Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The short - term end of the bond market, especially the inter - bank certificate of deposit (NCD) rate, has approached historical lows, and the analysis and judgment of it have little meaning due to the narrowing of fluctuations and changes in supply - demand structure [1][2][24]. - For the long - term end, the bond market shows a dull performance. Without clear monetary policy easing actions, the downward overdraft trading of long - term yields won't go far, and there is no obvious upward adjustment risk either [9]. Summary by Related Catalogs 1. Near - historical low NCDs: How to view? **1.1 Situation of Long - term and Short - term Bond Yields** - Long - term: During the period around the Two Sessions, the 30 - year ultra - long - term interest rate was weak, while the 10 - year interest rate was stable. The bond market was insensitive to both risk - aversion sentiment and inflation concerns. Without clear monetary policy easing, long - term yields had no significant upward or downward trends [9]. - Short - term: The NCD rate has approached historical lows. The 1 - year NCD of state - owned and joint - stock banks and the yields of bank financial bonds and 3 - year CDB bonds declined synchronously and slowly. The 1 - year NCD of state - owned and joint - stock banks had a first - level issuance and second - level price around 1.55%, close to the historical low of 1.54% in 2020. The decline in NCD and short - term interest rates compressed the spread with the capital interest rate [12]. **1.2 Changes in NCD Supply - demand Structure** - Supply side: The NCD stock has significantly decreased, with state - owned and joint - stock banks reducing about 3 trillion. Since 2024, state - owned banks have become the main suppliers. However, since the second half of 2025, the net financing of NCDs has been continuously negative. The low willingness of banks to issue NCDs is due to changes in the liability situation, such as the narrowing of the broad liability gap and the improvement of the deposit side. Additionally, central bank injections and inter - bank deposits can replace NCDs [14][15][18]. - Demand side: Product accounts maintain their NCD allocations, while banks actively reduce their holdings. Product accounts like bank wealth management and money market funds maintain stable NCD investments, while banks' NCD holdings have significantly decreased, which is related to the lack of spread space and the extrusion of idle funds after the tightening of inter - bank self - discipline [22]. **1.3 Pricing and Significance of NCDs** - The reasonable pricing of NCDs may be concentrated in the narrow range of 1.55% - 1.6%. There may be windows below 1.55%, but it loses the meaning of investment gaming. If the rate goes up, it will be when all maturities and varieties of interest rates face upward risks. With the narrowing of capital fluctuations, short - term products including NCDs have lost their "activity", and the significance of analysis and judgment is small [1][24]. 2. Risk Outlook No content other than risk warnings is provided in this part, so it is skipped.

Report Industry Investment Rating No information provided. Core View of the Report The risk of continued price increases for interbank certificates of deposit (NCDs) is low. The contradictions causing the front - loading of large banks' liability pressure are unlikely to intensify in June. The reasonable pricing center for NCDs of national and joint - stock banks after future capital price declines is 1.6%, and the current 1.7% is on the high side, presenting significant allocation value, but it is difficult for the NCD interest rate to decline in June [3][16][17]. Summary by Relevant Catalog 1. Reasons for the Sudden Price Increase of NCDs at the End of May - The sudden price increase of NCDs at the end of May led to a synchronous adjustment of interest rates and credit, and the NCD interest rate deviated from the capital price trend, with the NCD interest rate of national and joint - stock banks rising above 1.7% and the issuance volume increasing, which aggravated institutional concerns about banks' lack of liabilities [1][8]. 2. Analysis of the Reasons for the Front - loading of Large Banks' Liability Pressure - **Active front - loading of liability pressure by large banks**: In the last week of May, the issuance volume of NCDs increased, mainly the 1 - year variety of large state - owned banks, with a single - week issuance scale of 27.81 billion. The large banks advanced part of the liability pressure in advance. The 1 - year NCD maturity scale of large banks in June is around 240 billion, and the single - week issuance at the end of May has exceeded the future maturity [10][11]. - **Deposit interest rate cut**: Although the deposit interest rate cut aggravated the concern about banks' liability loss, the actual situation is acceptable. There was no obvious change in the scale of wealth management products after the deposit interest rate cut. The rapid transmission of this round of deposit interest rate cuts will reduce the relative liability pressure of large banks [2][13]. - **Credit and bond factors**: Credit demand in May may have improved marginally, and the government bond issuance peak in May increased the demand for long - term liabilities of banks. Considering the semi - annual time - point and indicator assessment at the end of June, the demand for long - term funds of banks may have increased marginally, but there is no obvious long - term liability pressure trend [2][14]. 3. Outlook for NCDs in June - The contradictions causing the front - loading of large banks' liability pressure are unlikely to intensify in June, and the space for continued price increases of NCDs is limited. After large banks raise 1 - year funds in advance, 3 - month NCDs may be the consensus term for both supply and demand. The supply pressure of long - term NCDs mainly depends on the issuance demand of joint - stock banks [3][16]. - The relative competition pressure of large banks' deposits is less than before. The so - called "disintermediation" of deposits will increase the allocation power of non - bank product accounts to NCDs and deposits, and the current impact is only at the expected level. The liability pressure brought by credit and long - bond allocation is a marginal change, and the government bond issuance pressure will weaken in June [3][16][17].