Core Insights - The report highlights the increasing difficulty for investors in the bond market as of mid-2025, with limited downward interest rate space, low coupon rates, narrow volatility ranges, intensified trading competition, and excessive strategy exploration [1][12] - Investors are focusing on "micro-operation" strategies such as bond switching, heavy positions in credit bond ETFs, narrowing spreads, and marginal bidding in primary auctions to capture alpha opportunities, although these strategies are becoming crowded [1][2][4] - The overall direction of the bond market is slightly bullish, but the space for further gains is limited, and the micro-operation trends may still have some inertia [1][4] Strategy One: "Diminishing Effect" of Bond Switching - There has been a rising interest in bond switching strategies among investors, particularly in the context of new and old bonds [2][13] - Historical data indicates that bond switching can enhance returns, but signs of diminishing effectiveness have emerged since Q2 2025 due to increased trading competition [2][18] - The conversion period for new bonds to active bonds has significantly shortened, and the interest rate spread between new and old bonds has narrowed, leading to potential overextension of strategy returns [2][18] Strategy Two: "Extreme" Credit Bond ETF Heavy Positioning - The rapid expansion of benchmark credit bond ETFs has led to significant changes in credit bond pricing [3][21] - The average valuation of index component bonds has compressed, with a notable decrease in spreads compared to ordinary credit bonds [3][21] - Investors are advised to avoid overly crowded index component bonds due to the severe valuation distortions that have occurred [3][25] Strategy Three: Flattening "All" Spreads - The bond market is generally bullish, but the downward space for key active bonds like the 10-year government bond is limited [4][12] - Certain bond types still present value opportunities, including 20-year government bonds and AAA-rated bank subordinated bonds [4][12] - Investors should be cautious in participating in trades related to long-end credit spreads due to the lack of support from insurance premiums and potential market volatility [4][12] Strategy Four: Increasing Marginal Bidding in Primary Auctions - There has been a rise in the enthusiasm for using marginal bidding strategies in the primary market for arbitrage between primary and secondary markets [5][12] - The historical data shows that the marginal bidding multiples for 10-year government bonds have reached record highs, reflecting the strategy's increased accuracy in a narrow trading environment [5][12]