Core Viewpoint - The announcement marks the end of the tax exemption era for interest income on bonds, indicating a significant step towards tax system fairness in the bond market [2][12]. Policy Changes - Starting from August 8, 2025, new bonds issued will be subject to value-added tax (VAT) on interest income, while existing bonds will remain exempt until maturity [3][10]. - The policy aims to enhance fiscal sustainability and reflects a necessary adjustment as the bond market matures [12]. Market Reactions - Bond traders have expressed urgency in assessing the tax impact, with a notable shift in pricing dynamics between old and new bonds [2][3]. - The scarcity premium for tax-exempt old bonds has rapidly increased, while new bonds will need to offer higher coupon rates to compensate for the tax burden [3][10]. Investment Strategies - Analysts recommend focusing on acquiring tax-exempt old bonds, particularly long-term government and local bonds, to capitalize on their scarcity premium [5][10]. - There is a consensus that the new tax policy will lead to a widening spread between old and new bonds, with strategies like "long old bonds, short new bonds" becoming prevalent [6][10]. Market Dynamics - The bond market is expected to experience increased demand for old bonds, leading to a potential decline in yields for these securities [5][7]. - The adjustment in tax policy may also influence the pricing of credit bonds and interbank certificates of deposit, as institutions reassess their investment strategies [10][11]. Cross-Asset Implications - The tax changes could lead to a reallocation of funds across different asset classes, with some institutions potentially favoring high-dividend stocks due to the reduced attractiveness of taxable bonds [10][11]. - The varying tax impacts on different investment entities may create a divergence in capital flows, with public funds and foreign investors potentially gaining an advantage [10][11]. Future Considerations - The market will need to adapt to the new pricing dynamics between old and new bonds, with the potential for significant shifts in trading strategies as institutions respond to the tax changes [7][12]. - The upcoming issuance of new bonds will be critical in reflecting market sentiment and pricing adjustments in response to the new tax regime [5][12].