1. Report Industry Investment Rating - No specific industry investment rating is provided in the report. 2. Core View of the Report - The short - term trend of Treasury bond futures may be volatile, and the impact of stock indices should continue to be monitored. Trading - type investors are advised to conduct band operations. [2] 3. Summary by Relevant Catalogs 3.1 Market Performance - On Wednesday, the opening prices of the main contracts of Treasury bond futures varied. The 30 - year variety opened significantly higher. Most main contracts fluctuated horizontally in the morning and rose in the afternoon. The 30 - year Treasury bond futures main contract TL2603 rose 0.75%, the 10 - year T2603 rose 0.03%, the 5 - year TF2603 rose 0.01%, and the 2 - year TS2603 fell 0.01%. [1] - On Wednesday, the Wande A - share index opened slightly lower, rose in the morning and then fluctuated horizontally. It closed 0.57% higher than the previous trading day, with a small positive line. The trading volume was 2.62 trillion yuan, a slight decrease from 2.80 trillion yuan in the previous trading day. [2] 3.2 Important Information - In the open market, the central bank conducted 363.5 billion yuan of 7 - day reverse repurchase operations on Wednesday. With 240.8 billion yuan of reverse repurchases maturing on the same day, the net investment was 122.7 billion yuan. [1] - In the money market, the overnight interest rate in the inter - bank money market declined on Wednesday. The weighted average of DR001 was 1.32%, compared with 1.37% in the previous trading day; the weighted average of DR007 was 1.50%, compared with 1.49% in the previous trading day. [1] - In the cash bond market, the closing yields of inter - bank Treasury bonds on Wednesday showed mixed changes compared with the previous trading day. The yield to maturity of 2 - year Treasury bonds rose 0.45 BP to 1.40%, the 5 - year rose 0.19 BP to 1.60%, the 10 - year fell 0.14 BP to 1.83%, and the 30 - year fell 3.25 BP to 2.30%. [1] - The Minister of the Ministry of Housing and Urban - Rural Development, Ni Hong, stated that the policy of implementing measures according to the city, precise policies, and one - city - one - policy will continue. The focus is on controlling increments, reducing inventories, and optimizing supplies. The "white - list" system for real - estate financing will be utilized to support the reasonable financing needs of real - estate enterprises and the rigid and improved housing needs of residents. [1] 3.3 Market Logic - In 2025, China's GDP was 1,401,879 billion yuan, a year - on - year increase of 5.0%, achieving the target set at the beginning of the year. In the fourth quarter, China's GDP increased by 1.2% quarter - on - quarter. In December, the growth rates of fixed - asset investment and total retail sales of consumer goods were lower than market expectations. The year - on - year actual growth rates of export and industrial added value above designated size both exceeded market expectations. The year - on - year growth rate of the service production index in December rebounded by 0.8 percentage points compared with November. [1] - In December last year, the year - on - year sales volume and housing prices of domestic real estate continued to decline, and the data from the first half of January this year also showed the same trend. The central bank announced a 0.25 - percentage - point reduction in the rediscount and re - loan interest rates starting from January 19, 2026, and stated that there is still room for reserve - requirement ratio cuts and interest - rate cuts throughout the year. [1] - On January 20, the Ministry of Finance stated that in 2026, the fiscal deficit, total debt, and total expenditure will be maintained at a necessary level to ensure that the overall expenditure intensity "only increases and does not decrease" and the guarantee of key areas "only strengthens and does not weaken". [1] 3.4 Trading Strategy - Trading - type investors are advised to conduct band operations. [2]

Economic Confidence Index - The "Economic Confidence Index" for December 2025 is reported at 50, slightly lower than the previous month, indicating a weak recovery in the economy [6][8]. Inflation Predictions - Economists predict the Consumer Price Index (CPI) for November 2025 to be 0.72%, up from 0.2% in the previous month, while the Producer Price Index (PPI) is expected to be -2.05% [9][10]. Retail Sales Growth - The forecast for the year-on-year growth of social retail sales in November is 3.09%, slightly higher than the previous month's 2.9%, driven by the "Double 11" shopping festival and a recovery in the dining sector [10][11]. Industrial Value Added - The predicted year-on-year growth rate for industrial value added in November is 5.0%, an increase from the previous month's 4.9% [11]. Fixed Asset Investment - The forecast for the year-on-year growth rate of fixed asset investment in November is -2.1%, lower than the previous month's -1.7%, indicating continued pressure from the real estate market [12][14]. Real Estate Investment - The predicted year-on-year growth rate for real estate development investment in November is -15.1%, reflecting ongoing challenges in the sector [14]. Trade Surplus - China's trade surplus for November is reported at $111.68 billion, with exports growing by 5.9% and imports by 1.9%, aligning with economists' expectations [15]. New Loans - Economists forecast new loans for November to rebound to 679.1 billion yuan, significantly higher than the previous month's 220 billion yuan [16]. Total Social Financing - The predicted total social financing for November is 2.32 trillion yuan, an increase from the previous month's 0.81 trillion yuan [17]. M2 Growth Rate - The forecast for the year-on-year growth rate of M2 in November is 8.29%, slightly above the previous month's 8.2% [18]. Monetary Policy Outlook - Economists expect the possibility of adjustments to the Loan Prime Rate (LPR) and reserve requirement ratios to be low in the near term, with a continued focus on maintaining liquidity in the market [20]. Exchange Rate Predictions - The predicted exchange rate for the Chinese yuan against the US dollar at the end of 2025 is 7.07, with expectations of a potential adjustment to 6.98 by mid-2026 [21]. Foreign Exchange Reserves - As of the end of November, China's foreign exchange reserves are reported at $33,464 billion, reflecting a slight increase from the previous month [22][23].

Economic Outlook - The economic confidence index for November 2025 is reported at 50.3, remaining stable compared to the previous month, indicating a steady economic outlook with a target growth rate of 5% for the year [1][4][8] - Economists predict that the external environment will remain complex and variable, emphasizing the need for domestic economic focus on restoring internal demand [1][7] Price Trends - The Consumer Price Index (CPI) for October is forecasted to be -0.1%, showing a slight recovery from the previous month's -0.3% [2][9] - The Producer Price Index (PPI) is expected to be -2.2%, slightly better than the previous month's -2.3% [2][9] Retail and Consumption - The year-on-year growth rate for social retail sales in October is predicted to be 2.7%, down from 3% in the previous month [2][10] - Factors affecting retail growth include a decline in automotive sales and a slowdown in the real estate market, despite positive trends in tourism and online consumption [11][10] Industrial Production - The industrial added value for October is expected to grow by 5.7%, a decrease from the previous month's 6.5% [2][12] - High-frequency data indicates strong production activity, particularly in steel and chemical sectors, suggesting continued robust industrial performance [12] Investment Trends - Fixed asset investment growth is projected to be -0.8%, slightly lower than the previous month's -0.5% [2][13] - Infrastructure investment is anticipated to receive a boost from new fiscal policies, while real estate investment continues to face challenges [14][15] Trade Balance - The trade surplus for October is forecasted to be $94.26 billion, an increase from the previous month's $90.45 billion [2][16][18] - Export growth is expected to be 2.6%, while import growth is projected at 3.1%, both lower than previous figures [18] Financial Indicators - New loans for October are expected to drop to 454.91 billion yuan from 1.29 trillion yuan in September [2][19] - The total social financing amount is predicted to be 1.3 trillion yuan, down from 3.53 trillion yuan in September [20] Monetary Policy - The M2 money supply growth rate is forecasted to be 8.2%, slightly lower than the previous month's 8.4% [21] - Economists expect little change in the LPR and reserve requirement ratios in the near term, with potential for slight adjustments to stimulate domestic demand [22] Currency and Foreign Reserves - The RMB to USD exchange rate is expected to stabilize at 7.1 by the end of November [3][23] - Foreign exchange reserves are projected to remain steady at approximately $333.71 billion [24] Policy Directions - Macroeconomic policies are expected to focus on enhancing infrastructure and social welfare, with an emphasis on "investment in people" to drive sustainable economic growth [26][27][29] - The government aims to improve residents' income and consumption capacity, which is crucial for stimulating domestic demand [31][32]

Economic Data Summary - The GDP growth rate for the first half of the year is reported at 7.2% [3] - Real estate sales have shown a cumulative growth rate of -10.6% [3] - Fixed asset investment has a cumulative growth rate of 11.2% [3] - Retail sales have a cumulative growth rate of 16.5% [3] - Industrial output has a cumulative growth rate of 14.5% [3]

Core Viewpoint - The economic outlook for June and the second quarter suggests a low but stable growth trajectory, with GDP growth expected around 5.3% in Q2, supported by new domestic policies and resilient exports [2][4]. Group 1: GDP and Economic Growth - Q2 GDP growth is projected at approximately 5.3%, with industrial production growth expected at 5.9% due to equipment upgrades and resilient exports [4][11]. - Retail sector growth is anticipated to rebound, with wholesale and retail expected to grow by 6.8% in Q2, up from 5.8% in Q1 [4][11]. - High growth is expected in the information and leasing service sectors [4]. Group 2: Production Sector - June industrial production growth is expected to be around 6.0%, with a PMI production index increase to 51% [5][15]. - Truck traffic on highways shows a growth of 2.0% in June, improving from previous months [5][15]. - The automotive wholesale growth rate is projected at 14.1%, indicating strong performance in the automotive manufacturing sector [5][15]. Group 3: Demand Side - Retail sales growth is expected to temporarily decline to around 4.6% in June, influenced by holiday timing and promotional activities [6][20]. - Fixed asset investment growth is projected to decrease to approximately 3.4% for the first half of the year, with manufacturing investment at 8.1% and real estate investment at -11.2% [6][19]. - June export growth is expected to be around 3.5%, while imports are projected to grow by 1% [7][17]. Group 4: Financial Sector - New social financing in June is expected to reach 3.8 trillion, an increase of 600 billion compared to the previous year, with a projected growth rate of 8.8% for social financing stock [8][21]. - M2 money supply is expected to grow by approximately 7.9% year-on-year, while M1 is projected to grow by 2.9% [8][21]. - Government and corporate bond issuance is expected to total around 1.8 trillion in June, with significant net financing increases compared to the previous year [8][21].