1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report The bond market is expected to continue the "bullish steepening" trend. The current changes in PMI, as a core leading indicator of the economic fundamentals, may reflect "endogenous weak recovery + external pressure transmission". Coupled with the expectations of loose liquidity and policy, the bond market is likely to continue the "bullish steepening" trend. The downward space for interest - rate bond yields has opened up, and the long - end is more cost - effective; for credit bonds, it is necessary to strictly control the risks of low - rated bonds and focus on short - duration high - rated bonds; for convertible bonds, attention should be paid to varieties with strong policy catalysis and underlying stock elasticity [1][69]. 3. Summary According to the Directory 3.1 Interest - rate Bonds - **Liquidity Observation**: From August 22 to August 29, 2025, the central bank conducted a total of 32,343.00 billion yuan in reverse repurchase operations, with 26,150.00 billion yuan in reverse repurchases maturing, resulting in a net injection of 6,193.00 billion yuan. Most inter - bank funding prices increased, with DR001 down 8.27BP to 1.3295% and DR007 up 4.89BP to 1.5158%. Exchange - traded funding prices decreased, with overnight GC001 down 2.50BP to 1.2290% and GC007 down 490BP to 1.4840% [15]. - **Primary Market Issuance**: From August 25 to August 31, 2025, the primary market for interest - rate bonds issued 5,025.97 billion yuan, with a total bond repayment of 5,161.89 billion yuan, resulting in a net financing of - 135.92 billion yuan. There were no treasury bond issuances during the reporting period. Policy - based financial bonds raised 1,510.00 billion yuan, and local government bond issuances decreased compared to the previous period, raising 3,515.97 billion yuan [28]. - **Secondary Market Trading**: Treasury bond spot yields increased at the long - end. From August 22 to August 29, 2025, the yields of 1 - year, 3 - year, 5 - year, and 7 - year treasury bonds decreased by 0.09BP, 2.88BP, 0.02BP, and 2.05BP respectively to 1.3698%, 1.4776%, 1.6322%, and 1.7320%, while the 10 - year treasury bond yield increased by 5.61BP to 1.8379%. The 10Y - 1Y term spread widened from 41.11BP to 46.81BP. The spot yields of policy - bank bonds decreased. During the same period, the yields of 1 - year, 3 - year, 5 - year, 7 - year, and 10 - year policy - bank bonds decreased by 3.09BP, 0.39BP, 0.36BP, 0.21BP, and 0.25BP respectively to 1.5346%, 1.6916%, 1.7685%, 1.8979%, and 1.8756%. The 10Y - 1Y term spread widened from 31.26BP to 34.10BP [34]. 3.2 Credit Bonds - **Primary Market Issuance**: From August 25 to August 31, 2025, the primary market for credit bonds issued 784 new bonds (including inter - bank certificates of deposit), with a total issuance scale of 9,250.64 billion yuan, a decrease of 833.08 billion yuan compared to the previous period, and a net financing of - 2,078.26 billion yuan. Asset - backed securities had the largest proportion in terms of the number of issuances. By rating, AAA - rated bonds were issued at 2,147.94 billion yuan, accounting for 59.51%. In terms of maturity, most bonds had a maturity of less than 1 year. By industry, the financial industry had the largest number of issuances [2][45]. - **Secondary Market Trading**: The yields to maturity of credit bonds showed divergence. From August 22 to August 29, 2025, among urban investment bonds, the 5 - year AA - rated bonds had the largest upward movement of 5.94BP, while the 3 - year AA - rated bonds had the largest downward movement of 3.04BP. Among medium - and short - term notes, the 10 - year AA - rated bonds had the largest upward movement of 4.15BP, while the 1 - year AAA - rated bonds had the largest downward movement of 4.39BP [2][52]. - **One - week Credit Default Event Review**: From August 25 to August 31, 2025, the credit bonds of one enterprise defaulted [56]. 3.3 Observation of Major Asset Classes - **Decline in European and American Stock Indices**: From August 22 to August 29, 2025, the three major US stock indices declined. The Dow Jones Industrial Average fell 0.19% weekly, the S&P 500 index fell 0.10% weekly, and the Nasdaq Composite fell 0.19% weekly, closing at 45544.88, 6460.26, and 21455.55 points respectively. The three major European stock indices also declined. The German DAX index fell 1.89% weekly, the French CAC40 index fell 3.34% weekly, and the UK FTSE 100 index fell 1.44% weekly, closing at 23902.21, 7703.90, and 9187.34 points respectively [57][58]. - **Decline in US Treasury Yields**: From August 22 to August 29, 2025, the yields of 1 - year, 3 - year, 5 - year, 7 - year, and 10 - year US Treasury bonds decreased by 4.00BP, 6.00BP, 8.00BP, 6.00BP, and 3.00BP respectively to 3.83%, 3.58%, 3.68%, 3.92%, and 4.23%. The 10Y - 1Y term spread changed by 1.00BP to 40.00BP [61]. - **Strengthening of the US Dollar Index and Weakening of Most Non - US Currencies**: The US dollar index rose 0.13% weekly, and most non - US currencies weakened. From August 22 to August 29, 2025, the British pound against the US dollar fell 0.16% weekly to 1.3505; the euro against the US dollar fell 0.32% weekly to 1.1686; the US dollar against the Japanese yen rose 0.08% weekly to 147.0540; the US dollar against the Chinese yuan fell 0.41% weekly to 7.1030 [63]. - **Increase in Crude Oil and Gold Prices**: From August 22 to August 29, 2025, the COMEX gold futures price rose 3.02% weekly to 3,475.50 US dollars per ounce, and the London spot gold price rose 2.85% weekly to 3,429.15 US dollars per ounce. The Brent crude oil price rose 0.58% weekly to 68.12 US dollars per barrel, and the WTI crude oil price rose 0.55% weekly to 64.01 US dollars per barrel [67].

Primary Market Review - The issuance scale of government bonds, local bonds, and policy financial bonds last week was 430.8 billion, 261.8 billion, and 162 billion respectively, with net financing amounts of 135.1 billion, 124.3 billion, and 63.6 billion [1] - Financial bonds (excluding policy financial bonds) had a total issuance scale of 122.5 billion, with a net financing amount of -7.2 billion [1] - Non-financial credit bonds had a total issuance scale of 392.8 billion, with a net financing amount of 107.3 billion [1] - Two new convertible bonds were issued, with an expected financing scale of 0.9 billion [1] Secondary Market Review - Short-term interest rates in the bond market decreased while long-term rates fluctuated, influenced by factors such as liquidity, the Lujiazui conference, institutional behaviors, and geopolitical conflicts [2] Liquidity Tracking - Last week, there was a net injection through OMO, while MLF matured and was withdrawn, with the central bank conducting buyback operations to support the liquidity during the tax period [3] - The R001 and R007 rates decreased by 1.4 basis points and increased by 1 basis point respectively compared to the previous week [3] Policy and Fundamentals - Economic data for May showed stable production, rising consumption, and declining investment, with structural concerns remaining [4] - High-frequency data indicated a month-on-month decline in production, a decrease in both domestic and external consumption, and price differentiation in the production and residential sectors, with the Middle East conflict driving oil prices significantly higher [4] Overseas Market - The Federal Reserve's June FOMC statement was slightly hawkish, but U.S. consumption and production data were disappointing, exacerbating risk aversion in overseas markets [5] - The 10-year U.S. Treasury yield closed at 4.38%, down 3 basis points from the previous week [5] Equity Market - The A-share market experienced a decline in most broad-based indices due to capital outflows from new consumption and innovative pharmaceuticals, as well as the impact of the Israel-Palestine conflict [6] - Specifically, the Wind All A index fell by 1.07%, the Wind Micro-Cap index dropped by 2.18%, the CSI 300 decreased by 0.45%, and the Sci-Tech 50 fell by 1.55% [6] - A-share trading volume decreased, with an average daily turnover of 1.22 trillion, down 156.644 billion week-on-week [6] - As of June 19, 2025, the total financing balance for the entire A-share market was 1,809.167 billion, an increase of 0.188 billion from June 12 [6] Bond Market Strategy Outlook - Factors favorable to the bond market are gradually increasing in the second half of the year, with bond yields likely to face upward pressure [7] - The 10-year government bond yield has already reflected macro expectations to some extent, and short-term long-end rates are unlikely to present significant excess opportunities in the near term [7] - Short-term rates are still some distance from previous lows, and banks are balancing duration pressures, which may accumulate buying power for short-term bonds [7] - The logic of under-allocation in credit bonds continues, with a strategy prioritizing coupon collection in the short term [7] - In the convertible bond market, supply-demand conflicts persist, and liquidity remains relatively loose, with some banks redeeming convertible bonds, making core varieties scarcer [7] - The convertible bond index has reached the upper range of its fluctuation zone, and opportunities in the index require catalysts, necessitating a focus on switching core varieties and monitoring for trading opportunities driven by sentiment [7]