Core Viewpoint - The article discusses the recent volatility in the bond market, highlighting banks' strategies to manage profits through the sale of OCI and AC account assets to offset losses from rising interest rates [1][3][12]. Group 1: Market Conditions - The bond market experienced significant fluctuations, with long-term bond yields reaching new highs in 2025, such as the 10-year government bond yield hitting 1.8025% and the 1-year bond yield rising to 1.61% [1]. - The market has been characterized by a "negative feedback" loop, where the volatility in bond prices has led to a lack of profitability for many institutions since the beginning of the year [12]. Group 2: Bank Strategies - Banks are reportedly selling bonds from OCI and AC accounts to realize gains and manage quarterly profits, a practice that reflects the flexibility of accounting standards [3][6]. - The sale of OCI assets allows banks to transfer accumulated gains directly to the profit and loss statement, while AC asset sales enable the recognition of the difference between fair value and book value as current profits [6][14]. Group 3: Financial Impact - To fully offset the impact of bond market fluctuations on profits, banks would need to sell approximately 2.2 trillion yuan of OCI assets, which represents 9.7% of the OCI balance as of the third quarter of 2024 [13]. - The costs associated with selling OCI and AC assets include capital loss for OCI and the potential loss of interest income for AC, necessitating a cautious approach to asset liquidation [14]. Group 4: Institutional Performance - The ability of banks to release performance through OCI varies, with state-owned banks and rural commercial banks having the most capacity, while joint-stock and city commercial banks have limited space [12]. - The article notes that the ongoing liquidity issues faced by large banks, termed "liability scarcity," have affected their ability to invest in bonds, leading to a net selling trend observed since late February [10][9].