Core Viewpoint - The Commonwealth Bank of Australia (CBA) share price experienced a decline of 4% in March, outperforming the S&P/ASX 200 Index, which dropped by 7.8% during the same period due to geopolitical tensions in the Middle East [1]. Group 1: Market Performance - The CBA share price's decline was less severe compared to other businesses, such as BHP Group Ltd, which fell by 13.7%, contributing to the larger decline of the ASX 200 [2]. - The volatility in March was influenced by military actions involving Israel, the US, and Iran, leading to broader market instability [1]. Group 2: Interest Rate Implications - The increase in fuel costs due to the Iran conflict is expected to drive higher inflation, potentially prompting interest rate hikes by the Reserve Bank of Australia (RBA) [3]. - Higher interest rates generally pose challenges for most asset prices, as risk-free investments become more attractive, leading to declines in shares and property values [4]. Group 3: CBA's Financial Position - Despite the general market challenges, CBA may benefit from rising interest rates due to its significant client transaction deposit balances, allowing the bank to lend at higher rates and boost net profit [6]. - The stability of CBA as a 'blue-chip' investment is highlighted, as it has managed to provide a safe haven for investors amid market turbulence [7].

Economic Growth and Inflation - Input inflation is characterized by rising international raw material prices impacting domestic consumer goods, reflected in the declining ratio of CPI to PPIRM since 2012[4] - Monthly GDP growth for January-February reached 5.2%, with expectations for Q1 GDP to exceed 5.0%[4] - The construction sector's employment decline is a key factor in rising unemployment rates, necessitating increased infrastructure investment to stabilize employment[4] Sector Performance - The service sector's growth is notably low, while industrial production is primarily supported by external demand, indicating insufficient domestic demand[4] - High-tech industries are growing significantly faster than in the past two years, but manufacturing upgrades and AI development are not creating enough jobs, keeping unemployment high[4] Infrastructure Investment - Infrastructure investment saw a significant increase from -15.2% in December to 9.8% at the start of the year, indicating a focus on stabilizing employment rather than growth[4] - If employment stabilization policies continue, construction alone could boost GDP by approximately 0.4 percentage points in Q2 compared to Q4 of the previous year[4] Market Implications - The bond market may face pressure in Q2 as GDP growth is expected to exceed 5%, driven by construction and industrial recovery[4] - The current economic environment suggests that changes in funding demand will have a greater impact on the funding landscape than central bank policy adjustments[4]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Since 2026, banks have been the main buyers of treasury bonds within 10 years and inter - bank certificates of deposit in the secondary market. Public funds are currently cautious, with low durations and a decreasing proportion of interest - rate purchases [1]. - The bank's liability side remains stable, supported by the growth of non - financial enterprises and non - banking institutions' deposits, while there is a certain loss of household deposits. The strong stock market performance has also promoted the growth of non - banking deposits [2]. - Although strengthening inter - bank self - discipline is beneficial for banks in the long - term, in the short - term, the partial loss of inter - bank deposits and the decline in liability stability may affect banks' asset - side behavior [3]. - There is uncertainty about whether non - banks can take over from banks to continue bullish operations. Non - banks are more cautious due to many disturbing factors, and the market rhythm and direction may change. Although non - banks have limited short - selling chips and there are opportunities for bullish band operations, the increasing supply in the primary market requires caution in April [4]. 3. Summary by Directory 3.1 Non - banks to Take Over from Banks: Continue to Go Long? 3.1.1 Most Funds are Cautious, and Banks Become the Market Main Force - In 2026, banks are the main buyers of treasury bonds within 10 years and inter - bank certificates of deposit in the secondary market. Large - scale banks have a cumulative net purchase of 6450.9 billion yuan in treasury bonds and 2400.7 billion yuan in certificates of deposit in the secondary market. Small and medium - sized banks mainly buy policy financial bonds within 10 years, treasury bonds over 20 years, and more than 1 trillion yuan of inter - bank certificates of deposit [14]. - Banks also have a large amount of primary - market bond underwriting. The strong correlation between the primary - market issuance of 50 - year treasury bonds and banks' secondary - market sales indicates that the net secondary - market purchases underestimate banks' actual buying power [15]. - Public funds are currently cautious. Since early March, due to the unstable Middle - East situation, the market has gradually reduced durations, which have returned to the level before the Spring Festival. The trading enthusiasm of public funds in 10 - year and 30 - year treasury bonds has declined, and banks have become a stabilizing force in the market [17][19]. 3.1.2 The Stability of Banks' Liability Side Exceeds Expectations - Although there were concerns about the loss of time deposits in the first half of 2026, the bank's liability system remains stable. From December 2025 to January 2026, the year - on - year deposit growth rate of large - scale banks increased significantly, partly due to actual deposit growth and partly due to the low - base effect caused by the loss of non - bank inter - bank deposits [22]. - In terms of new deposits, non - financial enterprises and non - banking institutions are the main growth drivers, while household deposits have a certain loss. From January to February, household deposits increased less by 890 billion yuan, non - financial enterprises increased more by 1055.5 billion yuan, fiscal deposits increased less by 390 billion yuan, and non - banking financial institutions increased more by 1120 billion yuan, with a total net increase of 520 billion yuan [29]. - Large - scale banks' deposit attractiveness has marginally increased. In January and February, the new household deposits of small and medium - sized banks were relatively low, while large - scale banks performed better. In terms of enterprise deposits, large - scale banks also showed better performance [30]. - The strong stock market performance has promoted the growth of non - bank deposits. Historically, non - bank deposits are strongly correlated with stock market performance. From December 2025 to February 2026, the good stock market performance drove the growth of banks' non - bank deposits [35]. 3.1.3 Will Banks' Buying Power Weaken? - Media reports suggest that the self - discipline management of inter - bank deposit interest rates is being further strengthened. According to the new requirements, the proportion of inter - bank current deposits with an interest rate higher than 1.4% of the 7 - day reverse repurchase (OMO) policy rate should not exceed 10% - 20% at the end of the quarter [37]. - The record - high bank deposit - loan gap may reflect the increasing pressure on banks' interest spreads. As of February 2026, the deposit - loan gap of financial institutions reached a record high. In the long - term, strengthening inter - bank self - discipline is beneficial for reducing banks' liability costs and stabilizing net interest spreads. However, in the short - term, the partial loss of inter - bank deposits and the decline in liability stability may affect banks' asset - side behavior [38][45]. - Large - scale banks have abundant funds at the beginning of the year. They conduct short - term reverse repurchases and buy certificates of deposit. They also buy a large amount of treasury bonds in the secondary market, which has been an important factor driving down the bond market. However, the impact of strengthened inter - bank supervision on banks' liability sides remains to be seen. Non - banks are more cautious, and the market rhythm and direction may change. Although non - banks have limited short - selling chips and there are opportunities for bullish band operations, the increasing supply in the primary market requires caution in April [57]. 3.2 Market Review: Many Overseas Disturbances - Geopolitical conflicts have affected the bond market. On March 23, 2026, due to the expected escalation of geopolitical conflicts, the bond market was under pressure. After that, news about the US - Iran situation and the central bank's MLF operation also affected the bond market. This week, the 10 - year treasury bond yield decreased by 1.4 BP, and the 30 - year treasury bond yield decreased by 1.65 BP [59][60][61]. 3.3 High - Frequency Tracking: Rising Oil Prices, High Probability of PPI Turning Positive in March 3.3.1 Price Index: Rising Oil Prices, High Probability of PPI Turning Positive - Consumer prices: Pork prices continue to decline, while fruit and vegetable prices are stable. - Producer prices: Oil prices continue to rise. Based on the prices of five commodities in March, the year - on - year PPI in March is expected to turn positive, with an expected value of 2.39%, and the PPI for means of production is expected to be 3.39% [63][64]. 3.3.2 Production: Relatively Stable The production indicators such as crude steel daily output, key power plant coal consumption, PX operating rate, and steel enterprise blast furnace operating rate show relatively stable production [86][87]. 3.3.3 Consumption: Still Weak - Liquor prices are flat, automobile consumption has slightly recovered, and postal express volume is slightly higher than the same period [95]. 3.3.4 Investment: Still Weak Overall - Real estate: There is a certain "spring market" in the second - hand housing market, but land transfer remains weak. - Infrastructure: Asphalt and cement production are at relatively low levels [104]. 3.3.5 Imports and Exports: Rising Freight Rates The freight rates for imports and exports are rising [108]. 3.3.6 Inventory: Marginal Decline in Rebar and Copper The inventories of rebar and copper are showing a marginal decline [114]. 3.3.7 Transportation: At a High Level in the Same Period The coastal container freight rate index and other transportation - related indicators are at a high level compared to the same period [118].

Core Viewpoint - Oil prices continue to rise while gold and silver prices decline, indicating a shift in market dynamics and potential investment opportunities in commodities [3][4]. Group 1: Major Assets & Overseas Events & Data - Oil prices increased, with Brent crude reaching $112.6 per barrel, while COMEX gold and silver prices fell to $4,492.0 per ounce and $67.6 per ounce, respectively [3][47]. - The S&P 500 index dropped by 2.1%, with most sectors declining, particularly communication services and information technology, which fell by 7.2% and 3.5% [5][9]. - The U.S. Treasury General Account (TGA) balance rose to $837.4 billion, while the net issuance of U.S. Treasury bonds decreased to $5.16 billion [65][71]. Group 2: U.S. Treasury and Fiscal Data - The cumulative fiscal deficit for the U.S. in 2026 reached $516 billion, down from $553.6 billion in the same period last year, with total expenditures at $1.9235 trillion [71][75]. - Tax revenue increased to $1.0245 trillion compared to $940.8 billion last year, indicating a positive trend in government revenue [71][79]. Group 3: Inflation and Economic Indicators - Japan's CPI for February showed a year-on-year increase of 1.3%, with core inflation (excluding policy factors) at 1.7%, indicating stable core inflation trends [110]. - Initial jobless claims in the U.S. were reported at 210,000, aligning with market expectations, while continuing claims were lower than anticipated at 1.819 million [116][118]. Group 4: Central Bank Policies - The probability of the Federal Reserve maintaining interest rates unchanged in 2026 increased to 72.4%, reflecting a significant shift in market expectations [4][101]. - The European Central Bank is expected to initiate interest rate hikes in June, with current market sentiment indicating a cautious approach [4][105].

Group 1 - Oil prices continue to rise, while gold and silver prices decline. Brent crude oil increased by 0.3% to $112.6 per barrel, COMEX gold fell by 1.8% to $4,492.0 per ounce, and COMEX silver dropped by 2.8% to $67.6 per ounce [1][47][54] - The S&P 500 index decreased by 2.1%, with most sectors experiencing declines. Communication services, information technology, and financials fell by 7.2%, 3.5%, and 2.1% respectively, while energy, materials, and utilities rose by 6.2%, 4.2%, and 2.9% [2][9] - Emerging market indices showed mixed results, with the South Korean Composite Index down by 5.9% and the Istanbul Stock Exchange down by 2.6% [2] Group 2 - The U.S. Treasury General Account (TGA) balance decreased to $837.4 billion as of March 25, 2026, with net issuance of U.S. Treasury bonds falling to $5.16 billion [65][71] - The cumulative fiscal deficit for the U.S. in 2026 reached $516 billion, lower than the $553.6 billion recorded in the same period last year. Total expenditures were $1,923.5 billion, compared to $1,835.6 billion last year [71][72] - The market anticipates a 72.4% probability that the Federal Reserve will maintain interest rates unchanged, a significant increase from the previous week's 64% [101][106] Group 3 - Japan's CPI for February showed a year-on-year increase of 1.3%, down from 1.5% previously, with core inflation (excluding food and energy) rising to 1.7% [110][113] - The U.S. jobless claims remained stable, with initial claims at 210,000, aligning with market expectations, and continuing claims at 1.819 million, lower than the anticipated 1.848 million [116][119]

Investment Rating - The industry investment rating is "Buy" [3] Core Insights - The report indicates that large banks have limited net buying activity, with a monthly cumulative net purchase of 46.8 billion yuan as of March 26, which is a decrease of approximately 200 billion yuan month-on-month but an increase of about 50 billion yuan year-on-year. It is expected that credit issuance may slightly decline compared to March 2025, but the initial performance remains strong [7][20] - The central bank's operations included a net injection of 281.9 billion yuan through various monetary policy tools, with a focus on maintaining liquidity stability as the quarter-end approaches [16] - The report highlights that the liquidity environment is expected to tighten in April due to tax payments and annual settlement pressures, with potential increases in funding rates towards the end of the month [16][17] Summary by Sections Section 1: March Credit Performance - The data shows that the funding environment remains stable as the quarter-end approaches, with large banks gradually reducing their lending from 4.37 trillion yuan to 3.78 trillion yuan [16] - The report emphasizes the importance of monitoring the upcoming PMI data and bank annual reports for insights into future liquidity trends [23] Section 2: Central Bank Dynamics and Market Rates - The central bank conducted 4.742 trillion yuan in 7-day reverse repos, with a net injection of 281.9 billion yuan after accounting for maturing operations [16] - Market rates for various instruments, including treasury bonds and NCDs, have shown slight fluctuations, with the 1-year treasury yield at 1.25% and the average NCD issuance rate at 1.52% [17][18] Section 3: Bank Financing Tracking - The total outstanding amount of interbank certificates of deposit (NCDs) is 18.19 trillion yuan, with a weighted average issuance rate of 1.65% [21] - The report notes that there were no new issuances of commercial bank bonds during the period, and the total outstanding amount of commercial bank bonds is 3.32 trillion yuan [22]

Group 1 - Oil prices continue to rise, while gold and silver prices decline. Brent crude oil increased by 0.3% to $112.6 per barrel, COMEX gold fell by 1.8% to $4,492.0 per ounce, and COMEX silver dropped by 2.8% to $67.6 per ounce [1][47][54] - The S&P 500 index decreased by 2.1%, with most sectors experiencing declines. Communication services, information technology, and financials fell by 7.2%, 3.5%, and 2.1% respectively, while energy, materials, and utilities rose by 6.2%, 4.2%, and 2.9% [2][9] - Emerging market indices showed mixed results, with the South Korean Composite Index down by 5.9% and the Istanbul Stock Exchange National 30 Index down by 2.6% [2] Group 2 - The U.S. Treasury General Account (TGA) balance decreased to $837.4 billion as of March 25, 2026, with net issuance of U.S. Treasury bonds falling to $5.16 billion [65][71] - The cumulative fiscal deficit for the U.S. in 2026 reached $516 billion, lower than the $553.6 billion recorded in the same period last year. Total expenditures were $1,923.5 billion, compared to $1,835.6 billion last year [71][72] Group 3 - The probability of the Federal Reserve maintaining interest rates unchanged has increased to 72.4% as of March 28, 2026, up from 64% the previous week. The European Central Bank is expected to begin raising rates in June [101][105] - Japan's CPI for February 2026 was reported at 1.3% year-on-year, down from 1.5%, with core inflation (excluding policy factors) at 1.7% [110]

Market Overview - The financial markets are experiencing significant volatility due to geopolitical tensions, particularly the Iran-Israel war, which has led to threats of blocking key oil chokepoints, pushing oil prices above $100 [1][4] - The broader crypto market is in bearish territory, with major cryptocurrencies like Bitcoin, Ethereum, XRP, and Solana down 6-8% in a week, resulting in a total market value loss of over $80 billion since March 24 [5][6] Bitcoin Options Expiry - On March 27, a record $14.16 billion in Bitcoin options expired, leading to a liquidation of nearly 40% of open positions on the Deribit exchange and causing Bitcoin to drop 5% to as low as $65,720 [2][4] - The forced selling resulted in over 122,000 traders being liquidated, with total losses reaching $451 million [2][4] Price Movements - Bitcoin's price fell from $71,000 at the start of the week to $66,457, marking a 47% decline from its all-time high of $126,080 in October 2025 [11] - Ethereum dropped below $2,000 for the first time since mid-2024, down 60% from its August 2025 high of $4,953 [12] - XRP fell to $1.33, down 65% from its July 2025 cycle high of $3.65, while Solana experienced the largest decline, down 72% from its peak [12][13] Market Sentiment and Indicators - The Fear & Greed Index is currently at 23, indicating extreme fear in the market, while the average crypto RSI has dropped to 39, suggesting oversold conditions [5] - Bitcoin's support level is at $66,000; a daily close below this level could trigger further declines towards $50,000 [6][19] Macro Economic Factors - The Federal Reserve's recent meeting revised its 2026 PCE inflation forecast from 2.4% to 2.7%, pushing rate cut expectations further out, which negatively impacts risk assets [7] - The 10-year Treasury yield is near 4.5%, and the dollar index has increased by 0.57% in a week, leading to capital moving from crypto to bonds [8] Potential Recovery Signals - A ceasefire or de-escalation in the Iran-Israel conflict could lead to a recovery in the crypto market, as seen in early March when Bitcoin rose 16% following ceasefire reports [15] - The CLARITY Act is progressing towards a Senate vote, which could provide a legal framework for institutional investment in crypto, a key requirement for many investors [16] - Stablecoin supply is near a record $316 billion, indicating that capital remains within the crypto ecosystem and could flow back into major assets once conditions improve [17]

Group 1 - Australia's inflation eased slightly in February but remained well above the central bank's target range [1] - The current inflation situation keeps the door open for a further rise in interest rates [1]

Core Insights - The global asset pricing logic is changing under the backdrop of high oil prices, high inflation, and high interest rates, with U.S. Treasury yields becoming more sensitive to inflation and supply factors [2] - The long-term interest rate is facing upward pressure, while gold retains its allocation value in an inflationary and uncertain environment [2] - The U.S. dollar is supported by safe-haven demand in the short term but faces adjustment pressure in the medium term due to fiscal constraints and reserve diversification [2] - The attractiveness of RMB assets is expected to increase as China distances itself from conflict-prone areas and maintains policy space [2] - A-shares are influenced by external disturbances but still present structural opportunities in sectors like power equipment and high-end manufacturing [2] - Hong Kong stocks are more affected by foreign capital flows and exhibit higher volatility, but their attractiveness for medium to long-term capital is increasing due to low valuations [2] Section Summaries 1. U.S.-Iran Conflict Dynamics - The U.S.-Iran conflict has escalated into a prolonged confrontation, impacting global energy supply and prices, with Brent crude oil prices rising significantly [6][7] - The conflict has led to increased military spending by the U.S., with costs exceeding $10 billion related to Iran, contributing to the rapid expansion of U.S. federal debt [15] 2. U.S. Federal Reserve's Hawkish Shift Amid High Energy Prices - The Federal Reserve has signaled a significant reduction in rate cut expectations, with most officials supporting only one rate cut in 2026 [8][12] - Inflation forecasts have been revised upward, with the core PCE inflation expected to rise to 4.0% [8][12] 3. U.S. Treasury Debt Outlook - U.S. federal debt has surpassed $40 trillion, with rapid growth driven by persistent fiscal deficits and military spending related to geopolitical tensions [15][19] - Interest payments on the debt are projected to exceed $1 trillion, raising concerns about fiscal sustainability [19] 4. Asset Class Changes Under Re-Inflation Narrative - The core logic of global asset pricing is shifting towards a framework of multiple constraints, including high energy costs and inflation persistence [32] - The traditional safe-haven role of U.S. Treasuries is weakening as inflation and supply factors dominate market dynamics [34] - Gold is expected to benefit from its dual role as a hedge against inflation and a currency alternative [34] 5. Structural Changes in Asset Pricing - The current asset pricing system is undergoing a fundamental reconfiguration, with energy costs, fiscal constraints, and credit stability becoming central [41] - Assets with supply security and credit stability characteristics, such as gold and energy, are likely to gain new premium sources [41]