1. Report Industry Investment Rating No information provided in the content. 2. Core Viewpoints of the Report - Last week, the released February inflation data (CPI同比 1.3%, PPI同比 -0.9%) slightly exceeded market expectations. The February import - export growth rate was remarkable, and the US stated that the Iran conflict would end soon, making the Middle - East situation uncertain. The bond market declined again, and ultra - long bonds tumbled. The trading activity of ultra - long bonds increased slightly, with the term spread widening and the variety spread narrowing [1][4][10]. - For the 30 - year Treasury bond, as of March 13, the spread between the 30 - year and 10 - year Treasury bonds was 47BP, at a historically low level. Considering domestic economic data, the economic downward pressure in December eased, with the estimated December GDP year - on - year growth rate at about 4.5%, a 0.4% increase from November. The manufacturing PMI in January and February dropped to 49.3 and 49 respectively, indicating a weak start to the year. The deflation risk continued to ease. The report believes that the bond market is more likely to correct in the near future due to factors such as rising domestic inflation risk and reduced central bank bond - buying scale. The 30 - 10 spread is expected to fluctuate at a high level in the short term [2][11]. - For the 20 - year CDB bond, as of March 13, the spread between the 20 - year CDB bond and the 20 - year Treasury bond was 13BP, at a historically low position. Similar to the 30 - year Treasury bond situation, the bond market is more likely to correct in the near future. However, considering the bond market is still in a large oscillation range, the variety spread of the 20 - year CDB bond is expected to continue to fluctuate in a narrow range [3][12]. 3. Summary According to Relevant Catalogs 3.1 Ultra - long Bond Review - The February inflation data (CPI同比 1.3%, PPI同比 -0.9%) slightly exceeded market expectations. The February import - export growth rate was very good, and the US's statement on the Iran conflict made the Middle - East situation uncertain. The bond market declined, and ultra - long bonds tumbled. The trading activity of ultra - long bonds increased slightly, with the term spread widening and the variety spread narrowing [1][4][10]. 3.2 Ultra - long Bond Investment Outlook - **30 - year Treasury Bond**: As of March 13, the 30 - 10 spread was 47BP, at a historically low level. December economic downward pressure eased, with GDP growth rate estimated at 4.5% year - on - year, a 0.4% increase from November. January and February manufacturing PMI dropped, and deflation risk continued to ease. The bond market is more likely to correct due to rising inflation risk and reduced central bank bond - buying. The 30 - 10 spread is expected to oscillate at a high level in the short term [2][11]. - **20 - year CDB Bond**: As of March 13, the 20 - year CDB - Treasury spread was 13BP, at a historically low position. Similar economic situation as the 30 - year Treasury bond. The bond market is more likely to correct, but the variety spread of the 20 - year CDB bond is expected to fluctuate in a narrow range [3][12]. 3.3 Ultra - long Bond Basic Overview - The balance of outstanding ultra - long bonds is 25.3 trillion. As of February 28, ultra - long bonds with a remaining term over 14 years totaled 1,655,081 billion (excluding asset - backed securities and project revenue notes), accounting for 15.3% of the total bond balance. Local government bonds and Treasury bonds are the main sub - varieties. By variety, Treasury bonds accounted for 27.5%, local government bonds 67.3%, etc. By remaining term, the 30 - year variety has the highest proportion [13]. 3.4 Primary Market - **Weekly Issuance**: Last week (2026.3.9 - 2026.3.15), the issuance volume of ultra - long bonds decreased, totaling 474 billion yuan. Compared with the week before last, the total issuance volume dropped significantly. By variety, Treasury bonds issued 320 billion, local government bonds 154 billion, etc. By term, 15 - year bonds issued 30 billion, 20 - year 16 billion, 30 - year 107 billion, and 50 - year 320 billion [18]. - **This Week's Scheduled Issuance**: The announced ultra - long bond issuance plan for this week totals 1,442 billion. Ultra - long local government bonds account for 1,436 billion, and ultra - long medium - term notes 6 billion [24]. 3.5 Secondary Market - **Trading Volume**: Last week, ultra - long bonds were very actively traded, with a trading volume of 11,303 billion, accounting for 11.7% of the total bond trading volume. By variety, ultra - long Treasury bonds accounted for 38.9% of the total Treasury bond trading volume, ultra - long local bonds 45.0% of the total local bond trading volume, etc. Compared with the week before last, the trading volume of ultra - long bonds increased by 532 billion, and the proportion increased by 1.3% [27]. - **Yield**: Due to factors such as inflation data and international situation, the bond market declined, and ultra - long bonds tumbled. For Treasury bonds, the yields of 15 - year, 20 - year, 30 - year, and 50 - year bonds changed by 5BP, 6BP, 9BP, and 9BP respectively to 2.16%, 2.31%, 2.37%, and 2.55%. Similar changes occurred in CDB bonds, local bonds, and railway bonds [39]. - **Spread Analysis**: - **Term Spread**: Last week, the term spread of ultra - long bonds widened, with an absolute low level. The 30 - 10 spread of benchmark Treasury bonds remained at 47BP, a 2BP change from the week before last, at the 44% quantile since 2010 [46]. - **Variety Spread**: Last week, the variety spread of ultra - long bonds narrowed, with an absolute low level. The spreads of 20 - year CDB bonds and railway bonds against Treasury bonds were 13BP and 15BP respectively, a - 1BP change from the week before last, at the 11% and 10% quantiles since 2010 [47]. 3.6 30 - year Treasury Bond Futures - Last week, the main 30 - year Treasury bond futures contract TL2606 closed at 111.06 yuan, with an increase of - 1.53%. The total trading volume was 47.12 million lots (114,506 lots), and the open interest was 13.07 million lots (- 2,023 lots). The trading volume increased significantly compared with the week before last, and the open interest decreased slightly [54].

1. Report Investment Rating The document does not mention the industry investment rating. 2. Core Viewpoints - In early March, it is advisable to take appropriate profit - taking on high - elasticity varieties and wait for the layout opportunity at the end of the month. The bond market in March has intertwined bullish and bearish factors, and the current credit spreads have narrowed to a relatively low historical range. [1][12] - Pay attention to the opportunity of over - decline repair of the constituent bonds of science and technology innovation bonds. If the scale of the science and technology innovation bond ETF stabilizes and rebounds, the constituent bonds may usher in a round of valuation repair market. [4][33] - For bank perpetual and secondary capital bonds (two - tier perpetual bonds), trading desks should be cautious and control the duration. When there is an adjustment in the bond market, seize the opportunity to increase positions. For allocation desks with stable liability ends, they can implement the strategy of "buying more on dips". [6][43] 3. Summary by Directory 3.1 3 - month Credit Bonds: Supply Strong, Demand Weak, Appropriate Defense 3.1.1 Early - month Profit - taking on High - elasticity Varieties, Wait for End - month Layout Opportunity - In February, interest rates fluctuated slightly downward. The 10 - year Treasury bond rate once broke through the resistance level but then rebounded. Credit bond yields generally declined, and credit spreads showed a differentiated trend, with long - duration varieties performing better. [1][11] - The current credit spreads are at a relatively low level, especially for high - elasticity varieties. From a seasonal perspective, credit bonds in March usually have strong supply and weak demand, and the probability of credit spread widening is relatively large. [2][13][15] - It is recommended to take profit on high - elasticity and low - cost - performance credit bond varieties in early March and adjust to high - grade medium - and short - duration credit bonds, commercial financial bonds, brokerage bonds, and interest - rate bonds. There may be a certain carry - trade space in March. [3][21] - From the end of March to early April, as the wealth management scale rebounds rapidly, it may be a window period for layout. The layout ideas include allocating products preferred by wealth management, seizing the riding yield at the convex points of the curve, and actively exploring variety spreads. [3][22] 3.1.2 Bank Two - tier Perpetual Bonds: Seize the Opportunity to Increase Positions after Adjustment - In February, the yields of bank two - tier perpetual bonds first declined and then rose, with medium - and long - duration varieties fluctuating greatly. Overall, the yields generally declined, and the spreads showed a differentiated trend. [36][37] - Looking forward, the bond market has increased uncertainties, and two - tier perpetual bonds may face greater valuation fluctuation risks. Trading desks should be cautious, and allocation desks with stable liability ends can implement the "buy - on - dips" strategy. Pay attention to two signals for increasing positions: when the trading yield of 4 - 5 - year large - bank two - tier perpetual bonds reaches the previous high, and when insurance keeps large - scale net buying while funds turn from continuous net selling to net buying. [6][43] 3.2 Urban Investment Bonds: Issuance Interest Rates Declined across the Board, Buying Sentiment Rebounded - In February, the net financing of urban investment bonds was positive but decreased year - on - year. The issuance sentiment weakened in the last week. The issuance proportion of short - duration bonds increased, and the weighted average issuance interest rates declined across the board, with long - duration varieties having a larger decline. [49] - Yields generally declined, with long - duration varieties performing better. Credit spreads showed a differentiated trend. Provincial net financing performance was differentiated, with most provinces having positive net financing. [53][55] - From the perspective of broker transactions, the buying sentiment of urban investment bonds warmed up in February. The overall TKN ratio and low - valuation ratio increased slightly compared with January. [61] 3.3 Industrial Bonds: Supply Shrunk, Yields Generally Declined - In February, the issuance and net financing scale of industrial bonds decreased year - on - year. The issuance sentiment improved in the fourth week. The issuance proportion of 1 - 3 - year and 3 - 5 - year bonds increased, and the issuance interest rates declined across the board, with 1 - 3 - year bonds having a larger decline. [64] - Yields generally declined, with medium - and high - grade long - duration varieties performing better. Credit spreads showed a differentiated trend. The yields of public bonds in various industries generally declined, with 1 - 5 - year AA bonds performing better. [66][69] 3.4 Bank Two - tier Perpetual Bonds: Yields Generally Declined, Medium - and Long - duration Varieties Performed Better - In February, there were no new issuances of bank two - tier perpetual bonds, and the net financing was negative year - on - year. Yields generally declined, with medium - and long - duration varieties performing better. Credit spreads showed a differentiated trend. [72][76] - From the perspective of broker transactions, the number of trading pens decreased significantly due to the Spring Festival holiday. The trading of state - owned banks, joint - stock banks, and city commercial banks showed different characteristics. [80]

1. Report Industry Investment Rating There is no information provided in the content about the report's industry investment rating. 2. Core Viewpoints of the Report - In February, the bond market may continue to fluctuate, and the coupon strategy may remain a relatively prudent choice. With low credit spreads and the need to control duration risk, investment strategies can focus on the refined exploration of variety spreads, increasing the allocation of low - credit - risk and high - absolute - return varieties [1][2] - Secondary perpetual bonds still have investment value, but their volatility may increase. It is recommended that trading desks control their positions according to their liability - side conditions and try reverse operations [4][5] 3. Summary by Relevant Catalog 3.1 Credit Bonds: Explore Variety Spreads, Pay Attention to Volatility Risks of Secondary Perpetual Bonds 3.1.1 Low Credit Spreads, Focus on Variety Spread Exploration - In January, the long - end interest rate showed a trend of "rapid rise → rapid fall → slow fall", credit bond yields declined, and credit spreads narrowed across the board. Medium - and low - rated bonds outperformed high - rated ones, and medium - and long - term varieties performed better [10][11] - In February, the bond market may continue to fluctuate. For accounts with unstable liability sides, it is not recommended to chase long - term credit. Focusing on medium - and short - term varieties may be relatively advantageous. After the spread compression in January, credit spreads are generally at a low level [14][15] - Investment strategies can focus on three aspects: exploring the spreads of perpetual varieties, seizing the allocation opportunities of brokerage bonds and brokerage sub - bonds, and grasping the "oversold" repair opportunities of science and technology innovation bond component bonds [18] 3.1.2 Secondary Perpetual Bonds Still Have Allocation Value, but Volatility May Increase - In January 2026, bank secondary perpetual bonds had a catch - up rally, with yields declining across the board and credit spreads narrowing, generally outperforming ordinary credit bonds. This rally was mainly driven by funds, while insurance's net buying volume gradually decreased [32][33] - 3 - 5 - year large - bank secondary perpetual bonds still have certain allocation value for accounts with stable liability sides. However, with the rapid entry of trading - desk funds such as funds and the reduction of insurance's buying volume, the volatility of secondary perpetual bonds may increase [39] 3.2 Urban Investment Bonds: Net Financing Increased Year - on - Year, Medium - and Long - Term Transaction Activity Rose - In January, the net financing of urban investment bonds was positive and increased year - on - year. The issuance proportion of medium - and long - term urban investment bonds increased, and the weighted average issuance interest rate decreased across the board [42] - The yields of urban investment bonds declined across the board in January, with medium - and long - term and low - grade varieties performing better. The trading sentiment of urban investment bonds improved, and the medium - and long - term transaction activity increased [48][54] 3.3 Industrial Bonds: Short - End Issuance Proportion Increased, Medium - and Long - Term Secondary Performance was Superior - In January, the issuance and net financing scale of industrial bonds increased year - on - year. The short - term issuance proportion of industrial bonds continued to rise, and the issuance interest rate generally declined [57] - The yields of industrial bonds declined across the board in January, with medium - and long - term varieties showing obvious repair. Most industries' public offering bond yields declined, and medium - and long - term varieties performed better [59][62] 3.4 Bank Secondary Perpetual Bonds: Transaction Sentiment Warmed Up, Medium - and Long - Term Varieties Significantly Repaired - In January 2026, there were no new bank secondary perpetual bond issuances, and the net financing was - 415 billion yuan, a year - on - year decrease of 36.1 billion yuan [65] - The yields of bank secondary perpetual bonds declined across the board in January, with medium - and long - term varieties significantly repaired. The trading sentiment of bank secondary perpetual bonds warmed up, and the transaction of city commercial bank secondary perpetual bonds spread to medium - and low - grade bonds [71][74]

Group 1 - The issuance of industrial perpetual bonds is primarily by high-rated entities, with an increase in issuance duration over the past two years. The main purpose of issuing these bonds is to reduce liabilities, predominantly by medium to high-rated central and state-owned enterprises in high-leverage industries. Since 2024, the issuance duration of industrial perpetual bonds has lengthened, with "3+N" still being the main issuance type, but the scale and proportion of "5+N" industrial perpetual bonds have significantly increased, possibly related to expectations of debt reduction and the overall lengthening of credit bond issuance duration [6][7]. - The spread of industrial perpetual bond varieties has widened to a high percentile, indicating opportunities for spread extraction. Since the second half of 2025, the spread of industrial perpetual bond varieties has continued to widen, influenced by two main factors: first, the marginal weakening of demand for perpetual bonds under the insurance I9 accounting standards, as the static coupon of perpetual bonds is weaker than that of dividend stocks; second, perpetual bonds are less likely to benefit from the expansion of credit bond ETFs due to stricter definitions of equity instruments. Currently, the spread of industrial perpetual bonds has widened to a high percentile since 2024, with the spread of varieties accounting for about 50% of the overall spread, reaching a high level since 2020. It is believed that institutional behavior will have limited further disturbance to industrial perpetual bonds, and attention should be paid to opportunities for spread extraction [7][8]. Group 2 - In the primary issuance market, net financing has increased. From January 19 to January 23, 2026, short-term financing bonds issued amounted to 128.06 billion yuan, with 86.04 billion yuan maturing; medium-term notes issued were 91.51 billion yuan, with 28.01 billion yuan maturing; corporate bonds issued were 1 billion yuan, with 4.1 billion yuan maturing; and company bonds issued were 102.05 billion yuan, with 52.55 billion yuan maturing. The total issuance of major credit bond varieties was 322.61 billion yuan, with 170.7 billion yuan maturing, resulting in a net financing of 151.91 billion yuan, an increase from the previous week's net financing of 49.27 billion yuan [8]. - In the secondary trading market, transaction volume has increased, and most spreads have narrowed. From January 19 to January 23, 2026, the total transaction volume of major credit bond varieties (corporate bonds, company bonds, medium-term notes, and short-term financing bonds) reached 931.2 billion yuan, an increase of 69.4 billion yuan compared to the previous week. The overall yield of medium-term notes has decreased, with the 3-year AAA medium-term note yield down by 3.43 basis points to 1.85%, the 3-year AA+ medium-term note yield down by 4.43 basis points to 1.93%, and the 3-year AA medium-term note yield down by 4.43 basis points to 2.08% [13][14].

Summary of Conference Call Records Industry Overview - The conference primarily discusses the bond market, focusing on the recovery trends observed since mid-January 2026, with specific attention to government bonds and credit bonds [1][2]. Key Points and Arguments Recovery of the Bond Market - The bond market has shown signs of recovery due to three main factors: 1. **Stability of Government and Local Bonds**: The stability of interest rates for government bonds and local bonds has been crucial. The 10-year government bond has remained stable, not exceeding 1.9%, while local bonds have stayed below 2.5% [2]. 2. **Banking Sector Participation**: There has been an increase in bank allocations to bonds, particularly after the clarity of KPIs for banks in 2026. This has led to a stronger demand for bonds, especially those with shorter durations [3][4]. 3. **External Support Factors**: External factors such as the stagnation of equity markets and expectations of monetary easing have contributed to the bond market's recovery. The MLF (Medium-term Lending Facility) has also seen increased volumes, indicating a supportive monetary environment [4][5]. Future Market Outlook - The outlook for the bond market remains cautious but optimistic. Short-duration bonds are expected to perform well, while long-duration bonds may face more volatility. The market anticipates that the recovery could serve as a precedent for future bond market trends in 2026 [5][6]. - The potential for downward movement in interest rates exists, particularly for 10-year government bonds, if deposit rates continue to decline [5][6]. Risks and Challenges - The bond market may face challenges related to supply and demand mismatches, especially in the first and second quarters of 2026. The issuance of local bonds is expected to be high, which could lead to increased pressure on the market [9][10]. - The risk indicators for banks remain a concern, particularly for smaller banks, which may face stricter regulations and slower adjustments to their risk profiles [9][10]. Investment Recommendations - Analysts recommend focusing on 10-year government bonds and certain credit bonds, particularly those with favorable yield spreads. The expectation is that these assets will provide stability and potential for appreciation in the current market environment [11][12]. - The discussion also highlights the potential for industry-specific perpetual bonds, particularly those issued by state-owned enterprises, which are seen as having a favorable risk-return profile [17][18]. Market Dynamics - The dynamics of the bond market are influenced by the behavior of institutional investors, with a noted shift towards increasing allocations in response to market conditions. The performance of convertible bonds is also highlighted, with expectations of continued demand despite some volatility [26][27]. Conclusion - The bond market is currently in a recovery phase, supported by stable interest rates, increased bank participation, and favorable external conditions. However, potential risks related to supply-demand mismatches and regulatory pressures on banks warrant careful monitoring. Investment strategies should focus on stable, shorter-duration bonds and select credit instruments to navigate the evolving landscape [36].

Key Points - The net supply of ordinary credit bonds in the primary market increased on a month-on-month basis, with total issuance reaching 269.9 billion yuan and net financing at 131.1 billion yuan during the period from January 5 to January 11, 2026 [3][5] - The issuance of industrial bonds decreased to 139.2 billion yuan, while net financing surged to 91.7 billion yuan. Conversely, local government bonds saw a significant increase in issuance to 130.7 billion yuan, the highest since November 2025, with net financing rising to 39.4 billion yuan [3][5] - In the secondary market, bond yields showed mixed performance, with overall credit spreads narrowing, particularly for 1-year bonds, which experienced the largest contraction [3][5] - The yield on 7-year bonds performed the best, with a decline of 2.36 basis points for AA+/AA/AA- rated local government bonds, while 5-year bonds saw an overall increase [3][5] - The trading volume of credit bond ETFs decreased significantly, with a net outflow of 55.3 billion yuan over four days, approaching 50% of the inflow seen in December 2025 [3][5] - The investment outlook for credit bonds remains favorable, with expectations of a stable bond market environment in the first quarter of 2026, despite potential pressures on credit spreads [3][5] - The strategy for credit investment focuses on short to medium-term credit bonds, particularly those with a maturity of 3-5 years, and emphasizes the opportunities presented by high-grade bonds [3][5] - The performance of various credit bonds is expected to vary, with short-term bonds outperforming longer-term bonds in terms of yield and credit spread [3][5][11]

Report Industry Investment Rating No information provided. Core Viewpoints - The GDP growth rate in Q3 was 4.8% year-on-year, in line with expectations, but the year-on-year growth rates of fixed asset investment and total retail sales of consumer goods in September continued to decline, indicating short-term economic pressure. With the initiation of China-US dialogue, Europe's support for a ceasefire in the Russia-Ukraine conflict, and the Shanghai Composite Index reaching new highs, the bond market slightly corrected, and ultra-long bonds declined slightly. The trading activity of ultra-long bonds decreased slightly last week, but remained very active. Both the term spread and variety spread of ultra-long bonds narrowed last week [1][3][10]. - Considering the economic data, the probability of a bond market rebound is high. With the low probability of additional treasury bond issuance in Q4, the government bond financing growth rate is expected to continue to decline, and the domestic economy will still face pressure. The 30-10 spread is expected to compress periodically, and the variety spread of 20-year CDB bonds is also expected to compress again in the short term [2][3][11]. Summary by Directory Weekly Review - **Ultra-long Bond Review**: The Q3 GDP growth rate was 4.8% year-on-year, meeting expectations, but the year-on-year growth rates of fixed asset investment and total retail sales of consumer goods in September continued to decline, indicating short-term economic pressure. The bond market slightly corrected, and ultra-long bonds declined slightly. The trading activity of ultra-long bonds decreased slightly but remained very active. Both the term spread and variety spread of ultra-long bonds narrowed [1][10]. - **Ultra-long Bond Investment Outlook**: As of October 26, the spread between 30-year treasury bonds and 10-year treasury bonds was 36BP, at a historically low level. The spread between 20-year CDB bonds and 20-year treasury bonds was 12BP, at a historically extremely low level. Considering the economic data, the probability of a bond market rebound is high. The 30-10 spread is expected to compress periodically, and the variety spread of 20-year CDB bonds is also expected to compress again in the short term [2][3][11]. - **Ultra-long Bond Basic Overview**: As of September 30, the balance of ultra-long bonds with a remaining term of over 14 years was 23.7802 trillion yuan, accounting for 15.0% of the total bond balance. Local government bonds and treasury bonds are the main varieties. By remaining term, the 30-year variety has the highest proportion [13]. Primary Market - **Weekly Issuance**: The issuance volume of ultra-long bonds surged last week. A total of 118.1 billion yuan of ultra-long bonds were issued, all of which were local government bonds. By term, 12.6 billion yuan had a 15-year term, 37.7 billion yuan had a 20-year term, and 67.8 billion yuan had a 30-year term [18]. - **This Week's Planned Issuance**: The planned issuance volume of ultra-long bonds announced this week is 105.1 billion yuan, all of which are ultra-long local government bonds [24]. Secondary Market - **Trading Volume**: The trading of ultra-long bonds was very active last week, with a trading volume of 1.0317 trillion yuan, accounting for 11.5% of the total bond trading volume. The trading activity of ultra-long bonds decreased slightly. Compared with the previous two weeks, the trading volume decreased by 47.5 billion yuan, and the proportion decreased by 0.3% [27]. - **Yield**: The Q3 GDP growth rate was 4.8% year-on-year, meeting expectations, but the year-on-year growth rates of fixed asset investment and total retail sales of consumer goods in September continued to decline, indicating short-term economic pressure. The bond market slightly corrected, and ultra-long bonds declined slightly. The yields of 15-year, 20-year, 30-year, and 50-year treasury bonds changed by 3BP, 3BP, 1BP, and 4BP respectively, reaching 2.09%, 2.20%, 2.21%, and 2.29%. The yields of 15-year, 20-year, 30-year, and 50-year CDB bonds changed by 2BP, 3BP, 1BP, and 4BP respectively, reaching 2.20%, 2.32%, 2.38%, and 2.45% [3][35]. - **Spread Analysis**: The term spread of ultra-long bonds narrowed last week, and the absolute level was low. The variety spread of ultra-long bonds also narrowed, and the absolute level was low. The 30-year - 10-year spread of treasury bonds was 36BP, 2BP lower than the previous two weeks, at the 17% quantile since 2010. The spreads between 20-year CDB bonds and treasury bonds and between 20-year railway bonds and treasury bonds were 12BP and 13BP respectively, with changes of 0BP and -6BP compared to the previous two weeks, at the 10% and 9% quantiles since 2010 [41][46]. 30-Year Treasury Bond Futures - The main contract of 30-year treasury bond futures, TL2512, closed at 115.01 yuan, a decrease of 0.74%. The total trading volume was 693,100 lots (-28,779 lots), and the open interest was 176,100 lots (-8,882 lots). Both the trading volume and open interest decreased slightly compared to the previous two weeks [48].

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the bond market, focusing on fixed income strategies and interest rate predictions for the fourth quarter of 2025. [1][2] Core Insights and Arguments 1. **Interest Rate Predictions**: The current interest rate model has shifted to a bullish stance since October 10, with a historical success rate of approximately 85%. The bond market is expected to experience limited downward movement in interest rates, with the 10-year government bond rate fluctuating around 1.75% and unlikely to drop below 1.7% without external shocks. [2][3] 2. **Market Conditions**: The bond market is influenced by two main factors: the lack of expectations for domestic monetary policy easing and the realization of economic growth targets for the year. This results in limited downward pressure on interest rates in the short term. [3] 3. **Strategy Recommendations**: Traditional duration strategies are not recommended due to limited space for significant downward movement. Instead, investors should focus on non-directional strategies that capitalize on high spread compression opportunities, particularly in slightly longer durations and higher interest rate positions. [4] 4. **Credit Spread Evaluation**: The comparison between 5-year subordinated capital bonds and 5-year government bonds shows a spread of approximately 40 basis points, indicating that subordinated capital bonds have better holding value despite lower liquidity. [5] 5. **Investment Opportunities in Credit Bonds**: There is potential for further compression in credit spreads for certain long-term credit bonds. The analysis of credit spreads across different maturities suggests that mid to long-term credit bonds still have room for compression. [6][7] 6. **Impact of Redemption Fee Regulations**: The new redemption fee regulations may lead to increased fund redemption, widening spreads. However, the market has partially absorbed the impact, and high credit quality bonds may still attract investment despite potential short-term volatility. [8][9] 7. **Local vs. National Bonds**: The overall spread between local and national bonds is high, with specific maturities showing significant differences. New local bonds have a higher implied VAT rate, making them worthy of attention, particularly the 30-year local bonds which still hold investment value relative to national bonds. [10] 8. **Portfolio Construction**: It is recommended to construct portfolios based on the value proposition of different bond types, with government bonds in the 6-7 year range and credit bonds in the 4-6 year range being particularly attractive. The overall duration of the portfolio should remain neutral or slightly high. [11] 9. **Special Government Bonds**: The issuance of special government bonds in the first quarter of 2025 remains uncertain, with the issuance plan typically announced around April. This uncertainty could affect the performance of specific bond types. [12][13] 10. **Focus on 30-Year Bonds**: Four specific 30-year government bonds are recommended for attention due to their good configuration value and liquidity. [14] 11. **Mid-Term Government Bonds**: Two mid-term government bonds (5-year and 7-year) are highlighted for their favorable value in the current market environment. [15] 12. **Floating Rate Bonds**: Current floating rate bonds do not imply any easing expectations, leading to relatively high prices. While there is some attraction for certain funds, large purchases are not advised. [16] 13. **Government Bond Futures**: The December futures contract is considered overpriced relative to cash bonds, but there is potential for basis compression in the far-month contracts. [17] Other Important Insights - The analysis emphasizes the importance of monitoring economic indicators and external factors such as trade tensions and interest rate expectations, which could significantly impact the bond market dynamics. [3][4][8]

Report Industry Investment Rating No relevant content provided Core Viewpoints of the Report - The ultra-long bonds started a rebound after an over - decline. The 9 - month PMI announced last week seasonally rebounded, with a net injection of 300 billion yuan in 3 - month repurchase agreements, and the Sino - US trade friction escalated again. After reaching a new high, the long - term bond yields quickly declined, and the ultra - long bonds rebounded slightly. [1][3][6][31] - In the short term, the bond market is expected to rebound after an over - decline. For the 30 - year treasury bonds, considering the widening of the 30 - 10 term spread, it is expected that the yield of the 30 - year variety will have a larger downward space in the rebound. For the 20 - year CDB bonds, considering the widening of the variety spread between the 20 - year CDB bonds and treasury bonds, it is expected that the yield of the 20 - year CDB bonds will have a larger downward space in the rebound. [2][7][8] Summary by Relevant Catalogs Ultra - long Bond Review - The 9 - month PMI announced last week seasonally rebounded, with a net injection of 300 billion yuan in 3 - month repurchase agreements, and the Sino - US trade friction escalated again. After reaching a new high, the long - term bond yields quickly declined, and the ultra - long bonds rebounded slightly. [1][3][6] - Against the background of the National Day holiday, the trading activity of ultra - long bonds decreased slightly last week, but overall trading remained active. [1][6] - Last week, the term spread of ultra - long bonds widened, and the variety spread narrowed. [1][3][6] Ultra - long Bond Investment Outlook 30 - year Treasury Bonds - As of October 12, the spread between 30 - year and 10 - year treasury bonds was 41BP, at a historically low level. [2][7] - In August, the downward pressure on the domestic economy continued to increase. The estimated year - on - year GDP growth rate in August was about 3.8%, continuing to decline from July. In terms of inflation, the CPI in August was - 0.4%, and the PPI was - 2.9%, with deflation risks remaining. [2][7][8] - In the short term, the bond market is expected to rebound after an over - decline. The domestic economic operation pressure was high in July and August, and the monetary policy is expected to continue to be relaxed. The current 10 - 1 term spread of 40BP is above the historical median, reflecting a relatively neutral economic expectation, and the upward pressure on the long - end is not large under the stable monetary policy. The A - share market still shows a structural market feature, and the emotional suppression of the stock market on the bond market has weakened. Considering the widening of the 30 - 10 term spread of treasury bonds recently, it is expected that the yield of the 30 - year variety will have a larger downward space in the rebound. [2][7] 20 - year CDB Bonds - As of October 12, the spread between 20 - year CDB bonds and 20 - year treasury bonds was 8BP, at a historically extremely low level. [2][8] - Similar to the 30 - year treasury bonds, in the short term, the bond market is expected to rebound after an over - decline. Considering the widening of the variety spread between the 20 - year CDB bonds and treasury bonds recently, it is expected that the yield of the 20 - year CDB bonds will have a larger downward space in the rebound. [2][8] Ultra - long Bond Basic Overview - As of September 30, the balance of ultra - long bonds with a remaining maturity of more than 14 years was 23.7802 trillion yuan (excluding asset - backed securities and project revenue notes), accounting for 15.0% of the total bond balance. Local government bonds and treasury bonds are the main varieties of ultra - long bonds. [9] - By remaining maturity, the 25 - 35 - year (inclusive) variety accounts for the highest proportion, at 39.9%. [9] Primary Market Weekly Issuance - Last week (from September 29 to October 12, 2025), the issuance volume of ultra - long bonds dropped sharply. A total of 4.72 billion yuan of ultra - long bonds were issued, a significant decrease compared with the previous week. [3][14] - By variety, 3 billion yuan of treasury bonds and 1.72 billion yuan of local government bonds were issued, while the issuance of other varieties was 0. [14] - By term, 140 million yuan with a 15 - year term, 480 million yuan with a 20 - year term, 1.1 billion yuan with a 30 - year term, and 3 billion yuan with a 50 - year term were issued. [14] This Week's Planned Issuance - The announced issuance plan of ultra - long bonds this week totals 5.77 billion yuan, including 4 billion yuan of ultra - long treasury bonds and 1.77 billion yuan of ultra - long local government bonds. [19] Secondary Market Trading Volume - Last week, the trading of ultra - long bonds was very active, with a trading volume of 568.9 billion yuan, accounting for 12.0% of the total bond trading volume. [21] - The trading activity of ultra - long bonds decreased slightly last week. Compared with the previous week, the trading volume of ultra - long bonds decreased by 685.6 billion yuan, and the proportion decreased by 1.4%. [22] Yield - The 9 - month PMI announced last week seasonally rebounded, with a net injection of 300 billion yuan in 3 - month repurchase agreements, and the Sino - US trade friction escalated again. After reaching a new high, the long - term bond yields quickly declined, and the ultra - long bonds rebounded slightly. [31] - For treasury bonds, the yields of 15 - year, 20 - year, 30 - year, and 50 - year bonds changed by - 4BP, - 2BP, 2BP, and - 1BP respectively, reaching 2.07%, 2.19%, 2.23%, and 2.27%. [31] - For CDB bonds, the yields of 15 - year, 20 - year, 30 - year, and 50 - year bonds changed by - 1BP, - 1BP, 3BP, and - 1BP respectively, reaching 2.19%, 2.28%, 2.36%, and 2.43%. [31] Spread Analysis - **Term Spread**: Last week, the term spread of ultra - long bonds widened, and the absolute level was low. The spread between 30 - year and 10 - year treasury bonds was 41BP, a change of 7BP from the previous week, at the 25% quantile since 2010. [40] - **Variety Spread**: Last week, the variety spread of ultra - long bonds narrowed, and the absolute level was low. The spread between 20 - year CDB bonds and treasury bonds was 9BP, and the spread between 20 - year railway bonds and treasury bonds was 15BP, changing by 1BP and - 3BP respectively from the previous week, at the 8% and 10% quantiles since 2010. [46] 30 - year Treasury Bond Futures - Last week (from October 5 to October 12), the main contract of 30 - year treasury bond futures, TL2512, closed at 113.97 yuan, a decrease of 0.03%. [49] - The total trading volume of 30 - year treasury bond futures was 524,800 lots (- 217,682 lots), and the open interest was 173,400 lots (1,695 lots). The trading volume decreased significantly compared with the previous week, while the open interest increased slightly. [49]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Current investment strategy suggests focusing on rebound opportunities, with priority given to 25T5, 230023, and 250215 which have undergone significant adjustments [1][13] - The 10-year Guokai new and old bond yields are inverted, and 250215 is expected to become the main bond in the short term, presenting good holding odds [1][11] - In the 10-year Treasury bond segment, the main bond's excess value is not strong; while in the 30-year Treasury bond segment, the main bond shows stronger performance [13][18] - Since May this year, the upward range of Guokai bonds has been larger than that of Treasury bonds, and if interest rates continue to rise, the spread of the 10-year variety is likely to widen further [3][34] 3. Summary According to the Directory 1.1 Individual Bond Trend Differences - On August 19, 2025, the yields of long-term bonds in the bond market oscillated stronger overall. The yield of the main bond 250210 declined more than that of the new bond 250215, and the yields of the second-new and new bonds were inverted [6] - The intraday buying power of 250210 was significantly stronger than that of 250215, possibly due to the difference in trading volume. The current 250210 - 250215 spread is around -1BP [11] 1.2 Analysis of Recent Main Bond Trends and Bond Selection Considerations - For 10-year Guokai bonds, recent main bond trends have been relatively better. The factors influencing individual bond trends include trading power and bond cost-effectiveness [13] - In the 10-year Treasury bond segment, the main bond 250011 has a relatively weaker trend, and the influence of individual bond cost-effectiveness is relatively stronger [14] - In the 30-year Treasury bond segment, the main bond 2500005 has a stronger trend. The current 2500005 - 2500002 spread is around 6 - 7BP [18] - In the medium and short-term segment, for 3 - 5-year interest rate bonds, 240020 and 250003 can be considered for odds, and 250203 and 250208 for trading; floating-rate bonds can focus on 25 Nongfa Qingfa 09 [23] 1.3 Observation of Recent Variety Spread Trends - Since May this year, the upward range of Guokai bonds has been larger than that of Treasury bonds. The spread of 5-year Guokai bonds and Treasury bonds has rapidly increased from around 4BP to 15BP, and the 10-year variety from around 5BP to around 12BP [34] - In the past 5 years, during each interest rate upward cycle, the spread between Guokai bonds and Treasury bonds has widened significantly. If interest rates continue to rise, the spread of the 10-year variety is likely to widen further [34]