Core Viewpoint - After a brief stabilization, the bill rates have significantly increased over two consecutive working days, with the 6-month government bank bill discount rate rising to 1.33% on February 26, marking a new high for the year and surpassing government bond rates for the first time this year [1][13]. Market Performance on February 26 - On February 26, the 3-month government bank bill rate rose by 45 basis points (BP) to 1.50%, while the 7-month and 8-month rates increased by 6 BP to 1.30% and 1.33%, respectively [6][15]. - The trading range for various maturities showed significant upward movement, with the 1-month rate reaching a high of 1.50% [4][18]. Historical Trends - The bill rates experienced a notable drop at the beginning of February, with the 7-month rate falling by 28 BP to 0.83% on the first working day. However, a rebound began shortly after, with the 8-month rate rising to 1.15% by February 14 [5][19]. - By February 26, the 8-month rate had increased by 48 BP since the beginning of the month, reflecting a strong upward trend [19][22]. Supply and Demand Dynamics - The supply of bills in the primary market has been recovering, but demand from banks remains weak, leading to a situation where supply significantly exceeds demand. Many banks are not only refraining from purchasing bills but are also actively selling their inventory [12][24]. - The overall market conditions have contributed to the substantial rise in bill rates, reaching new highs for the year [12][24]. Interest Rate Comparisons - As of February 26, the spread between bill rates and government bond rates was 4 BP, while the spread with interbank certificates of deposit was -24 BP, indicating that bill rates have surpassed government bond rates for the first time this year [10][23].

1. Report Industry Investment Rating - No information about industry investment rating is provided in the report. 2. Core Viewpoints of the Report - The balance of inter - bank certificates of deposit (CDs) has declined significantly since the second half of 2025. The 1Y inter - bank CD rate is expected to decline slightly, and the 1Y inter - bank CD rate of large banks may fall below 1.55% in the next few quarters. The long - term bond yield has room for further decline, with the 10Y Treasury bond yield expected to oscillate between 1.6% - 1.9% in 2026, and the bond market trend may be significantly stronger than the early - year expectations [1][2][3]. 3. Summary of Related Contents 3.1 Inter - bank CD Balance and Structure - As of the end of January 2026, the balance of inter - bank CDs was 19.03 trillion yuan, a decrease of 2.77 trillion yuan compared to the end of May 2025. Among them, the balance of state - owned large banks was 6.34 trillion yuan, a decrease of 1.36 trillion yuan compared to the first half of 2025; the balance of joint - stock banks was 5.59 trillion yuan, a decrease of 0.6 trillion yuan; the balance of city commercial banks was 5.81 trillion yuan, a decrease of 0.13 trillion yuan; the balance of rural commercial banks was 1.14 trillion yuan, with little change [1]. - Since the beginning of 2025, the proportion of 1Y inter - bank CDs has decreased from 63.2% at the end of 2024 to 50.2% at the end of January 2026 [1]. 3.2 Reasons for the Decline in Inter - bank CD Balance of Large Banks - Since the second quarter of 2025, the growth rate of general deposits of the four major banks has rebounded from 3.7% at the end of March 2025 to 7.6% at the end of January 2026, alleviating the liability pressure of large banks [1]. - Since the second half of 2025, the central bank has increased the medium - and long - term liquidity injection. As of the end of January 2026, the central bank's claims on other depository corporations reached 21.69 trillion yuan, an increase of 4.55 trillion yuan compared to the end of May 2025. The large banks obtained a large amount of funds through repurchase and MLF, significantly reducing their demand for issuing inter - bank CDs [1]. - The preference of wealth management products for investing in deposits and the growth of non - bank inter - bank deposits due to the active stock market may also reduce the demand of some banks for issuing inter - bank CDs [1]. 3.3 Deposit Situation - Since 2022, although the deposit interest rate has been significantly reduced multiple times, the balance of personal time deposits has steadily increased from 68.2 trillion yuan at the end of December 2021 to 123.8 trillion yuan at the end of January 2026. The impact of the significant reduction of the time deposit interest rate in May 2025 on personal time deposits has weakened [1]. - The "current - deposit - oriented" trend of bank deposits is not obvious. As of the end of January 2026, the proportion of current deposits in personal deposits was only 26.3%, slightly lower than 26.8% at the end of September 2024. Since the beginning of 2025, the proportion of current deposits has stabilized, which is beneficial for banks to reduce liability costs [2]. 3.4 Investor Structure of Inter - bank CDs - As of the end of December 2025, policy banks held 0.44 trillion yuan of inter - bank CDs, accounting for 2.2%, a decrease of 4.2 percentage points compared to the end of 2020; depository financial institutions held 4.72 trillion yuan, accounting for 24.0%, a decrease of 12.4 percentage points; non - legal person products held 12.53 trillion yuan, accounting for 63.7%, an increase of 14.4 percentage points. The investment demand for inter - bank CDs is mainly from broad - based funds such as bank wealth management products and money market funds [2]. 3.5 Interest Rate Analysis - The money market interest rate is greatly affected by the central bank's actions. The inter - bank CD rate is related to the marginal winning bid rates of repurchase and MLF. The short - term interest rate still has room to decline, and the 1Y inter - bank CD rate of large banks may fall below 1.55% in the next few quarters [2]. - The long - term bond yield has room for further decline. The 10Y Treasury bond yield is expected to oscillate between 1.6% - 1.9% in 2026, and the 30Y Treasury bond active bond may return below 2.2%. The 1Y inter - bank CD rate of large banks may fall below 1.55% [3].

Report Summary 1. Investment Rating No investment rating for the industry is provided in the report. 2. Core View Continue to hold and pay attention to short - end performance [1]. 3. Summary by Content Market Performance - Treasury bond futures rose in early trading, were affected by news in the afternoon, and closed higher. Structurally, long - end performed strongly during the day, with TS and TF main contracts flat and others rising. The central bank had a net injection of 173.8 billion yuan as there were no reverse repurchase maturities in the open market [1]. News - The General Office of the CPC Central Committee and the General Office of the State Council issued an opinion on further ensuring and improving people's livelihood and addressing urgent concerns of the public [2]. Market Analysis - The capital interest rate dropped further. The central bank's net injection in the open - market in the morning led to a decline in the capital interest rate, and the overnight inter - bank anonymous rate fell below 1.4% to 1.35%. The inter - bank certificate of deposit (NCD) rate declined, indicating improved liquidity. Currently, the bond market sentiment is good, but the relatively weak performance of short - term bonds does not match the market trend and NCD performance. If this structure continues, the upside potential of long - end bonds will be limited [3]. - There was a new round of China - US economic and trade negotiations in the UK this week. In the afternoon, false news of a China - US agreement caused a temporary drop in treasury bond futures prices. In the short - term, the biggest variable in the China - US negotiations may be a certain reduction of the 20% fentanyl tariff, but complete removal is unlikely. If the trade negotiation is favorable this week, it may be a case of "bad news being fully priced in" for the bond market [3]. Data | Contract | 2025 - 06 - 06 | 2025 - 06 - 05 | Today's Change | Last Week's Same Period | | --- | --- | --- | --- | --- | | TS2509 | 102.448 | 102.434 | 0.014 | 102.35 | | TF2509 | 106.125 | 106.06 | 0.065 | 105.875 | | T2509 | 108.9 | 108.735 | 0.165 | 108.5 | | TL2509 | 119.72 | 119.36 | 0.36 | 118.75 | | TS Basis (CTD) | - 0.0733 | - 0.0721 | - 0.0012 | - 0.0794 | | TF Basis (CTD) | - 0.0287 | - 0.0084 | - 0.0203 | - 0.0397 | | T Basis (CTD) | 0.2587 | - 0.0138 | 0.2725 | 0.3512 | | TL Basis (CTD) | 0.5255 | 0.6076 | - 0.0821 | 0.3512 | | DR001 | 1.4124 | 1.412 | 0.0004 | 0 | | DR007 | 1.5323 | 1.5509 | - 0.0186 | - 0.1007 | | DR014 | 1.5833 | 1.5892 | - 0.0059 | - 0.1352 | [3][4] Charts - The report includes charts on net basis and basis of TS, TF, T, and TL main contracts, long - end interest rate trends, treasury bond spreads (7Y - 2Y), US treasury bond trends, US - China spreads, exchange - traded fund prices, DR and policy anchors, and inter - bank capital transactions [5][10][12][15][16].