1. Report Industry Investment Rating - The investment rating for the bond futures market is "oscillation" [1] 2. Core View of the Report - The bond futures market is expected to be volatile in the short - term, and trading - type investors are advised to conduct band operations [1][2] 3. Summary by Relevant Catalogs 3.1 Market Performance - On Tuesday, most of the bond futures' main contracts opened slightly higher and fluctuated horizontally throughout the day. The 30 - year bond futures main contract TL2606 rose 0.09%, the 10 - year T2606 fell 0.01%, the 5 - year TF2606 remained flat, and the 2 - year TS2606 rose 0.01% [1] - On Tuesday, the Wande A - share index opened slightly higher, fell in the morning and then rebounded, declined unilaterally in the afternoon, closed near the lowest point with a 2.97% drop, and the trading volume was 3.16 trillion yuan, slightly larger than the previous trading day's 3.05 trillion yuan [2] 3.2 Important Information - Open market: On Tuesday, the central bank conducted 34.3 billion yuan of 7 - day reverse repurchase operations, with 526 billion yuan of reverse repurchases maturing on the same day, resulting in a net withdrawal of 491.7 billion yuan [1] - Money market: On Tuesday, the overnight interest rate in the inter - bank money market declined compared with the previous trading day. The weighted average of DR001 was 1.26% (1.31% the previous day), and the weighted average of DR007 was 1.45% (1.46% the previous day) [1] - Cash bond market: On Tuesday, the closing yields of inter - bank treasury bonds fluctuated narrowly compared with the previous trading day. The yield to maturity of 2 - year treasury bonds decreased by 0.71 BP to 1.35%, the 5 - year increased by 0.39 BP to 1.54%, the 10 - year increased by 0.46 BP to 1.78%, and the 30 - year increased by 1.31 BP to 2.28% [1] - The central bank's net investment in treasury bond trading in the open market in February was 5 billion yuan [1] 3.3 Market Logic - In January, China's social financing scale increased by 7.22 trillion yuan, exceeding the market expectation of 6.51 trillion yuan and an increase of 165.4 billion yuan year - on - year. The net financing of government bonds in January increased by 976.4 billion yuan, an increase of 283.1 billion yuan year - on - year [1] - In January, RMB loans in the credit caliber increased by 4.71 trillion yuan, slightly higher than the market expectation of 4.5 trillion yuan but a decrease of 420 billion yuan year - on - year [1] - In January, the sales price of second - hand residential properties in first - tier cities decreased by 0.5% month - on - month, with the decline narrowing compared with the previous month [1] - In January, China's overall inflation level recovered moderately. The core CPI rose 0.3% month - on - month, and the PPI rose 0.4% month - on - month [1] - In January, the official manufacturing PMI was 49.3%, and the service business activity index was 49.5%, both below the boom - bust line, indicating a mild economic situation in January [1] - The Ministry of Finance stated that in 2026, the fiscal deficit, total debt, and total expenditure will be maintained at a necessary level, ensuring that the overall expenditure intensity "only increases and does not decrease" and the protection of key areas "only strengthens and does not weaken" [1] - The central bank stated that there is still room for reserve requirement ratio cuts and interest rate cuts this year to promote the low - level operation of the comprehensive social financing cost, gradually play the role of treasury bond trading in liquidity management, and keep the bank system's liquidity abundant [1]

Economic Indicators - The weekly ECI supply index is at 49.92%, down 0.16 percentage points from last week, while the demand index remains stable at 49.88%[10] - The monthly ECI supply index for February is 50.00%, a decrease of 0.02 percentage points from January, while the demand index increased by 0.04 percentage points to 49.88%[11] Industrial Production - Post-holiday industrial production is better than the same period last year, with the automobile operating rate showing improvement[2] - The steel production rate is at 80.24%, a slight increase of 0.09 percentage points from the previous week, and up 1.93 percentage points year-on-year[20] Consumer Trends - Home appliance sales during the Spring Festival period showed a significant decline, with many products experiencing negative year-on-year growth by February 22[2] - The average daily sales of passenger cars fell to 40,953 units, down 23,608 units year-on-year[27] Real Estate Market - The sales area of commercial housing in 30 major cities increased by approximately 87.4% year-on-year during the first five days post-holiday, totaling 113.1 million square meters[2] - The transaction area of second-hand houses in 19 cities reached 110.41 million square meters, up 78.0% year-on-year[2] Export Performance - The export resilience remains strong, with the monitoring ports recording a total cargo throughput of 18,760.60 million tons, significantly higher than the previous year's 24,558.20 million tons[39] - South Korea's export growth rate for February is 29.00%, down 4.9 percentage points from January but up 28.60% year-on-year[39] Inflation and Prices - The average wholesale price of pork is 17.87 yuan/kg, down 0.34 yuan/kg from the previous week[45] - The spot price of gold increased to 5,222.30 USD/oz, up 169.10 USD/oz from the previous week[45]

Report Industry Investment Rating - The investment rating for the bond futures in the macro and finance sector is "volatile" [1] Core Viewpoints of the Report - On Friday, the main contracts of bond futures opened higher across the board and fluctuated upwards throughout the day, with the 30-year variety showing stronger performance. The 1-year inflation expectation in the US dropped from 4% to a 13-month low of 3.5%. The official manufacturing PMI in January was 49.3%, falling back below the boom-bust line. The bond futures may fluctuate in the short term, and trading investors are advised to conduct band operations [1][2] Summary by Relevant Catalogs Market Review - On Friday, the main contracts of bond futures opened higher across the board and fluctuated upwards throughout the day. The 30-year bond futures main contract TL2603 rose 0.42%, the 10-year T2603 rose 0.08%, the 5-year TF2603 rose 0.03%, and the 2-year TS2603 rose 0.02%. The Wind All A index opened lower, rose in the morning session, and slightly declined in the afternoon, closing down 0.19% from the previous trading day, forming a small Yang line with an upper shadow, with a trading volume of 2.16 trillion yuan, a slight contraction compared to the previous trading day's 2.19 trillion yuan [1][2] Important Information - Open market: On Friday, the central bank conducted 31.5 billion yuan of 7-day reverse repurchase operations and 300 billion yuan of 14-day reverse repurchase operations. With 477.5 billion yuan of reverse repurchases maturing on the same day, the net withdrawal was 146 billion yuan. - Money market: On Friday, the overnight interbank funding market rate remained flat compared to the previous trading day. The weighted average of DR001 throughout the day was 1.32%, and that of DR007 was 1.48%. - Cash bond market: On Friday, the closing yields of interbank government bonds declined compared to the previous trading day. The yield to maturity of the 2-year government bond dropped 0.37 BP to 1.36%, the 5-year dropped 1.34 BP to 1.56%, the 10-year dropped 0.67 BP to 1.81%, and the 30-year dropped 2.00 BP to 2.25%. - US policy: The US President signed an executive order to impose tariffs on countries trading with Iran, but no new tariffs have been added for now. The US and Iran held "very good talks," and the US will negotiate with Iran again next week. - US inflation expectation: The 1-year inflation expectation in the US dropped from 4% to a 13-month low of 3.5% [1] Market Logic - In January, the official manufacturing PMI was 49.3%, falling back below the boom - bust line, with the new order index at 49.2%, indicating a decline in manufacturing market demand. The business activity index of the construction industry in January was 48.8%, and that of the service industry was 49.5%, remaining below the boom - bust line for the third consecutive month. The Ministry of Finance stated that in 2026, the fiscal deficit, total debt, and total expenditure will be maintained at a necessary level. The central bank governor said that there is still room for reserve requirement ratio cuts and interest rate cuts this year [1][2] Trading Strategy - Trading investors are advised to conduct band operations [2]

Group 1 - The People's Bank of China (PBOC) conducted a 7-day reverse repurchase operation of 354 billion yuan, resulting in a net injection of 143.8 billion yuan after accounting for maturing reverse repos [1] - Experts indicate that the PBOC is actively maintaining liquidity through various monetary policy tools, ensuring that liquidity remains at a sufficient level [1] - The liquidity pressure before the Spring Festival is expected to be manageable, with significant mid-term fund injections already realized [1] Group 2 - Analysts expect the PBOC to initiate 14-day reverse repos before the Spring Festival and to flexibly conduct buyout repos and MLF operations to inject medium-term liquidity [2] - The market anticipates the PBOC's upcoming announcement regarding January's treasury buy-sell operations, with potential for increased volume [2] - The PBOC aims to maintain ample liquidity in the banking system, with expectations for further strengthening of treasury buy-sell tools [2] Group 3 - There is still room for a reserve requirement ratio (RRR) cut, with the current average RRR at 6.3% [3] - The PBOC is expected to continue increasing liquidity injections and to flexibly utilize various open market operation tools to maintain liquidity [3] - The PBOC's strategy includes using treasury buy-sell operations to achieve multiple functions, including monetary injection and coordination with fiscal policy [3]

Economic Indicators - As of January 25, 2026, the ECI supply index is at 50.06%, up 0.10 percentage points from the previous week, while the demand index remains stable at 49.84%[8] - The ECI investment index is at 49.83%, unchanged from last week, and the consumption index is at 49.65%, down 0.01 percentage points[8] - The ECI export index has increased to 50.22%, up 0.02 percentage points from last week[8] Industrial Production - The operating rate for automotive full steel tires has improved by 20.6 percentage points year-on-year, while the cement shipment rate has increased by 13.4 percentage points compared to the same period last year[2] - The overall industrial production shows significant improvement due to the timing of the Spring Festival, with various industries experiencing better operating rates compared to last year[17] Real Estate Market - The sales growth of second-hand homes continues to recover, with a year-on-year increase of approximately 10.9% for the week of January 17-23, 2026, marking the first positive year-on-year change since October 2025[2] Consumer Market - The retail sales of passenger cars are expected to rebound from a year-on-year decline of -14.0% in December 2025 to a growth of 0.3% in January 2026[2] - The "trade-in" policy has shown positive effects, with significant improvements in appliance sales during the week of January 12-18, 2026[2] Export Performance - The cumulative cargo throughput at monitored ports in January 2026 is recorded at an average of 25,967.4 million tons, reflecting a year-on-year growth of approximately 3.5%[2] - January exports are expected to maintain strong resilience, supported by a higher number of working days compared to the previous year[2] Inflation Trends - The average wholesale price of pork has increased to 18.48 yuan/kg, showing a marginal recovery, while the average price of 28 key monitored vegetables is at 5.65 yuan/kg, also reflecting a slight increase[44] - The CPI is expected to continue rising due to the seasonal demand for food products and the increase in international oil prices[2] Monetary Policy - The MLF (Medium-term Lending Facility) has been preemptively rolled over with an excess of 9,000 billion yuan, indicating a total liquidity injection of 1 trillion yuan in January 2026[16] - The ELI index stands at -0.71%, having increased by 0.07 percentage points from the previous week, indicating a slight improvement in liquidity conditions[13] Risk Factors - Uncertainties remain regarding U.S. tariff policies and the potential for policy measures to fall short of market expectations[59] - The sustainability of improvements in the real estate market is still under observation[59]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report - Last week, the bond market recovered, with relatively stable credit spreads and narrowing spreads for Tier 2 and perpetual bonds. The weakening of the stock - bond seesaw effect and positive factors such as better - than - expected 30 - year Treasury bond issuance and regulatory measures on the A - share market improved bond market sentiment. Although the expected RRR cut did not materialize, the central bank's press conference sent positive signals, and the bond market may continue to repair [2][14]. - The central bank emphasized that there is still room for RRR cuts and interest rate cuts. Considering economic data and market conditions, these measures may be implemented around the Two Sessions in March. The central bank may also flexibly adjust its bond - buying operations in response to bond supply and yield curve changes [3][20]. - Despite potential disturbances to the capital market in the future, the central bank is likely to maintain loose liquidity. The DR001 central rate in January is expected to be around 1.3% - 1.35% [5][49]. - December's financial data was better than expected, but there is still pressure for the subsequent decline in social financing and M2 growth rates. The bond market may face short - term disturbances as interest rates approach previous lows, but there are signs of an interest rate peak, and there is no need to be overly pessimistic about the bond market [52][74]. 3. Summary by Relevant Catalogs 3.1 1 - month RRR cut did not materialize, but the central bank's press conference sent positive signals in terms of policy and bond - buying space - The central bank emphasized that there is still room for RRR cuts and interest rate cuts. External factors do not strongly constrain interest rate cuts, and the reduction of the central bank's re - lending rate creates conditions for interest rate cuts. The RRR cut may be postponed due to concerns about overheating in the capital market [3][20]. - The central bank can tolerate M2 and social financing growth rates being higher than the target to a certain extent and may maintain a loose liquidity environment to support credit. The central bank also elaborated on the significance of Treasury bond trading and may increase the scale and extend the term of bond purchases [4][27]. 3.2 Mismatch between capital injection and leakage caused fluctuations, and the non - implementation of the RRR cut did not hinder capital loosening - In December, the decline in government deposits was lower than expected, resulting in a lower - than - expected excess reserve ratio of 1.6%. The capital remained loose possibly due to abundant non - bank liquidity [32]. - In the first week of January, the excess reserve ratio was estimated to be only 0.9% due to OMO net withdrawal and government bond net payment. External disturbances such as government bond net payment, maturity of repurchase agreements, and North Exchange IPO subscriptions led to a temporary tightening of capital, but the situation eased after the central bank's operations [38]. - In the next month, factors such as tax payments, government bond payments, and cash - withdrawal demand may disrupt the capital market. However, the central bank's attitude indicates that the capital market is unlikely to experience significant fluctuations, and the DR001 central rate in January is expected to be around 1.3% - 1.35% [44][49]. 3.3 December's financial data was better than expected, but the subsequent social financing and M2 growth rates may continue to decline - In December, new credit was 9100 billion yuan, better than expected. Corporate credit improved, but household credit was weak. The decline in household short - term and medium - long - term loans shows that the real estate market is still clearing, and households are repairing their balance sheets [52]. - December's new social financing was 2.21 trillion yuan, and the stock's year - on - year growth rate dropped to 8.3%. Although it was better than expected, there is still pressure for a decline in the subsequent social financing growth rate due to the high base of Q1 credit and the slowdown in government bond net supply [58]. - In December, the M2 growth rate rose to 8.5%. The increase was mainly due to factors such as bank foreign exchange settlement surplus and non - bank deposit base effects. However, the M1 growth rate declined, indicating a possible slowdown in deposit activation [59][65]. 3.4 Interest rates are approaching previous lows and may face disturbances, but the trend of shock repair is still expected to continue - After last week's repair, the yields of Treasury bonds of various maturities (except ultra - long - term) are lower than those at the end of 2025. Although the market may face short - term disturbances as interest rates approach previous lows, the strong configuration willingness of banks and insurance companies is a clear signal of an interest rate peak [74]. - There is no need to be overly pessimistic about the bond market. If the capital remains loose and government bond supply does not cause the expected impact, the 10 - year Treasury bond may break through the December low of 1.83%. It is recommended to maintain a certain leverage and participate in the trading opportunities of 10 - year policy - financial bonds [8][74].

1. Report Industry Investment Rating - The report does not mention the industry investment rating [1][5] 2. Core Viewpoints of the Report - The central bank's reduction of various structural monetary policy tool interest rates by 25bp reflects support for the "five major articles of finance", helps stabilize the net interest margin of banks, and indicates a continued loose monetary policy, but does not directly lead to an immediate decline in interest rates or a follow - up reduction in LPR [5][13][14] - There is still room for reserve requirement ratio cuts (130bp) and interest rate cuts in 2026, but the probability of a comprehensive interest rate cut is low before the Two Sessions and the first release of 2026 economic data [5][14] - The central bank will increase liquidity injection, and the overnight interest rate is expected to be slightly lower than 1.40%, which does not mean a tightening of liquidity [20] - In 2026, the central bank's treasury bond trading will mainly cooperate with fiscal policies, and it is more concerned about risks of large - scale unilateral changes in interest rates [22] 3. Summary by Relevant Catalogs 3.1 Structural Monetary Policy Interest Rate Cuts - On January 15, 2026, the central bank announced a series of monetary and financial policies, including a 0.25 - percentage - point cut in various structural monetary policy tool interest rates. After the cut, the 1Y agricultural and small - business re - loan and other special tool interest rates are 1.25%, lower than the 7DOMO policy rate [5][8][13] - The reduction in interest rates can reduce banks' interest - paying costs and help stabilize the net interest margin. It is estimated that by the end of December 2025, the balance of the central bank's structural monetary policy tools will be around 5.4 trillion yuan, and the interest savings after the rate cut will be about 13.5 billion yuan. Even if all tools are fully utilized, the interest savings will only slightly exceed 20 billion yuan [5][13] - The interest rate cut does not directly lead to a decline in interest rates, and it does not meet the conditions for an LPR follow - up reduction [5][13] 3.2 Future Reserve Requirement Ratio and Interest Rate Cut Space - The central bank stated that there is still room for reserve requirement ratio and interest rate cuts in 2026 [14] - The current average statutory deposit reserve ratio of financial institutions is 6.3%, and it is expected that 5% is the bottom line, leaving a 130bp cut space [14] - The main constraint for interest rate cuts is the pressure on banks' net interest margins. Although there are factors conducive to stabilizing the net interest margin, the probability of a comprehensive interest rate cut before the Two Sessions and the first release of 2026 economic data is low [14] 3.3 Follow - up Capital Market Conditions - The central bank will continue to increase liquidity injection, keep liquidity abundant, and guide the overnight interest rate to run around the policy rate [20] - The overnight interest rate in December 2025 was generally below 1.30%. Due to the dislocation of repurchase operations, the overnight interest rate rose to 1.30% - 1.40%. It is estimated that an overnight interest rate slightly lower than 1.40% is appropriate, which does not mean a tightening of liquidity [20] 3.4 Follow - up Treasury Bond Trading - In 2025, the net investment of repurchase operations was 3.8 trillion yuan, mainly achieved through treasury bond trading [22] - Two perspectives can be used to observe the central bank's treasury bond holdings. In 2025, the balance of the central bank's claims on the central government decreased by 67 billion yuan, while the balance of other institutions' treasury bond holdings increased by 37 billion yuan, and the balance of local government bond holdings of other institutions increased by 290 billion yuan [22] - In 2026, the central bank's treasury bond trading will mainly cooperate with fiscal policies, help ensure the smooth issuance of treasury bonds at a reasonable cost, and play a role in preventing market risks. The adjustment of the 10 - year treasury bond yield range may not represent a clear regulatory target [22] 3.5 Other New Monetary and Financial Policies - Merge and use the agricultural and small - business re - loan and rediscount quotas, increase the agricultural and small - business re - loan quota by 500 billion yuan, and set up a private enterprise re - loan quota of 1 trillion yuan [8] - Increase the science and technology innovation and technological transformation re - loan quota by 400 billion yuan and expand the scope of support [8] - Merge and manage the private enterprise bond financing support tool and the science and technology innovation bond risk - sharing tool, with a total re - loan quota of 200 billion yuan [8] - Reduce the minimum down - payment ratio for commercial housing loans to 30% to support the de - stocking of the commercial real estate market [9]

Core Viewpoint - The People's Bank of China (PBOC) signals that there is room for further interest rate cuts and reserve requirement ratio (RRR) reductions in 2026, aiming to support economic stability and reasonable price recovery [5][6]. Monetary Policy Adjustments - The average RRR for financial institutions is currently 6.3%, indicating potential for RRR cuts [5]. - The PBOC plans to lower the interest rates of various structural monetary policy tools to enhance support for key sectors and weak links [14][17]. - A reduction of 0.25 percentage points in the re-lending and re-discount rates will take effect on January 19, 2026, with new rates set for different loan terms [14]. Government Bond Operations - The PBOC will flexibly conduct government bond trading operations to maintain liquidity and support the smooth issuance of government bonds [8]. - In 2025, the total issuance of government bonds reached 16 trillion yuan, with a net increase of 6.6 trillion yuan, indicating a robust bond market [8]. Support for Commercial Real Estate - The minimum down payment ratio for commercial property loans has been reduced from 50% to 30%, aimed at stimulating the commercial real estate market [10]. Exchange Rate Policy - The PBOC maintains a clear and consistent exchange rate policy, emphasizing stability in the RMB exchange rate and rejecting competitive devaluation [12]. Support for Private Enterprises - The PBOC has increased the re-lending quota for supporting agriculture and small enterprises by 500 billion yuan, now including medium-sized private enterprises [16]. - The total quota for re-lending to private enterprises is set at 1 trillion yuan, with terms aligned with existing policies [16]. Price Stability Considerations - The CPI rose by 0.8% year-on-year in December 2025, marking the highest level since March 2023, prompting the PBOC to focus on promoting reasonable price recovery as part of its monetary policy [20].

Core Viewpoint - The People's Bank of China (PBOC) announced eight policies aimed at supporting high-quality development of the real economy, establishing a foundation for monetary policy implementation in 2026, with a focus on maintaining "moderately accommodative" monetary policy and promoting stable economic growth and reasonable price recovery [1][3]. Structural Monetary Policy Tools - The majority of the eight policies involve adjustments to structural monetary policy tools, including a 0.25 percentage point reduction in interest rates for various structural monetary policy tools, bringing the one-year interest rate for various relending facilities down from 1.5% to 1.25% [3][4]. - The policies include merging agricultural and small business relending with rediscounting, increasing the relending quota by 500 billion yuan, and establishing a separate relending quota of 1 trillion yuan specifically for private enterprises [3][4]. - The relending quota for technological innovation and technological transformation has been increased from 800 billion yuan to 1.2 trillion yuan, expanding the support scope to include high R&D investment private SMEs [3][4]. - A new risk-sharing tool for bonds issued by private enterprises and technological innovation has been established, providing a total relending quota of 200 billion yuan [3][4]. - The support scope for carbon reduction tools has been expanded to include energy-saving renovations and green upgrades [3][4]. Interest Rate and Reserve Requirement Adjustments - The PBOC indicated that there is still room for further reductions in reserve requirements and interest rates in 2026, with the current average reserve requirement ratio at 6.3% [6][7]. - The PBOC has previously lowered policy interest rates ten times since the second half of 2018, with the average interest rates for new corporate and personal housing loans at around 3.1% as of December 2025, reflecting a decline of 2.5 and 2.6 percentage points respectively since mid-2018 [6][7]. Coordination of Monetary and Fiscal Policies - The PBOC plans to resume open market operations for government bonds, which had been paused since early 2025, to enhance the coordination between monetary and fiscal policies [9][10]. - In 2025, the issuance of government bonds reached 16 trillion yuan, with a net increase of 6.6 trillion yuan, indicating a significant role for banks and financial institutions in holding government bonds [10][11]. Price Trends and Economic Outlook - The PBOC noted positive changes in price levels, with the Consumer Price Index (CPI) rising by 0.8% year-on-year as of December 2025, the highest level since March 2023 [12][13]. - The PBOC will continue to implement moderately accommodative monetary policy, focusing on promoting stable economic growth and reasonable price recovery [13][14].

1. Report Industry Investment Rating No information provided in the content. 2. Core View of the Report The current bond market decline is due to the constraint of the "impossible triangle," and before the supply pressure of ultra - long bonds is fully digested by the market, the bond market is unlikely to have a trend - based opportunity. It is expected that the long - end yield will continue to show a weak and volatile trend. The long - end yield of the 30 - year Treasury bond is expected to fluctuate in the range of 2.2% - 2.4%, and the bond market may have a phased repair opportunity in the second half of the first quarter of 2026 [2][8][41]. 3. Summary According to the Directory 3.1 Current Bond Market's "Impossible Triangle" Since the second half of 2025, the bond market has been falling continuously. After the People's Bank of China's unexpected "hawkish" Treasury bond trading operation in November 2025, the market is worried about the carrying pressure of ultra - long - term interest - rate bonds, and the supply of ultra - long bonds has become the core contradiction. From early November 2025 to January 7, 2026, the yield of the 30 - year Treasury bond rose by about 20 basis points, and the price of the ultra - long - term Treasury bond futures (TL) fell by nearly 6 yuan. The current market decline is due to the "impossible triangle" constraint, that is, the following three cannot hold simultaneously: fiscal policy continues to lengthen the debt issuance duration, the central bank does not buy long - duration Treasury bonds, and does not change the interest - rate risk sensitivity index restrictions for banks [4][15]. 3.2 Outlook for the People's Bank of China's Treasury Bond Trading Operations in 2026 It is expected that the People's Bank of China will continue to mainly buy short - duration Treasury bonds, maintaining a "high - frequency and small - volume" monthly operation mode, and guiding the market to reduce irrational expectations and excessive attention to this tool. Treasury bond trading will return to a normal and regular liquidity management tool, and its impact on the bond market will be neutral. Overseas experience shows that large - scale purchases of long - term bonds usually occur when the policy rate drops to a very low level or even zero. Since the domestic policy rate still has a 140 - basis - point space, it is too early for unconventional policies. The current Treasury bond trading operations of the Chinese central bank are more similar to Reserve Management Purchases (RMP) rather than Quantitative Easing (QE) [5][19][20]. 3.3 Outlook for Fiscal Debt Issuance Duration in 2026 Theoretically, when interest rates continue to adjust, local governments will shorten the debt issuance duration. However, this process may face two problems. First, it is a slow process for local governments to actively shorten the duration. The proportion of new local bonds in the stock of local bonds is not high, and the increase in interest expenditure caused by long - duration debt issuance is not significant in the short term, so the possibility of local governments significantly shortening the duration in the short term is low. Second, the term arrangement of local government bond issuance has high flexibility, and the Ministry of Finance does not restrict the scale and quantity of long - term local bond issuance. Therefore, the overall duration of local government stock debt is difficult to significantly shorten in a short time [23]. 3.4 Views on Adjusting Banks' Interest - Rate Sensitivity Indicators Although the adjustment of interest - rate sensitivity indicators can increase the bond - allocation capacity of large banks to some extent, the maturity mismatch trend between the asset and liability ends of banks has been deepening in recent years, and the adjustment of indicators is difficult to significantly expand the ability of large banks to undertake long - term bonds. According to the revision of the regulatory standards for interest - rate risk in the banking book by the Basel Committee in July 2024, the interest - rate parallel upward shock parameter should be lowered from 250BP to 225BP. Based on the data of the six major banks at the end of 2024, this parameter adjustment can release about 1.23% of the indicator space on average, corresponding to about 172.2 billion yuan of Tier - 1 capital. In the scenario of still considering a 250 - basis - point extreme shock and calculating based on the modified duration of 8.35 years of the stock local government bonds, it is expected to add about 824.568 billion yuan of bond - allocation capacity for large banks. However, the maturity mismatch between assets and liabilities of banks is still deepening, with the liability side showing a trend of current - account and non - bank deposits, and the asset side showing a long - term trend, so the ability of banks to undertake long - term bonds is still limited [35]. 3.5 Outlook for the Bond Market The bond market still faces the constraint of the "impossible triangle." Before the supply narrative of ultra - long bonds is fully priced, there is no obvious opportunity to bottom - fish in the bond market. The view of a weak and volatile long - end yield is maintained, and the yield of the 30 - year Treasury bond may be further adjusted to 2.4%. After the supply pressure of ultra - long bonds is fully digested by the market, the bond market may have a phased repair opportunity, which may occur in the second half of the first quarter of 2026. At that time, the dynamic balance among fiscal debt issuance rhythm, central bank operation attitude, and bank allocation behavior will be the key to determining the market direction [8][41].