by Directory 1. Bond Custody Volume and Structure - The total bond custody volume was 179.31 trillion yuan as of the end of January 2026, with a net month-on-month increase of 0.76 trillion yuan, and a month-on-month increase of 0.46 trillion yuan compared to the end of December 2025 [11]. - Interest rate bond custody volume was 125.73 trillion yuan, accounting for 70.12% of the inter - bank bond market custody volume, with a net month-on-month increase of 1.10 trillion yuan; credit bond custody volume was 19.40 trillion yuan, accounting for 10.82%, with a net month-on-month increase of 0.25 trillion yuan; non - policy financial bond custody volume was 12.93 trillion yuan, accounting for 7.21%, with a net month-on-month decrease of 2 billion yuan; interbank certificate of deposit custody volume was 19.03 trillion yuan, accounting for 10.61%, with a net month-on-month decrease of 0.66 trillion yuan [11]. 2. Bond Holder Structure and Changes 2.1 Changes in Custody Volume by Institution Month-on-Month - Policy banks increased their positions in interest rate bonds and interbank certificates of deposit and reduced their positions in credit bonds; commercial banks increased their positions in interest rate bonds and credit bonds and reduced their positions in interbank certificates of deposit; credit unions increased their positions in all of interest rate bonds, interbank certificates of deposit and credit bonds; insurance institutions increased their positions in interbank certificates of deposit and credit bonds and reduced their positions in interest rate bonds; securities companies increased their positions in interest rate bonds and reduced their positions in interbank certificates of deposit and credit bonds; non - human products increased their positions in credit bonds and reduced their positions in interest rate bonds and interbank certificates of deposit; overseas institutions reduced their positions in all of interest rate bonds, interbank certificates of deposit and credit bonds [22]. 2.2 Changes in Custody Volume by Bond Type Month-on-Month - Treasury bond custody volume continued to increase month-on-month, with commercial banks continuously increasing their positions and non - human products continuously reducing their positions. Commercial banks were the main buyers, increasing their positions by 453.4 billion yuan [25]. - Local government bond custody volume continued to increase month-on-month, with commercial banks significantly increasing their positions and securities companies changing to reducing their positions. Commercial banks were the main buyers, increasing their positions by 458 billion yuan [25]. - Policy financial bond custody volume continued to increase month-on-month, with commercial banks continuously increasing their positions and non - human products changing to significantly reducing their positions. Policy banks and commercial banks were the main buyers, increasing their positions by 112.3 billion yuan and 123.9 billion yuan respectively [25]. - Interbank certificate of deposit custody volume continued to decrease month-on-month, with credit unions changing to increasing their positions and non - human products continuously reducing their positions. Policy banks and credit unions were the main buyers, increasing their positions by 23.4 billion yuan and 27.8 billion yuan respectively; non - human products were the main sellers, reducing their positions by 533.2 billion yuan [25]. - Corporate bond custody volume continued to decrease month-on-month, with commercial banks and non - human products being the main sellers, reducing their positions by 7.7 billion yuan and 6 billion yuan respectively [26]. - Medium - term note custody volume continued to increase month-on-month, with non - human products continuously increasing their positions and policy banks changing to reducing their positions. Non - human products were the main buyers, increasing their positions by 93.8 billion yuan [27]. - Short - term financing and ultra - short - term financing custody volume changed to increasing, with commercial banks being the main buyers, increasing their positions by 149 billion yuan, and non - human products increasing their positions by 34.3 billion yuan [27]. - Non - publicly - oriented debt instrument custody volume continued to decrease month-on-month, with non - human products being the main sellers [27]. 2.3 Holder Structure of Main Bond Types - As of the end of January 2026, for treasury bonds, commercial banks accounted for 69.65%, overseas institutions 5.14%, policy banks 11.93%, non - human products 7.07%, securities companies 2.48%, insurance institutions 2.55%, and credit unions 1.16% [30]. - For policy financial bonds, commercial banks accounted for 57.14%, non - human products 30.30%, overseas institutions 2.82%, credit unions 3.23%, insurance institutions 1.89%, securities companies 1.24%, and policy banks 3.38% [32]. - For local government bonds, commercial banks accounted for 71.98%, non - human products 9.88%, policy banks 11.71%, insurance institutions 4.87%, securities companies 0.96%, credit unions 0.58%, and overseas institutions 0.02% [33]. - For corporate bonds, non - human products accounted for 55.84%, commercial banks 30.96%, securities companies 9.08%, insurance institutions 3.25%, policy banks 0.56%, credit unions 0.24%, and overseas institutions 0.08% [35]. - For medium - term notes, non - human products accounted for 60.47%, commercial banks 25.11%, securities companies 4.51%, nominal holder accounts (domestic) 3.69%, policy banks 2.91%, insurance institutions 2.26%, overseas institutions 0.20%, others 0.58%, and credit unions 0.26% [37]. - For short - term financing and ultra - short - term financing, non - human products accounted for 62.38%, commercial banks 31.16%, nominal holder accounts (domestic) 2.78%, securities companies 0.86%, policy banks 2.25%, others 0.31%, insurance institutions 0.12%, credit unions 0.02%, and overseas institutions 0.13% [39]. - For non - publicly - oriented debt instruments, non - human products accounted for 61.90%, commercial banks 20.47%, nominal holder accounts (domestic) 7.95%, policy banks 5.12%, securities companies 3.82%, others 0.55%, credit unions 0.13%, overseas institutions 0.06%, and insurance institutions 0.00% [41]. - For interbank certificates of deposit, non - human products accounted for 63.05%, commercial banks 22.78%, policy banks 2.42%, credit unions 2.11%, others 4.11%, nominal holder accounts (domestic) 2.07%, securities companies 0.75%, overseas institutions 2.53%, and insurance institutions 0.18% [43]. 3. Bond Market Leverage Ratio Observation - As of the end of January 2026, the estimated balance of repurchase - style repurchase of bonds to be repurchased was 11.96 trillion yuan, with a month-on-month increase of 49.837 billion yuan, and the leverage ratio was 107.14%, remaining flat compared with the previous month and increasing by 0.84 percentage points year-on-year [44].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The target range for the 10 - year Treasury bond is 2 - 3%, with a central value of around 2.5%. Economic recovery is accelerating due to the falsification of the under - expected economic recovery and the implementation of wide - credit and wide - fiscal policies at the beginning of 2026. If there are wide - monetary policies, it may be a chance for reduction. Attention should be paid to the inflation situation, especially whether the PPI month - on - month increase can remain positive. If inflation rises continuously, there is a possibility of tightened funds, which will lead to an upward yield of short - term bonds. Real estate is a lagging indicator and may bottom out after the recovery of various economic indicators and the rise of the stock market [7]. 3. Summary by Relevant Catalogs Overall Situation - The total bond custody volume of Shanghai Clearing House and China Central Depository & Clearing Co., Ltd. (CCDC) in January was 179.31 trillion yuan (previous value: 178.55 trillion yuan), with a net monthly increase of 757.617 billion yuan (+302.571 billion yuan), and the month - on - month increase rebounded. The custody volume of Shanghai Clearing House decreased by 176.293 billion yuan (previous decrease: 204.504 billion yuan), with less decrease compared to December. The custody volume of CCDC increased by 933.910 billion yuan (previous increase: 507.075 billion yuan), and the month - on - month increase rebounded [3][4]. Bond Types - In Shanghai Clearing House, credit bonds contributed the main increment in the month, with a net monthly increase of 324.120 billion yuan; corporate credit - related bonds increased by 284.120 billion yuan; interest - rate bonds increased 74.000 billion yuan less month - on - month; inter - bank certificates of deposit decreased by 656.158 billion yuan. In CCDC, local government bonds contributed the main increment, with a net monthly increase of 549.357 billion yuan; interest - rate bonds increased by 1004.506 billion yuan; credit bonds increased by - 70.595 billion yuan. Overall, interest - rate bonds contributed the main increment. The custody volume of interest - rate bonds was 124.22 trillion yuan (previous value: 123.15 trillion yuan), with a net monthly increase of 1078.506 billion yuan; the custody volume of credit bonds was 34.14 trillion yuan (previous value: 33.88 trillion yuan), with a net monthly increase of 264.385 billion yuan; the custody volume of inter - bank certificates of deposit was 19.03 trillion yuan (previous value: 19.69 trillion yuan), with a net monthly increase of - 656.158 billion yuan [5]. Institutions - In Shanghai Clearing House, deposit - taking financial institutions, insurance companies, and securities firms increased their bond holdings, with net monthly increases of 134.960 billion yuan, 4.056 billion yuan, and 12.500 billion yuan respectively. Policy banks, broad - based funds, and overseas institutions had negative net increases, which were - 27.540 billion yuan, - 233.480 billion yuan, and - 88.957 billion yuan respectively. In CCDC, commercial banks were the main force in increasing bond holdings, with a net monthly increase of 1021.526 billion yuan. Insurance companies, broad - based funds, and overseas institutions had negative net increases in custody volume, which were - 12.460 billion yuan, - 473.979 billion yuan, and - 18.804 billion yuan respectively. Overall, commercial banks were the main force in increasing bond holdings. The custody volume of commercial banks was 95.55 trillion yuan (previous value: 94.40 trillion yuan), with a net monthly increase of 1144.653 billion yuan; the custody volume of securities firms was 3.22 trillion yuan (previous value: 3.15 trillion yuan), with a net monthly increase of 69.946 billion yuan; the custody volume of broad - based funds was 48.16 trillion yuan (previous value: 48.86 trillion yuan), with a net monthly increase of - 707.458 billion yuan; the custody volume of overseas institutions was 3.35 trillion yuan (previous value: 3.46 trillion yuan), with a net monthly increase of - 107.761 billion yuan [6]. Leverage - The overall leverage ratio of the bond market in January was 107.14% (unchanged from the previous month). By institution, the leverage ratios of commercial banks and securities firms increased, while that of non - bank institutions decreased. The leverage ratio of commercial banks was 105.00% (previous value: 104.61%), with a month - on - month increase of 0.38 percentage points; the leverage ratio of non - bank institutions was 109.73% (previous value: 110.17%), with a month - on - month decrease of 0.44 percentage points, among which the leverage ratio of securities firms was 143.11% (previous value: 140.07%), with a month - on - month increase of 3.04 percentage points [7].

1. Report Industry Investment Rating - No information about the industry investment rating is provided in the report. 2. Core Viewpoints of the Report - In December 2025, the bond market remained weak. The ultra - long - end interest rates continued to rise while the short - end rates recovered, steepening the yield curve. The trading desks, represented by securities firms and broad - based funds, continued to reduce their bond allocations, but the reduction intensity of securities firms weakened and they started to increase their allocation to interest - rate bonds. The allocation - oriented institutions such as banks and insurance companies increased their bond allocations, but the scale was limited and difficult to reverse the overall interest - rate trend. The top signal of interest rates might need to wait until the allocation power strengthened to the point where the selling pressure from trading institutions could no longer push interest rates significantly higher [3][13]. 3. Summary According to the Table of Contents 3.1 12 - month Interest - rate Bonds Drag Bond Custody Increment to Drop Significantly, Credit and Certificates of Deposit Also Decline - In December, the total bond custody scale increased by 30.26 billion yuan month - on - month, a significant decrease of 117.73 billion yuan compared with November. The custody increment of interest - rate bonds was 69.59 billion yuan, about 78 billion yuan lower than the previous month. The custody increments of treasury bonds, local bonds, and policy - financial bonds all decreased significantly. The net financing of medium - term notes and short - term commercial papers also decreased significantly, leading to a lower custody increment of credit bonds. The custody scale of inter - bank certificates of deposit continued to decline by 62.24 billion yuan month - on - month, with the decline expanding by 23.66 billion yuan compared with the previous month [3][10]. 3.2 Trading Desks' Reduction of Allocations Continues, Allocation - Oriented Desks Lack Incentive to Increase Allocations 3.2.1 Broad - based Funds - In December, the bond custody volume of broad - based funds decreased by 9.92 billion yuan month - on - month, compared with an increase of 22.16 billion yuan in the previous month. The reduction in inter - bank certificates of deposit was 34.96 billion yuan, an increase of 34.01 billion yuan compared with the previous month. The reduction in treasury bonds, enterprise bonds, short - term commercial papers, PPNs, and credit - asset - backed securities increased, while the increase in medium - term notes and local bonds decreased. The reduction in commercial - bank bonds decreased, and they started to increase their allocation to policy - financial bonds. Relative to the stock, the reduction intensity of broad - based funds on bonds increased, and the reduction in inter - bank certificates of deposit was particularly significant, but the reduction in commercial - bank bonds decreased and the allocation to policy - financial bonds increased [17][19]. 3.2.2 Securities Firms - In December, the bond custody volume of securities firms decreased by 0.23 billion yuan month - on - month, with the decline narrowing by 13.98 billion yuan compared with the previous month. They started to increase their allocation to treasury bonds, policy - financial bonds, and commercial - bank bonds, increased their allocation to local bonds, but started to reduce their allocation to medium - term notes and short - term commercial papers, and the reduction in inter - bank certificates of deposit, PPNs, and enterprise bonds increased. Relative to the stock, the reduction intensity of securities firms on bonds decreased, mainly as they started to increase their allocation to interest - rate bonds but started to reduce their allocation to credit bonds [27]. 3.2.3 Insurance Companies - In December, the bond custody volume of insurance companies increased by 4 billion yuan month - on - month, with the increase expanding by 1.15 billion yuan compared with the previous month. They increased their allocation to treasury bonds, local bonds, and inter - bank certificates of deposit, decreased their reduction in commercial - bank bonds, but started to reduce their allocation to policy - financial bonds and medium - term notes, decreased their allocation to financial bonds on the Clearstream, and increased their reduction in enterprise bonds. Relative to the stock, insurance companies started to increase their allocation to bonds, mainly increasing their allocation to treasury bonds and local bonds [33]. 3.2.4 Overseas Institutions - In December, the bond custody scale of overseas institutions decreased by 15.09 billion yuan month - on - month, with the decline expanding by 3.41 billion yuan compared with the previous month. They started to reduce their allocation to policy - financial bonds, increased their reduction in inter - bank certificates of deposit and treasury bonds, but started to increase their allocation to local bonds and medium - term notes. Relative to the stock, the reduction intensity of overseas institutions on bonds increased slightly, mainly increasing their reduction in policy - financial bonds and inter - bank certificates of deposit, but decreasing their reduction in treasury bonds and increasing their allocation to local bonds and medium - term notes [34]. 3.2.5 Other Institutions - In December, the bond custody volume of other institutions including the central bank increased by 18.24 billion yuan month - on - month, with the increase narrowing by 39.22 billion yuan compared with the previous month. They decreased their allocation to treasury bonds and local bonds, started to reduce their allocation to policy - financial bonds, but increased their allocation to inter - bank certificates of deposit. The change in the bond custody structure of other institutions might indicate that the underlying assets of repurchase agreements were still mainly local bonds, but some were replaced from policy - financial bonds to treasury bonds [39]. 3.2.6 Commercial Banks - In December, the bond custody scale of commercial banks increased by 25.73 billion yuan month - on - month, with the increase narrowing by 52.58 billion yuan compared with the previous month. The increase in local bonds, treasury bonds, financial bonds on the Clearstream, and medium - term notes decreased, the reduction in short - term commercial papers, inter - bank certificates of deposit, and commercial - bank bonds increased, and the increase in policy - financial bonds increased. This also reflected the impact of the change in the structure of repurchase - agreement underlying assets to some extent. Relative to the stock, commercial banks also increased their allocation to bonds to some extent, increasing their allocation to policy - financial bonds and treasury bonds, increasing their allocation to local bonds, decreasing their reduction in inter - bank certificates of deposit, but decreasing their allocation to financial bonds on the Clearstream and medium - term notes, and increasing their reduction in short - term commercial papers and commercial - bank bonds [45]. 3.2.7 Credit Unions - In December, the bond custody scale of credit unions decreased by 9.82 billion yuan month - on - month, compared with an increase of 0.98 billion yuan in the previous month. They started to reduce their allocation to inter - bank certificates of deposit and treasury bonds, increased their reduction in policy - financial bonds and commercial - bank bonds, and decreased their allocation to local bonds. Relative to the stock, the reduction intensity of credit unions on bonds increased, mainly reducing their allocation to certificates of deposit and policy - financial bonds [46]. 3.3 The Bond - market Leverage Ratio Seasonally Rebounded in December, and Securities Firms Reduced Leverage but It Remained at a High Level - In December, affected by short - term disturbances in the liabilities of some institutions at the end of the year and the increase in the demand for borrowing funds, the bond - market leverage ratio increased by 0.6 percentage points month - on - month to 107.8%, which was in line with the seasonal pattern. By institution, the leverage ratio of commercial banks increased by 0.3 percentage points month - on - month to 103.6%; the leverage ratio of non - bank institutions increased by 1.4 percentage points month - on - month to 118.4%, which was also in line with the seasonal characteristics; the leverage ratio of securities firms decreased significantly by 14.1 percentage points month - on - month to 217.3%, but it was still at a high level; the leverage ratio of insurance and non - legal - person products increased by 1.7 percentage points month - on - month to 115.4%, which was at a relatively low level in the past three years. In the broad - based funds, the repurchase balances of various institutions rebounded. Among them, the repurchase balances of money - market funds, other products, and insurance companies reached record highs, and the repurchase balance of wealth - management products reached a new high since 2025, but the repurchase balance of non - money - market funds remained at a relatively low level since 2023 [4][52].

Group 1 - The total amount of bonds under custody increased slightly, reaching 178.55 trillion yuan by the end of December 2025, with a net increase of 0.30 trillion yuan compared to the previous month, but a decrease of 1.18 trillion yuan compared to November [8] - By type, the custody of interest rate bonds, credit bonds, and financial bonds saw a net increase, while the amount of interbank certificates of deposit decreased [8] - The custody of interest rate bonds was 124.63 trillion yuan, accounting for 69.80% of the total, with a net increase of 0.69 trillion yuan; credit bonds reached 19.15 trillion yuan, accounting for 10.73%, with a net increase of 0.02 trillion yuan; financial bonds totaled 12.93 trillion yuan, accounting for 7.24%, with a net increase of 0.13 trillion yuan; interbank certificates of deposit stood at 19.69 trillion yuan, accounting for 11.03%, with a net decrease of 0.62 trillion yuan [8] Group 2 - The structure of bondholders showed that most institutions increased their bond holdings, except for credit cooperatives which reduced their positions; policy banks increased their holdings of interest rate bonds, interbank certificates of deposit, and credit bonds [9] - Commercial banks and securities companies increased their holdings of interest rate bonds while reducing their positions in interbank certificates of deposit and credit bonds [9] - The custody of government bonds continued to increase, with policy banks and commercial banks consistently adding to their holdings, while non-legal person products reduced their positions [9] Group 3 - The leverage ratio in the bond market increased, with the estimated balance of repurchase agreements reaching 11.91 trillion yuan by the end of December 2025, an increase of 859.04 billion yuan, resulting in a leverage ratio of 107.14%, which is an increase of 0.54 percentage points compared to the previous month [10] - The year-on-year comparison shows a decrease of 1.10 percentage points in the leverage ratio [10]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The total bond custody increased less on a month - on - month basis. In December 2025, the total bond custody of China Central Depository & Clearing Co., Ltd. (CCDC) and Shanghai Clearing House was 178.55 trillion yuan, with a net increase of 0.30 trillion yuan compared to the previous month, and 1.18 trillion yuan less than the month - on - month increase in November [1][11]. - In terms of the bond holder structure, among the allocation portfolios, except for credit cooperatives, all institutions increased their bond holdings; trading portfolios and overseas institutions decreased their bond holdings. Different institutions showed different trends in holding various types of bonds [2][26]. - The balance of bonds to be repurchased increased seasonally, and the bond market leverage ratio rose on a month - on - month basis. As of the end of December 2025, the estimated balance of repurchase - style repurchase of bonds to be repurchased was 11.91 trillion yuan, an increase of 859.04 billion yuan compared to the previous month. The leverage ratio was 107.14%, up 0.54 percentage points month - on - month and down 1.10 percentage points year - on - year [4][47]. 3. Summary by Related Catalogs 3.1 Bond Custody Total and Structure - The total bond custody increased less on a month - on - month basis. As of the end of December 2025, the total bond custody of CCDC and Shanghai Clearing House was 178.55 trillion yuan, with a net increase of 0.30 trillion yuan compared to the previous month, and 1.18 trillion yuan less than the month - on - month increase in November [1][11]. - By variety, interest - rate bonds, credit bonds, and financial bonds increased on a net basis month - on - month, while negotiable certificates of deposit (NCDs) decreased on a net basis. In December 2025, the custody of interest - rate bonds was 124.63 trillion yuan, accounting for 69.80% of the inter - bank bond market custody, with a net increase of 0.69 trillion yuan; the custody of credit bonds was 19.15 trillion yuan, accounting for 10.73%, with a net increase of 0.02 trillion yuan; the custody of non - policy financial bonds was 12.93 trillion yuan, accounting for 7.24%, with a net increase of 0.13 trillion yuan; the custody of NCDs was 19.69 trillion yuan, accounting for 11.03%, with a net decrease of 0.62 trillion yuan [1][11]. 3.2 Bond Holder Structure and Changes 3.2.1 Month - on - Month Changes in Custody by Institution - Among the allocation portfolios, except for credit cooperatives, all institutions increased their bond holdings; trading portfolios and overseas institutions decreased their bond holdings. Specifically, policy banks increased their holdings of interest - rate bonds, NCDs, and credit bonds across the board; commercial banks and securities companies increased their holdings of interest - rate bonds but decreased their holdings of NCDs and credit bonds; non - legal person products increased their holdings of interest - rate bonds and credit bonds but decreased their holdings of NCDs; credit cooperatives and overseas institutions decreased their holdings of interest - rate bonds, NCDs, and credit bonds across the board [2][26]. 3.2.2 Month - on - Month Changes in Custody by Bond Type - The custody of treasury bonds continued to increase on a month - on - month basis. Policy banks and commercial banks continued to increase their holdings, while non - legal person products continued to decrease their holdings. - The custody of local government bonds continued to increase on a month - on - month basis, and all major institutions in the bond market increased their holdings. - The custody of policy - based financial bonds continued to increase on a month - on - month basis. Commercial banks continued to increase their holdings, while policy banks changed to significantly decrease their holdings. - The custody of NCDs continued to decrease on a month - on - month basis. Policy banks changed to increase their holdings, while non - legal person products significantly decreased their holdings. - The custody of enterprise bonds continued to decrease on a month - on - month basis, and all major institutions in the bond market decreased their holdings. - The custody of medium - term notes continued to increase on a month - on - month basis. Commercial banks and non - legal person products were the main institutions increasing their holdings. - The custody of short - term financing bills and super - short - term financing bills continued to decrease on a month - on - month basis, and commercial banks were the main institutions decreasing their holdings. - The custody of privately - placed debt instruments changed to a decrease, and commercial banks were the main institutions decreasing their holdings [3][28]. 3.2.3 Holder Structure of Major Bond Types - As of the end of December 2025, the holder structure of treasury bonds: commercial banks accounted for 69.21%, overseas institutions 5.25%, policy banks 11.61%, non - legal person products 7.72%, securities companies 2.50%, insurance institutions 2.57%, and credit cooperatives 1.13% [33]. - The holder structure of policy - based financial bonds: commercial banks accounted for 56.73%, non - legal person products 31.54%, overseas institutions 2.82%, credit cooperatives 3.15%, insurance institutions 1.89%, securities companies 0.93%, and policy banks 2.94% [35]. - The holder structure of local government bonds: commercial banks accounted for 71.83%, non - legal person products 9.83%, policy banks 11.81%, insurance institutions 4.92%, securities companies 1.02%, credit cooperatives 0.57%, and overseas institutions 0.02% [37]. - The holder structure of enterprise bonds: non - legal person products accounted for 55.48%, commercial banks 31.29%, securities companies 9.09%, insurance institutions 3.23%, policy banks 0.54%, credit cooperatives 0.28%, and overseas institutions 0.08% [39]. - The holder structure of medium - term notes: non - legal person products accounted for 60.33%, commercial banks 24.90%, securities companies 4.56%, nominal holder accounts (domestic) 3.67%, policy banks 3.24%, insurance institutions 2.26%, overseas institutions 0.21%, other 0.57%, and credit cooperatives 0.25% [41]. - The holder structure of short - term financing bills and super - short - term financing bills: non - legal person products accounted for 66.21%, commercial banks 26.47%, nominal holder accounts (domestic) 2.97%, securities companies 1.01%, policy banks 2.73%, other 0.29%, insurance institutions 0.14%, credit cooperatives 0.02%, and overseas institutions 0.15% [46]. - The holder structure of NCDs: non - legal person products accounted for 63.66%, commercial banks 22.09%, policy banks 2.22%, credit cooperatives 1.90%, other 4.15%, nominal holder accounts (domestic) 2.09%, securities companies 0.81%, overseas institutions 2.92%, and insurance institutions 0.16% [45]. 3.3 Bond Market Leverage Ratio Observation - The balance of bonds to be repurchased increased seasonally, and the bond market leverage ratio rose on a month - on - month basis. As of the end of December 2025, the estimated balance of repurchase - style repurchase of bonds to be repurchased was 11.91 trillion yuan, an increase of 859.04 billion yuan compared to the previous month. The leverage ratio was 107.14%, up 0.54 percentage points month - on - month and down 1.10 percentage points year - on - year [4][47].