Core Insights - The Ministry of Finance emphasizes the need to continuously prevent and resolve risks in key areas while implementing a comprehensive debt management policy [1] - The central bank conducted a net withdrawal of 213.4 billion yuan through reverse repos, indicating a tightening of liquidity in the market [3] - Jiangxi and Hunan provinces plan to issue a total of approximately 29.2 billion yuan in new special bonds for land reserve and other projects [4][5] Fiscal Policy - The Ministry of Finance will continue to implement a package of debt management policies, focusing on replacing hidden debts and holding accountable new hidden debt behaviors [1] - The ministry aims to strengthen financial operation analysis and dynamic monitoring to ensure stable grassroots financial operations [1] Market Dynamics - The central bank's operation today included a 1.40% interest rate for a 7-day reverse repo, with a total of 3.55 billion yuan in reverse repos maturing, leading to a net withdrawal of 213.4 billion yuan [3] - The issuance of special bonds in Jiangxi and Hunan is aimed at funding land reserves and other projects, with specific amounts detailed for each province [4][5] Debt Issuance - Henan Investment Group plans to issue 1.5 billion yuan in medium-term notes with a subscription range of 1.50% to 2.50% [7] - The issuance of 740 million yuan in bonds by Henan Southeast Industry Development Group has been accepted by the Shanghai Stock Exchange [8] - Luoyang Guohong Group completed the issuance of 1 billion yuan in PPN at a rate of 2.4% [9] - Anhui Construction Investment Group made its market debut with a 500 million yuan medium-term note issuance [10][11] Regulatory Developments - The Anhui Regulatory Bureau of the Ministry of Finance has established a leadership group for the supervision of government bond funds, emphasizing the importance of this task [6] Market Sentiment - Xinyin Fund suggests that incremental fiscal policies may not materialize until early next year, while the bond market is expected to maintain a bullish trend [19] - The central bank's resumption of government bond trading is seen as a positive signal for the market, with expectations of continued liquidity support [19]

Core Viewpoint - The 30-year government bond ETF from Bosera is experiencing a mixed market sentiment, with a recent price of 107.31 yuan and a 1.41% increase over the past two weeks, indicating active trading and liquidity in the domestic bond market [2]. Group 1: Market Performance - The 30-year government bond ETF has a current scale of 18.048 billion yuan [3]. - The ETF has seen a net inflow of 265 million yuan recently, with a total of 549 million yuan net inflow over the past five trading days, averaging 110 million yuan per day [3]. - The trading volume for the ETF reached 1.853 billion yuan, with a turnover rate of 10.26%, reflecting a vibrant market activity [2]. Group 2: Market Trends - The domestic bond market sentiment is currently high, with short-term bonds being heavily purchased and yields declining significantly, influenced by rumors of large banks buying newly issued bonds with maturities of three years or less [2]. - The central bank conducted a reverse repurchase operation of 557.7 billion yuan, resulting in a net injection of 419.5 billion yuan, leading to a loosening of the interbank market liquidity [2]. - Analysts predict three characteristics for the bond market in 2025: increased impact of central bank and regulatory attitudes on interest rate trends, a rise in risk appetite due to "anti-involution" policies, and a potential shift in the low-interest-rate support logic for the bond market due to stock market profitability [2].

Report Industry Investment Rating - The trend rating for treasury bonds is "oscillation" [1] Core Viewpoints of the Report - Affected by the escalation of the Sino-US trade war, treasury bond futures will strengthen in the short term, and the curve is expected to flatten. However, policies such as the new fund fee regulations have not been implemented, and the stock-bond pattern has changed, so the bond market is unlikely to have a trend of strengthening [2][13] Summary According to the Directory 1. One-week Review and Views 1.1 This Week's Trend Review - From October 6th to 12th, treasury bond futures oscillated. On Thursday, due to the strong overseas risk appetite during the holiday, the bond market was weak in the morning, but it rose overall throughout the day. On Friday, the bond market sentiment was okay in the morning, but the issuance of the 50-year ultra-long special treasury bonds was poor at noon, causing treasury bond futures to decline. On Saturday, the trade war escalated again, and the spot bond yields of treasury bonds dropped significantly. As of October 10th, the settlement prices of the main contracts of 2-year, 5-year, 10-year, and 30-year treasury bond futures were 102.352, 105.655, 107.960, and 114.020 yuan respectively, with changes of -0.022, +0.000, +0.075, and +0.020 yuan compared to the previous weekend [1][11] 1.2 Next Week's Views - After the holiday, the bond market sentiment improved compared to late September, with 7 - 10Y varieties performing strongly. Affected by the escalation of the Sino-US trade war, treasury bond futures will strengthen in the short term, and the curve is expected to flatten. However, policies such as the new fund fee regulations have not been implemented, and the bond market is unlikely to have a trend of strengthening. The Sino-US trade conflict has heated up again, and treasury bonds will have a short-term favorable period. This round of the treasury bond's upward trend may not be "one-step", and there may still be some room for increase in the short term [2][13] 2. Weekly Observation of Interest Rate Bonds 2.1 Primary Market - This week, 14 interest rate bonds were issued, with a total issuance volume of 286.254 billion yuan and a net financing amount of 193.297 billion yuan, an increase of 213.981 billion yuan and 142.396 billion yuan respectively compared to last week. Two local government bonds were issued, with a total issuance volume of 10.254 billion yuan and a net financing amount of -24.565 billion yuan, a decrease of 62.019 billion yuan and 87.766 billion yuan respectively compared to last week. 158 interbank certificates of deposit were issued, with a total issuance volume of 230.880 billion yuan and a net financing amount of 95.930 billion yuan, an increase of 193.590 billion yuan and 227.480 billion yuan respectively compared to last week [20] 2.2 Secondary Market - The yields of treasury bonds showed a differentiated trend. As of October 10th, the yields of 2-year, 5-year, 10-year, and 30-year treasury bonds were 1.50%, 1.61%, 1.85%, and 2.28% respectively, with changes of +0.80, -0.14, -1.08, and +5.65 bp compared to the previous weekend. The spreads of 10Y - 1Y and 10Y - 5Y narrowed, while the spread of 30Y - 10Y widened. The yields of 1-year, 5-year, and 10-year policy bank bonds were 1.60%, 1.80%, and 2.04% respectively, with changes of -5.26, -2.26, and +0.89 bp compared to the previous weekend [25] 3. Treasury Bond Futures 3.1 Price, Transaction, and Position - Treasury bond futures oscillated. As of October 10th, the settlement prices of the main contracts of 2-year, 5-year, 10-year, and 30-year treasury bond futures were 102.352, 105.655, 107.960, and 114.020 yuan respectively, with changes of -0.022, +0.000, +0.075, and +0.020 yuan compared to the previous weekend. The trading volumes of 2-year, 5-year, 10-year, and 30-year treasury bond futures this week were 32,254, 55,914, 78,817, and 116,178 lots respectively, with changes of +1,706, -15,123, -18,511, and -30,040 lots compared to last week. The positions of 2-year, 5-year, 10-year, and 30-year treasury bond futures this week were 74,944, 147,637, 251,416, and 173,754 lots respectively, with changes of -5,116, -1,919, +2,992, and +2,975 lots compared to last week [33][36] 3.2 Basis and IRR - The short-selling hedging strategy is considered to be closed. The trade conflict has heated up, and the market risk preference is expected to weaken in the short term, and treasury bond futures will have a short-term favorable period. However, the market's negative factors have not been fully exhausted, and the new fund fee regulations are likely to be implemented this year, which will still disturb the bond market. There are no obvious positive arbitrage opportunities this week [40] 3.3 Inter-period and Inter-variety Spreads - As of October 10th, the inter-period price differences of the 2512 - 2603 contracts of 2-year, 5-year, 10-year, and 30-year treasury bond futures were +0.088, +0.100, +0.295, and +0.330 yuan respectively, with changes of -0.004, -0.030, -0.025, and -0.010 yuan compared to the previous weekend [44] 4. Weekly Observation of the Funding Situation - This week, the central bank conducted 113.70 billion yuan of 7-day reverse repurchase operations, and due to 266.33 billion yuan of reverse repurchase expiring, a net withdrawal of 152.63 billion yuan was achieved. As of October 10th, R007, DR007, SHIBOR overnight, and SHIBOR 1-week were 1.49%, 1.42%, 1.32%, and 1.45% respectively, with changes of -12.68, -1.47, -6.00, and +4.60 bp compared to the previous weekend. The average daily trading volume of interbank pledged repurchase this week was 7.53 trillion yuan, an increase of 3.26 trillion yuan compared to last week, and the overnight proportion was 61.77%, lower than the previous week's level [48][50][52] 5. Weekly Overseas Observation - The US dollar index strengthened, and the yield of 10Y US treasury bonds declined. As of October 10th, the US dollar index rose 1.13% to 98.8223 compared to the previous weekend; the yield of 10Y US treasury bonds was reported at 4.05%, a decrease of 8 bp compared to the previous weekend; the spread between Chinese and US 10Y treasury bonds was inverted by 219.9 bp. During the holiday, the US government shutdown led to an increase in market risk aversion, and the expectation of interest rate cuts increased. After the holiday, the Sino-US trade conflict escalated again [58] 6. Weekly Observation of High-Frequency Inflation Data - Industrial product prices showed a mixed trend. As of October 10th, the Nanhua Industrial Product Index, the metal index, and the energy and chemical index were 3,573.12, 6,449.77, and 1,604.70 points respectively, with changes of -0.72, +100.37, and -26.52 points compared to the previous weekend. Agricultural product prices also showed a mixed trend. As of October 10th, the prices of pork, 28 key vegetables, and 7 key fruits were 18.85, 4.88, and 7.06 yuan/kg respectively, with changes of -0.46, -0.13, and +0.12 yuan/kg compared to the previous weekend [61] 7. Investment Suggestions - The bond market is strengthening in the short term, and it is recommended to take a bullish approach [62]

Group 1 - The report addresses how to quantify current market implied interest rate cut expectations through interest rate swap pricing and floating rate bond spread analysis, aiming to fill gaps in traditional liquidity analysis [3] - The analysis identifies four stages of interest rate cut expectations evolution since 2024, indicating a significant reversal in market expectations compared to the beginning of the year [4] - Current market pricing does not reflect further easing potential and may even imply a marginal tightening of policy, suggesting that if a rate cut signal is released in Q4, it could create a significant positive impact on the bond market due to the existing low market consensus [4] Group 2 - The report highlights three marginal changes in institutional behavior following the breach of interest rates, indicating a shift in market dynamics [6] - Fund managers have significantly reduced their duration, with the median duration of long-term bond funds dropping to 2.8 years, and net purchases of ultra-long government bonds turning negative since early September [7] - Banks have been actively buying 10-year government bonds, acting as a buffer during the recent bond market correction, while the trading volume of certain bonds has shown a rapid adjustment [8]

1. Report Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Core View of the Report The report aims to address the core issues in interest rate research by combining "longitudinal prediction" of liquidity and "horizontal pricing" of interest rates Through two technical routes - interest rate swap pricing and floating - rate bond spread analysis, it quantifies the implied interest - rate cut expectations in current market transactions, and based on the current market consensus, it assesses potential bond market expectations and investment opportunities if policy easing occurs [6][11][13] 3. Summary by Relevant Catalog 3.1 From the Core Issues of Fundamentals to Interest Rate Pricing Traditional liquidity analysis has limitations such as qualitative speculation, over - focus on history, and over - emphasis on the future Effective interest rate research needs to combine "longitudinal prediction" and "horizontal pricing", and the report uses two technical routes to analyze implied interest - rate cut expectations in market transactions to provide a basis for judging future bond market trends and investment opportunities [12][13] 3.2 Interest Rate Swap Pricing 3.2.1 How to Observe Implied Interest - Rate Cut Expectations through Interest Rate Swaps? The market's expectation of policy rate cuts can be approximated as the expectation of a decline in the future funding rate center Interest rate swaps, such as 1Y FR007, can provide a fair market indicator The spread between 1Y FR007 and the current FR007 is an effective proxy variable for measuring interest - rate cut expectations Since 2024, the evolution of interest - rate cut expectations can be divided into four stages: in 2024H1, expectations were flat; in 2024H2, expectations rapidly increased; from February to March 2025, expectations were revised; from Q2 2025 to the present, expectations gradually cleared [14][15] 3.2.2 Is the Interest - Rate Cut Expectation Predicted by Interest Rate Swaps Reliable? Interest rate swaps have two advantages: they truly reflect market consensus as the prices are formed by real - money transactions, and active trading ensures pricing efficiency However, differences in investor structure and trading motivation between the interest rate swap market and the cash bond market may lead to short - term pricing deviations [19][20] 3.3 Floating - Rate Pricing The report selects floating - rate bonds linked to DR007 as research objects and uses the spread between the floating - rate bond's yield to maturity and the benchmark interest rate as the core observation indicator Since last December, the spread trend can be divided into three stages: from December last year to January this year, the spread converged rapidly; from February to March this year, the spread widened significantly; from Q2 this year to the present, the spread remained high and continued to rise, indicating a significant reversal of the market's easing expectations compared to the beginning of the year [21][25][27] 3.4 Summary Through cross - verification of the two technical routes, the current market's interest - rate cut expectations have basically cleared, and the current pricing may even imply a marginal tightening of policies If an interest - rate cut signal is released or an actual cut occurs in the fourth quarter, it may form an expectation gap with the current low market consensus, which is beneficial to the bond market However, interest rate trends are affected by multiple factors and need further analysis [28]

Summary of Key Points from Conference Call Records Industry Overview - The records primarily focus on the bond market, specifically the trends and expectations for the fourth quarter of 2025 and the performance of various financial instruments including government bonds and local government bonds. Core Insights and Arguments 1. **Market Trends**: The bond market is expected to exhibit a "weak before strong" pattern in the fourth quarter, contrasting with historical trends. The market is anticipated to be relatively stable in October, with limited speculative opportunities due to weak positioning [1][2][3]. 2. **October Performance**: October 2025 is projected to show some recovery from previous declines, driven by adjustments in market sentiment and the release of prior pressures. This recovery is not expected to be as weak as in previous years [4][5]. 3. **Policy Changes**: There is a notable shift in policy consistency and proactivity in 2025 compared to previous years. The government is unlikely to announce significant new bond issuance in October, which may lead to lower interest rates in the short term [5][6]. 4. **Central Bank Actions**: The central bank and major banks are actively buying government bonds to stabilize the market. This strategy aims to prevent significant declines in market indices, although it has limited effects on other bond types [6][7]. 5. **Market Reactions**: Recent market declines were attributed to the introduction of new fund fee regulations, which may have been overestimated in their impact. The insurance and wealth management sectors remain stable, mitigating potential risks from credit loans and government bonds [7][8]. 6. **Investment Strategies**: Insurance institutions are increasingly purchasing local government bonds, viewing them as attractive investments due to their yield. This trend indicates a shift towards securing current yield levels rather than capital gains [8][9]. 7. **Long-term Bonds**: There is a divergence in market expectations for local government bonds versus 30-year government bonds. Local bonds are favored for their higher yields, while long-term bonds face skepticism due to their volatility [10][11]. 8. **Credit Bonds Sentiment**: The sentiment towards credit bonds is cautious, influenced by policy uncertainties and new fund redemption fee regulations. The market is expected to stabilize once these uncertainties are resolved [14][15]. Additional Important Content 1. **ETF Market Dynamics**: The second batch of STAR Market ETFs has seen rapid expansion, with significant inflows and a total scale reaching 2,474 billion yuan. However, some products still lack sufficient scale, indicating potential for further growth [12][13]. 2. **Future of Convertible Bonds**: The convertible bond market is showing resilience, with recommendations to focus on high-quality options that exhibit strong anti-drawdown characteristics. The issuance of convertible bonds is expected to normalize, with a focus on technology and undervalued sectors [16][18]. 3. **Investment Opportunities**: There are recommendations for strategic investments in sectors such as AI computing, consumer electronics, and low-valuation sectors like banking and chemicals, which have recently attracted significant capital inflows [18]. This summary encapsulates the key points and insights from the conference call records, providing a comprehensive overview of the current state and future expectations of the bond market and related financial instruments.

Economic Overview - In August, the industrial added value increased by 5.2% year-on-year, slightly down from 5.7% in July, but still above 5%[5] - The manufacturing sector's added value grew by 5.7%, outpacing overall industrial growth by 0.5 percentage points, with 31 out of 41 industrial categories showing year-on-year growth, resulting in a growth coverage of 75.6%[5] - High-tech manufacturing saw a significant expansion, with added value increasing by 9.3% year-on-year, indicating strong momentum in emerging industries[5] Investment Trends - From January to August, fixed asset investment grew by only 0.5% year-on-year, a decline from 1.6% in the previous period, with real estate being a major drag[5] - Manufacturing investment rose by 5.1%, significantly higher than the overall investment growth, with notable increases in consumer goods manufacturing (9.0%) and aerospace manufacturing (28.0%)[5] - Real estate development investment fell by 12.9% year-on-year, with August alone seeing a 19.5% decline, marking the largest monthly drop of the year[6] Consumer Behavior - Retail sales of consumer goods increased by 3.4% year-on-year in August, with significant growth in home appliances (14.3%) and furniture (18.6%) despite a slight overall slowdown[6] - The penetration rate of new energy vehicles reached over 50%, with August retail sales showing a positive shift to +0.8% from -1.5% in July[6] Market Outlook - The economic recovery momentum is expected to continue, with GDP growth projected to meet the target of around 5% for the year, despite a forecasted slowdown in Q3 compared to Q2[6] - A-shares typically exhibit a "pre-holiday contraction, post-holiday surge" pattern, with over 60% probability of index gains following the National Day holiday[7] Fixed Income Strategy - The bond market is currently experiencing fluctuations, with short-term credit spreads narrowing while long-term spreads are widening, indicating a mixed market sentiment[7] - The average duration of bank TPL (Total Portfolio Loss) is estimated at 3 years, with projected floating losses of approximately 453 billion yuan for Q3 due to rising long-term bond yields[9]

Summary of Key Points from Conference Call Records Industry Overview - The records focus on the Chinese credit market and its implications for the economy, particularly in relation to the banking sector and real estate market [1][2][3]. Core Insights and Arguments - **Declining Credit Demand**: China's credit demand has shifted from insufficient supply to low demand, with new loans expected to be less than 17 trillion yuan in 2025, down from 23 trillion yuan in 2022, indicating a decline in both credit growth and volume, posing challenges to economic growth [1][3]. - **Weak Personal Loans**: In August, personal loans increased by only 30.3 billion yuan, reflecting a continued downturn in the real estate market, with second-hand home prices in Beijing dropping nearly 10% over the past quarter [1][5]. - **Manufacturing Sector Struggles**: The manufacturing industry faces overcapacity, leading to weak credit demand from enterprises. The gap between corporate deposits and loans has widened to over 60 trillion yuan, indicating that state-owned enterprises are borrowing heavily while market-oriented firms show insufficient financing needs [1][6]. - **Banking Sector Manipulations**: Banks are manipulating credit data through bill discounting and short-term loans to meet scale assessments, but these measures do not fundamentally address the underlying issue of weak credit demand [1][7]. - **Deleveraging Trends**: There is a clear trend of households actively deleveraging, with increased savings and reduced borrowing. The ratio of personal loans to deposits has significantly decreased, indicating low consumer willingness to spend [1][8][10]. Additional Important Insights - **Future Loan Projections**: The anticipated decline in new loans and social financing growth rates, projected to fall from 9.0% to around 8.0% by year-end, reflects weak investment demand and ongoing challenges in the real estate and manufacturing sectors [3][10]. - **Investment Outlook**: The outlook for long-term bonds remains positive, with a target yield of around 1.75% for ten-year government bonds, suggesting potential value for investors [3][12][18]. - **Market Sentiment**: Institutional attitudes towards ultra-long credit bonds are cautious, with a noted decline in net purchases by insurance and wealth management sectors, although there is still a strategy to accumulate on dips [17][19]. - **Economic Predictions**: The overall trend for the bond market in 2025 is expected to be volatile, with no clear directional movement, necessitating a careful approach to investment strategies [20][21]. Conclusion - The records highlight significant challenges in the Chinese credit market, with declining demand impacting both personal and corporate borrowing. The banking sector's response through data manipulation and the ongoing trend of deleveraging among households are critical factors to monitor. The investment outlook for bonds remains cautiously optimistic, with specific strategies recommended for conservative investors.

Group 1 - The report highlights that consumer spending has weakened since peaking in May-June 2025, with retail sales growth for January to July 2025 at 4.8%, down 0.2 percentage points from the previous period, significantly impacted by the restaurant sector, which saw a growth rate of 3.8% [2][3] - Industrial value-added growth for July 2025 was 6.3%, a decline of 0.1 percentage points from June, with production in "anti-involution" sectors like automotive and photovoltaic experiencing notable decreases [3][4] - Fixed asset investment growth has accelerated its decline, with a cumulative year-on-year growth rate of 1.6% in July 2025, down 1.2 percentage points from June, driven by weak performance in real estate, infrastructure, and manufacturing sectors [3][5] Group 2 - The bond market has shown a weakening in pricing based on fundamentals, with the yield curve flattening, indicating pessimistic expectations for the economy despite weak demand in the real sector [3] - The report anticipates that the 10-year government bond yield will range between 1.65% and 1.80% in August and September 2025, with conditions for further yield declines being more stringent [3] - The report notes that August is a peak supply month for government bonds, and if market adjustments worsen, there is a possibility that the central bank may restart bond purchases [3]

Group 1: CPI Analysis - July CPI year-on-year is 0%, better than the expected -0.1%, indicating stability compared to last year [1] - Month-on-month CPI decreased by 0.1%, weaker than seasonal trends, with food prices showing significant weakness [1] - Core CPI increased by 0.8% year-on-year, the highest in 1.5 years, driven by demand recovery and the end of commodity subsidies [1] Group 2: PPI Analysis - July PPI year-on-year is -3.6%, below the expected -3.4%, consistent with the previous value [2] - Month-on-month PPI decreased by 0.2%, showing a slight improvement of 0.2 percentage points from the previous month [2] - Specific industries like oil extraction and processing showed positive month-on-month changes, while non-metallic mining and manufacturing declined [2] Group 3: Macro Economic Outlook - The low CPI and PPI indicate that overall inflation remains low, allowing for a moderately loose monetary policy [3] - The bond market is expected to see a gradual upward correction in convertible bond valuations due to increased demand for fixed income [3] - The issuance pace of local government special bonds may accelerate, creating temporary supply pressure, but strong demand from long-term stable funds remains [3]