Group 1 - The CPI data is significantly better than market expectations, with both overall and core inflation unexpectedly declining [1] - Core commodity prices are weaker than anticipated, particularly in clothing, while core services also show weakness, with notable declines in rent and owner's equivalent rent [1] - This situation is likely to lead to a cautious steepening of the U.S. Treasury yield curve as investors begin to factor in more rate cut expectations [1] Group 2 - Trade policies are expected to continue pushing inflation higher, creating significant uncertainty for investors in the coming months [1] - The fixed income market is currently experiencing a brief respite due to the favorable CPI data [1]

1. Report Industry Investment Rating - No industry investment rating information is provided in the report. 2. Core Viewpoints of the Report - In May 2025, the overall sentiment in the fixed - income market was relatively optimistic, but the cost - effectiveness of chasing the upward trend was decreasing. The supply pressure of secondary perpetual bonds throughout the year was controllable, and the risk mainly came from the non - redemption of small banks. It was recommended to control the duration at around 5Y and not to be too long. The strategy of appropriately extending the duration proposed at the beginning of May relatively outperformed [5]. 3. Summary by Relevant Catalogs 3.1 Enterprise Perpetual Bonds 3.1.1 Primary Market - In May, 82 enterprise perpetual bonds were issued, raising a total of 103.7 billion yuan, a decrease of about 37% compared to the previous month. The repayment scale dropped to 72.3 billion yuan, a significant 49% decrease month - on - month, resulting in a net inflow of 31.4 billion yuan. The proportion of issuance by AAA high - grade entities rose to 90%. The issuance costs of AAA and AA were 2.21% and 2.78% respectively, with the former decreasing by 8bp and the latter increasing by 9bp month - on - month, while the AA+ issuance rate dropped back to 2.77%. The top three industries in terms of issuance volume were public utilities, building decoration, and urban investment, with the comprehensive industry remaining in the fourth place [5][10]. 3.1.2 Secondary Market - In May, the yields of industrial and urban investment perpetual bonds fluctuated downward. The risk - free yield decreased at the short end and increased at the long end, leading to a narrowing of the credit spread at the short end and a widening at the long end. The urban investment variety spread mainly narrowed, while the high - and low - grade trends of the industrial variety spread diverged. The trading volume of enterprise perpetual bonds decreased slightly, and the turnover rate increased slightly. No new cases of non - redemption of enterprise perpetual bonds occurred in May [5]. 3.2 Financial Perpetual and Subordinated Bonds 3.2.1 Primary Market - In May, the issuance volume of financial perpetual bonds increased significantly month - on - month, with the issuance of bank perpetual bonds doubling. A total of 11 financial perpetual bonds were newly issued, with a total issuance scale of 194.3 billion yuan, doubling month - on - month. The issuance scale of financial subordinated bonds decreased month - on - month, with the bank issuance scale shrinking slightly. A total of 111.7 billion yuan of financial subordinated bonds were issued in May, with bank secondary capital bonds accounting for the largest proportion [37][41]. 3.2.2 Secondary Market - In May, the spreads of financial institutions narrowed across the board, with the narrowing of long - term bank spreads being particularly obvious. Except for the 27bp widening of the spread of AA+ insurance capital supplementary bonds, the spreads of other grades of financial institutions narrowed by 3 - 10bp. The total trading volume and turnover rate of bank perpetual bonds increased simultaneously, while the trading volume of bank secondary capital bonds decreased slightly, but the turnover rate also increased slightly. No new cases of non - redemption of bank secondary capital bonds occurred in May, but the redemption date of "20 Changchun Rural Commercial Secondary 01" was postponed by 3 months to September 29, 2025 [5][53][58]. 3.3 ABS 3.3.1 Primary Market - In May, a total of 159 ABS projects were issued, raising a total of 151.9 billion yuan. The number of projects decreased by 26% month - on - month, and the total financing amount decreased by 29% compared to April. Personal consumption loan ABS had the largest issuance scale, followed by financial leasing and accounts receivable. The financing cost of ABS projects decreased significantly [64]. 3.3.2 Secondary Market - In May, the yields to maturity of ABS at all grades and terms decreased across the board, with a consistent decline of around 5bp. The long - term spreads narrowed more significantly. The secondary trading enthusiasm of ABS continued to decline month - on - month, and a small amount of discount trading occurred in Gemdale ABS [70][72]. 3.4 June Strategy for Secondary Perpetual Bonds - In May, the increased issuance of secondary perpetual bonds brought supply pressure, and there was a certain selling pressure in the secondary market. The turnover rate fluctuated upward at a high level, and the spread narrowed slightly. Looking forward to June, the annual supply pressure was controllable, and the risk mainly came from the non - redemption of small banks. If seeking returns, it was necessary to extend the duration of large banks, but the cost - effectiveness of continuing to chase the upward trend was decreasing. It was recommended to control the duration at around 5Y [5].

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - For credit bonds, the cost - performance is gradually decreasing. It is recommended to conduct sinking exploration around the 3 - year term, which is suitable as a bottom - position allocation, and adjust the sinking scale and proportion according to the subsequent market trend. Priority should be given to sinking rather than extending the duration [5][10]. - For convertible bonds, the short - term strategy is to defend, and investors can allocate when the price drops. The logic of being optimistic about convertible bonds remains unchanged, and attention should be paid to the rating adjustment risk in June [5][11]. Summary by Related Catalogs 1 Credit&转债市场观察与思考 1.1 Credit Bonds - From May 19th to May 25th, the primary issuance of credit bonds was 26.16 billion yuan, more than doubling month - on - month. The total repayment amount was 24.3 billion yuan, also increasing significantly, with a net inflow of 1.86 billion yuan. The average coupon rates of AAA and AA + grades were 2.04% and 2.15% respectively, down 2bp and 1bp from the previous week. The frequency of new AA/AA - grade bonds remained low [8]. - The yields of all grades and terms decreased, with a central decline of about 2bp, especially for high - grade and long - term bonds. The risk - free yield curve moved slightly upward at the short end. The spreads of all grades and terms narrowed, with an average narrowing of about 3bp, and the narrowing speed slowed down month - on - month. The term spreads of all grades generally narrowed, and the grade spreads of short - term bonds narrowed while those of long - term bonds slightly widened [9][18]. - The credit spreads of urban investment bonds in all provinces narrowed, with a central narrowing of about 5bp. The credit spreads of industrial bonds in most industries also narrowed, with a central narrowing of about 2bp, slightly underperforming urban investment bonds. The real estate industry's spreads slightly widened by 3bp [9][23][24]. - The turnover rate in the secondary market decreased by 0.23pct to 1.74%, returning to the median level. High - discount bonds were mostly real - estate enterprise bonds [9][26]. - As the market is further explored, the cost - performance of credit bonds shows a downward trend. It is recommended to conduct sinking exploration around the 3 - year term [5][10]. 1.2 Convertible Bonds - Last week, the equity market indices fluctuated and adjusted. The daily average trading volume decreased slightly. After the tariff disturbance, institutional investors had a profit - taking sentiment. The medium - to long - term outlook is still optimistic, but short - term fluctuations are more likely [5][11]. - The performance of convertible bonds was relatively good last week. The CSI Convertible Bond Index only declined by 0.11%, the parity center decreased by 0.4% to 94.2 yuan, and the conversion premium rate center increased by 0.8% to 28.5%. The daily average trading volume decreased significantly [5][11]. - In terms of style, large - cap, high - grade, and low - price convertible bonds performed well, while high - price and low - grade convertible bonds were relatively weak. The current sentiment of convertible bonds is weak, and the strategy is mainly for profit - taking and defense. It is advisable to keep the option to increase positions and allocate when the price drops, and pay attention to the rating adjustment risk in June [5][11]. 2 Credit Bond Review 2.1 Negative Information Monitoring - There were no bond defaults or overdue events this week. However, the credit ratings of Shanxi Yuci Rural Commercial Bank Co., Ltd. and related bonds were downgraded. Moody's placed AVIC International Financial Leasing Co., Ltd. and related entities on the rating downgrade review list. Multiple companies had negative events such as legal disputes, overdue debts, and regulatory warnings [12][13][15]. 2.2 Primary Issuance - The primary issuance volume of credit bonds increased significantly month - on - month, but the maturity scale almost doubled year - on - year, resulting in a small net inflow. The issuance cost of medium - and high - grade bonds decreased slightly, while the frequency of new AA/AA - grade bonds remained low [15][16]. 2.3 Secondary Trading - The valuations of credit bonds decreased across the board, with high - grade and long - term bonds having a larger decline. The yield curve showed a bull - flattening trend, and the spreads narrowed comprehensively, with a central narrowing of about 3bp [18]. - The credit spreads of urban investment bonds in all provinces narrowed, with a central narrowing of about 5bp. The credit spreads of industrial bonds in most industries also narrowed, with a central narrowing of about 2bp, slightly underperforming urban investment bonds. The real estate industry's spreads slightly widened by 3bp [23][24]. - The turnover rate in the secondary market decreased by 0.23pct to 1.74%, returning to the median level. High - discount bonds were mostly real - estate enterprise bonds [26]. 3 Convertible Bond Review 3.1 Market Overall Performance - Last week, the equity market indices such as the Shanghai Composite Index, Shenzhen Component Index, and others all declined. The pharmaceutical, comprehensive, and non - ferrous metal industries had the highest gains, while the computer, machinery, and communication industries had the largest losses [11][30]. - The leading convertible bonds mostly underperformed their underlying stocks. The list of popular individual bonds changed. Some convertible bonds such as Yanggu, Jingzhuang, and Xuerong had relatively large increases, and bonds like Zhongqi, Hongqiang, and Xuerong were more actively traded [30]. 3.2 Convertible Bond Premium Rate and Trading Volume - Last week, the performance of convertible bonds was relatively good. The CSI Convertible Bond Index only declined by 0.11%, the parity center decreased by 0.4% to 94.2 yuan, and the conversion premium rate center increased by 0.8% to 28.5%. The current valuation level of convertible bonds is relatively reasonable, and it is difficult for the valuation to decline significantly due to the decreasing number of existing bonds and insufficient new supply [32]. - The daily average trading volume decreased significantly [5][11].

Report Industry Investment Rating No relevant content provided. Core View of the Report - The time point for the certificate of deposit (CD) interest rate to return to a downward trend may be earlier than market expectations. Despite the existence of factors such as increased supply of interest - bearing bonds, deposit rate cuts, and the end - of - June factor that cause marginal tightening pressure on the capital market, the market has made preparations. The outflow of bank deposits due to rate cuts may increase the demand for CD allocation, and the CD issuance rhythm and bank behavior also support the earlier return of CD rates to a downward trend. If so, it will also bring a repair opportunity for the bond market interest rate to decline steeply [4][7][9]. Summary According to the Directory 1 Fixed Income Market Observation and Thinking - Market concerns about the upward risk of CD interest rates have resurfaced, mainly due to increased supply of interest - bearing bonds, deposit rate cuts increasing bank liability pressure, and the end - of - June factor. However, the market has prepared, and the CD interest rate may return to a downward trend earlier than expected [4][7]. - Deposit rate cuts may lead to bank deposit outflows, but the funds are likely to enter fixed - income asset management products, increasing CD allocation demand and potentially pushing CD rates down [4][7]. - From the perspective of CD issuance rhythm, if banks expect tight funds at the beginning of the year and increase CD financing, the CD rate may decline earlier when facing the end - of - June factor [4][8]. - Bank behavior shows that the slowdown in the expansion pressure of inter - bank liabilities relative to assets helps stabilize CD rates [4][8]. 2 Fixed Income Market Outlook 2.1 This Week's Attention and Important Data Release - This week, China will release the official manufacturing PMI for May, the US will release the core PCE for April, and the eurozone will release the industrial sentiment index for May [17][18]. 2.2 This Week's Interest - Bearing Bond Supply Scale Estimation - This week, it is expected to issue 328.2 billion yuan of interest - bearing bonds, which is at a relatively low level compared to the same period. There are no treasury bond issuance plans, 39 local bonds are planned to be issued with a scale of 228.2 billion yuan, and the actual issuance scale of policy - based financial bonds is expected to be around 100 billion yuan [18]. 3 Interest - Bearing Bond Review and Outlook 3.1 Central Bank's Injection and Capital Market Conditions - The central bank's reverse repurchase volume increased, with a total injection of 946 billion yuan, and the MLF roll - over was 500 billion yuan, resulting in a net injection of 120 billion yuan in the open market after considering maturities. The capital market interest rate fluctuated more, with the trading volume of inter - bank pledged repurchase falling, and the overnight proportion averaging around 87%. The capital interest rate declined but still had large intraday fluctuations [23][24]. - The CD issuance scale rebounded, and the interest rate increased. From May 19th to May 25th, the issuance scale was 714.3 billion yuan, the maturity scale was 738.3 billion yuan, and the net financing was - 24 billion yuan. The issuance and interest rates of different types of banks and different maturities also changed [30][31]. 3.2 The Bond Market Continues to Rise After Exhausting Positive Factors - Last week, long - term interest rates mainly rose, while medium - and short - term interest rates continued to decline slightly. Factors included large intraday fluctuations in capital interest rates, strong profit - taking sentiment after the dual cuts, and a significant increase in the issuance price of ultra - long - term primary treasury bonds. On May 23rd, the yields of 1 - year, 3 - year, 5 - year, 7 - year, and 10 - year treasury bonds changed by - 0.2bp, - 0.9bp, - 1.0bp, - 1.6bp, and 3.3bp respectively compared to the previous week [40]. 4 High - Frequency Data - On the production side, most of the operating rates declined, such as the blast furnace operating rate, semi - steel tire operating rate, and petroleum asphalt operating rate, while the PTA operating rate increased. The average daily crude steel production in early May decreased year - on - year [49]. - On the demand side, the year - on - year growth rates of passenger car manufacturers' wholesale and retail sales remained positive, land trading volume increased, and the sales area of commercial housing in 30 large - and medium - sized cities increased, with a year - on - year growth rate of about - 9%. The SCFI and CCFI composite indices changed by 7.2% and 0.2% respectively [49]. - In terms of prices, crude oil prices declined, copper and aluminum prices diverged, coal prices diverged, and the prices of building materials, cement, and glass in the middle reaches also declined. Vegetable and fruit prices in the downstream consumption sector declined slightly, while pork prices remained flat [50].

Group 1: Report Industry Investment Rating - No industry investment rating information is provided in the report. Group 2: Core Viewpoints of the Report - In May, the bond market should focus on the funding situation. The central bank's operations are uncertain, and the level of funding rates is the core variable for whether bond market interest rates can continue to break downward [4]. - The credit bond market sentiment is stable, and the allocation rhythm should be maintained. The new issuance volume decreased significantly in the week of April 28 - May 4, with a large net outflow. Yields generally declined, and spreads showed different trends [4]. - For convertible bonds, operations can gradually become more active. The convertible bond market is stabilizing and showing signs of a rebound. If the equity market sentiment improves, the demand for convertible bond allocation will continue to be released [4]. Group 3: Summary According to Relevant Catalogs 1 Fixed Income Market Observation and Thinking 1.1 Interest - rate Bonds - In May, the bond market should focus on the funding situation. The 10 - year Treasury bond has moved from the right to the left of the [1.6% - 1.9%] range. The net supply of government bonds in May may reach about 1.7 trillion, bringing uncertainty to the funding situation. The Fed's interest - rate cut expectation cooled during the May Day holiday, adding uncertainty to the central bank's monetary policy [4][9]. 1.2 Credit Bonds - From April 28 to May 4, the primary issuance of credit bonds was 112 billion yuan, a 79% decrease compared to the previous period due to the May Day holiday. The total repayment was 197.3 billion yuan, also a significant decrease, resulting in a net outflow of 85.3 billion yuan. Yields generally declined, and spreads showed different trends. The turnover rate decreased, and high - discount bonds were mainly real - estate enterprise bonds [4][11]. 1.3 Convertible Bonds - Last week, the equity market showed mixed performance. The convertible bond market declined slightly, with the CSI Convertible Bond Index falling 0.07%. The convertible bond valuation is stabilizing and showing signs of a rebound. Operations can be more active [4][13]. 1.4 This Week's Attention and Important Data Release - This week, important data to be released include China's April Caixin Services PMI, April CPI, the US May interest - rate decision, and the Eurozone's April Services PMI [14]. 1.5 This Week's Estimated Supply of Interest - rate Bonds - This week, the estimated issuance of interest - rate bonds is 565.1 billion yuan, which is relatively high compared to the same period. Treasury bonds are expected to be 391 billion yuan, local bonds 74.1 billion yuan, and policy - bank bonds about 100 billion yuan [14][16]. 2 Interest - rate Bonds Review and Outlook 2.1 Central Bank's Operations and Funding Situation - During the month - end, the central bank increased reverse repurchase operations, with a total net injection of 735.8 billion yuan in the open - market operations for the week [19]. 2.2 Strong Willingness to Hold Bonds for the Holiday - Before the holiday, the PMI data and the funding situation were generally stable, and the enthusiasm for holding bonds for the holiday was high, which contributed to the decline in interest rates, especially for longer - term and high - duration bonds [34]. 3 High - frequency Data - Commodity prices mostly declined. On the production side, the operating rates were divided. On the demand side, the year - on - year growth rates of passenger - car wholesale and retail sales remained positive, while land transactions decreased. Export indices declined. In terms of prices, crude oil prices decreased, copper and aluminum prices increased, and coal prices were divided [45]. 4 Credit Bonds Review 4.1 Negative Information Monitoring - There were no bond defaults, downgrades of bond or issuer ratings in the domestic market from April 28 - May 4, but there were overseas rating downgrades of some companies [64][65]. 4.2 Primary Issuance - The primary issuance volume of credit bonds decreased significantly, with a large net outflow. The cost of issuing high - grade bonds increased slightly, and the frequency of issuing new AA/AA - grade bonds remained low [4][68]. 4.3 Secondary Trading - Credit bond valuations declined slightly. Short - term spreads narrowed, while medium - and long - term spreads widened passively. The turnover rate decreased, and high - discount bonds were mainly real - estate enterprise bonds [4][73].

Group 1: Report Overview - The report focuses on the bond market dynamics of enterprise perpetual bonds, financial perpetual and subordinated bonds, and ABS in March 2025, aiming to provide investors with reference [9]. Group 2: Industry Investment Rating - No industry investment rating is provided in the report. Group 3: Core Views - The overall performance of the bond market in the second quarter is expected to be positive, with the 10-year Treasury bond yield likely to move from the right side to the middle of the 1.6% - 1.9% range [5]. - It is recommended to continue trading in bands and appropriately invest in short-term bonds of urban and rural commercial banks [5]. Group 4: Enterprise Perpetual Bonds 4.1 Primary Market - In March, 107 enterprise perpetual bonds were issued, raising a total of 111.4 billion yuan, a 56% increase from the previous month. However, the repayment scale increased to 136 billion yuan, resulting in a net financing outflow of 24.6 billion yuan, the first net outflow this year [5][10]. - The issuance scale of AAA-rated high-quality issuers decreased slightly, and the issuance costs of AAA, AA+, and AA-rated bonds increased by 24bp, 41bp, and 8bp respectively [10]. - The top three industries in terms of issuance volume were urban investment, building decoration, and public utilities, while the comprehensive industry dropped to the fourth place [5][10][13]. - Among the newly issued bonds in March, 63 were subordinated bonds, accounting for 59% of the total number and 67% of the total scale [15]. 4.2 Secondary Market - In March, the short-term yields of industrial and urban investment perpetual bonds fluctuated downward, and the short-term spreads narrowed significantly, while the long-term yields showed no obvious downward trend [21]. - The spreads of urban investment and industrial perpetual bonds fluctuated slightly in March, with the spreads of medium and low-grade, medium and long-term urban investment bonds tending to widen slightly [23]. - The trading volume and turnover rate of enterprise perpetual bonds increased significantly in March. The top three industries in terms of trading volume were urban investment, public utilities, and building decoration [5][30]. - No new cases of non-redemption of enterprise perpetual bonds were reported in March [34]. Group 5: Financial Perpetual and Subordinated Bonds 5.1 Primary Market - The issuance volume of financial perpetual bonds continued to increase in March, reaching the highest level in the first quarter. A total of 7 financial perpetual bonds were issued, raising 63.5 billion yuan, with a net financing outflow of 30.7 billion yuan [35]. - The issuance of financial subordinated bonds increased significantly, with banks contributing the main share. In March, 59.2 billion yuan of financial subordinated bonds were issued, with a net financing inflow of 27 billion yuan [39]. 5.2 Secondary Market - In March, the spreads of most financial institutions narrowed slightly, with the spreads of AA+-rated banks narrowing the most [44]. - The spreads of brokerage subordinated bonds narrowed significantly, while the spreads of TLAC bonds remained stable [48]. - The trading volume and turnover rate of bank perpetual bonds and secondary capital bonds increased significantly in March [52][56]. - No new cases of non-redemption of bank secondary capital bonds were reported in March, but investors are still advised to be cautious about the non-redemption risk of weak urban and rural commercial banks [60]. Group 6: ABS 6.1 Primary Market - In March, 189 ABS projects were issued, raising a total of 171.7 billion yuan, a significant increase from February in terms of both the number of projects and the total financing amount [61]. - Personal consumption loan ABS had the largest issuance scale, followed by financial leasing and microloan ABS [61]. - The issuance scale of real estate ABS increased in March, with a total of 3.4 billion yuan issued, mainly including CMBS and supply chain ABS [63]. - High-grade bonds still dominated the ABS market in March, with AAAsf-rated bonds accounting for 94% of the issuance scale. The issuance costs of short-term bonds increased significantly [64]. 6.2 Secondary Market - In March, the short and medium-term yields of ABS decreased significantly, while the long-term yields remained flat. The short and medium-term credit spreads also narrowed [65]. - The secondary trading volume of ABS increased significantly in March, reaching 185.5 billion yuan, almost doubling from the previous month. The top three types of underlying assets in terms of trading volume were Reits, personal consumption loans, and accounts receivable ABS [67]. - Some Sunac ABS were traded at a significant discount in March [67].