1. Report Industry Investment Rating - The rating for government bonds is "oscillation" [5] 2. Core View of the Report - Although the factors driving the bond market's strength are mainly at the expected level and the market may fluctuate, the long - term upward direction is relatively certain. The bond bull market is in the accumulation period, and a bullish approach is recommended. [16][17] - There are two new features in the bond market this week: the impact of tariff expectations on the bond market has weakened, and the market's expectation of liquidity has started to turn positive. [16] - The factors supporting the bond market's strength are mainly concentrated in expectations, which may be falsified within the month but have a high probability of being realized in the next few months. In the long run, the liquidity environment has a basis for further loosening, and incremental monetary policies are expected to be implemented in Q3. [17] 3. Summary According to the Directory 3.1 One - Week Review and Viewpoint 3.1.1 This Week's Trend Review - From June 2nd to June 8th, government bond futures turned from weak to strong. Influenced by factors such as Sino - US leaders' potential phone calls, expectations of central bank operations, and Sino - US trade negotiations, the bond market fluctuated. By June 6th, the settlement prices of the main contracts of 2 - year, 5 - year, 10 - year, and 30 - year government bond futures were 102.448, 106.125, 108.900, and 119.720 yuan respectively, up 0.050, 0.120, 0.185, and 0.310 yuan from last weekend. [2][14] 3.1.2 Next Week's Viewpoint - Although the driving factors for the bond market's strength are mainly at the expected level and the market may fluctuate, the long - term upward direction is clear. The bond bull market is in the accumulation period, and a bullish approach is recommended. [16] - There are two new features in the bond market this week: the impact of tariff expectations on the bond market has weakened, and the market's expectation of liquidity has started to turn positive. [16] - The market's expectation of liquidity turning positive is due to factors such as the stabilization of certificate of deposit (CD) rates, the central bank's 1 - trillion - yuan outright reverse repurchase operation at the beginning of the month, and large banks' continuous purchase of short - term bonds. [16] 3.2 Weekly Observation of Interest - Rate Bonds 3.2.1 Primary Market - This week, 48 interest - rate bonds were issued, with a total issuance volume of 614.275 billion yuan and a net financing of 275.021 billion yuan, up 220.063 billion yuan and 7.639 billion yuan respectively from last week. [22] - 26 local government bonds were issued, with a total issuance volume of 109.595 billion yuan and a net financing of 50.501 billion yuan, down 118.617 billion yuan and 86.881 billion yuan respectively from last week. [22] - 401 CDs were issued, with a total issuance volume of 586.190 billion yuan and a net financing of - 80.360 billion yuan, down 83.310 billion yuan and 97.130 billion yuan respectively from last week. [22] 3.2.2 Secondary Market - Government bond yields declined. By June 6th, the yields of 2 - year, 5 - year, 10 - year, and 30 - year government bonds were 1.42%, 1.52%, 1.66%, and 1.88% respectively, down 4.23, 3.31, 1.30, and 1.40 basis points from last weekend. [27] - The 10Y - 1Y and 10Y - 5Y spreads widened by 3.11bp and 2.01bp respectively, while the 30Y - 10Y spread narrowed by 0.1bp. [27] 3.3 Government Bond Futures 3.3.1 Price, Trading Volume, and Open Interest - Government bond futures turned from weak to strong. By June 6th, the settlement prices of the main contracts of 2 - year, 5 - year, 10 - year, and 30 - year government bond futures were 102.448, 106.125, 108.900, and 119.720 yuan respectively, up 0.050, 0.120, 0.185, and 0.310 yuan from last weekend. [33] - The trading volumes of 2 - year, 5 - year, 10 - year, and 30 - year government bond futures this week were 39,510, 58,282, 59,360, and 71,211 lots respectively, with changes of + 2,766, - 2,336, - 13,870, and - 10,576 lots from last weekend. [37] - The open interests of 2 - year, 5 - year, 10 - year, and 30 - year government bond futures this week were 121,116, 166,717, 196,017, and 115,097 lots respectively, with changes of - 816, + 674, - 11,525, and - 9,017 lots from last weekend. [37] 3.3.2 Basis and Implied Repo Rate (IRR) - There were few arbitrage opportunities this week. At the beginning of the month, the liquidity further loosened, the futures basis generally increased slightly, and the IRR of the cheapest - to - deliver (CTD) bonds of each main contract generally dropped to around 1.8%. With the current CD rate close to 1.7%, the opportunities for arbitrage strategies were relatively limited. [41] 3.3.3 Inter - Delivery and Inter - Product Spreads - By June 6th, the inter - delivery spreads of the 2506 - 2509 contracts of 2 - year, 5 - year, 10 - year, and 30 - year government bond futures were - 0.132, - 0.290, - 0.190, and - 0.730 yuan respectively, with changes of + 0.038, + 0.000, + 0.030, and - 0.060 yuan from last weekend. [44] 3.4 Weekly Observation of the Funding Situation - This week, the central bank conducted 930.9 billion yuan of reverse repurchase operations, with 1,602.6 billion yuan of reverse repurchases maturing, resulting in a net withdrawal of 671.7 billion yuan. [51] - On June 6, 2025, the central bank conducted a 1 - trillion - yuan outright reverse repurchase operation with a term of 91 days. [51] - As of June 6th, R007, DR007, SHIBOR overnight, and SHIBOR 1 - week were 1.55%, 1.53%, 1.41%, and 1.50% respectively, down 14.58, 13.22, 6.00, and 11.70 basis points from last weekend. [54] - This week, the average daily trading volume of inter - bank pledged repurchase was 7.5 trillion yuan, 1 trillion yuan more than last week, and the overnight proportion was 87.48%, higher than last week's 83.88%. [56] 3.5 Weekly Overseas Observation - The US dollar index weakened slightly, and the yield of 10 - year US Treasury bonds increased. As of May 30th, the US dollar index fell 0.24% to 99.2031 from last weekend, and the yield of 10 - year US Treasury bonds rose 10 basis points to 4.51%. The spread between Chinese and US 10 - year Treasury bonds was inverted by 284.7 basis points. [61] - This week, the expectation of trade conflicts fluctuated. Different assets had different understandings and trading behaviors regarding trade conflicts. Stocks, bonds, commodities, and foreign exchange generally performed strongly. [62] 3.6 Weekly Observation of High - Frequency Inflation Data - This week, industrial product prices rose across the board. As of June 6th, the South China Industrial Product Index, Metal Index, and Energy and Chemical Index were 3,431.20, 6,071.06, and 1,583.28 points respectively, up 48.17, 47.35, and 24.95 points from last weekend. [64] - This week, agricultural product prices showed mixed trends. As of June 6th, the prices of pork, 28 key vegetables, and 7 key fruits were 20.46, 4.35, and 7.79 yuan/kg respectively, with changes of - 0.20, + 0.02, and - 0.05 yuan/kg from last weekend. [64] 3.7 Investment Recommendations - Adopt a bullish approach. [21][65] - Moderately pay attention to the arbitrage opportunities of government bond futures. [21] - Moderately pay attention to the strategy of steepening the yield curve. [21]