Core Viewpoint - The People's Bank of China (PBOC) has decided to resume the trading of government bonds after a 10-month suspension, indicating a positive shift in the bond market and a need for liquidity support [2][3]. Group 1: Reasons for Resuming Bond Trading - The resumption is attributed to a phase of alleviated interest rate risks in the bond market and the necessity to provide liquidity support [3]. - The initial suspension in January was due to overly optimistic market sentiment and rapid declines in government bond yields, which increased interest rate risks and widened the China-U.S. interest rate differential [3]. - Since July, a shift in risk appetite has led to capital outflows from the bond market, causing a rapid increase in the 10-year government bond yield from 1.6% to over 1.8%, stabilizing around this level for a month [3]. - The macroeconomic environment, including the Federal Reserve's rate cuts and a narrowing of the China-U.S. interest rate differential, has created a favorable context for the PBOC to restart bond trading [3]. Group 2: Market Implications - The resumption of bond trading signals a defined upper limit for bond yields, suggesting limited room for further increases in the 10-year government bond yield [4]. - The PBOC's actions are aimed at enhancing the financial function of government bonds and improving the coordination between monetary and fiscal policies [4]. - The recent rise in short-term bond yields has led to a narrowing of the yield spread between 10-year and 1-year government bonds, indicating a potential steepening of the yield curve [4]. - In the short term, the PBOC's bond purchases may focus on the shorter end of the yield curve, with the long end requiring further observation of the scale of bond purchases and equity market performance [4].

Core Viewpoint - The article emphasizes the importance of improving the government bond yield curve as a foundation for the financial market, highlighting recent measures taken by the Ministry of Finance to enhance liquidity in the secondary market for government bonds [2][3]. Summary by Sections Government Bond Market Operations - The Ministry of Finance announced operations to support the market for government bonds, specifically selling 2.7 billion yuan of 2025 10-year bonds and 2.8 billion yuan of 2025 12-year bonds to improve liquidity and reflect market supply and demand [2][3]. Current Market Conditions - The article discusses the ongoing asset shortage and declining policy interest rates, which have increased investor preference for government bonds, leading to a liquidity squeeze in the bond market [2][3][4]. - In July, there was a net decrease of 1.11 trillion yuan in household deposits, indicating a shift in financial asset distribution among residents [3]. Importance of a Healthy Yield Curve - A well-functioning government bond yield curve is crucial for the stability and predictability of the financial system, especially as household asset exposure risks change [3][4]. - The Ministry of Finance's operations aim to balance supply and demand in the market, preventing excessive price increases and ensuring that the yield curve reflects market conditions [3][4]. Challenges in the Market - The article identifies two main issues contributing to the current market's risk-averse behavior: low policy interest rates leading to credit tightening and insufficient capacity to generate effective risk assets, exacerbating the asset shortage [4][5]. - The focus on safe assets like government bonds has resulted in liquidity problems in the secondary market, as investors prefer to hold rather than trade these securities [4][5]. Recommendations for Improvement - To enhance the government bond yield curve and market pricing mechanisms, it is essential to address low interest rates and promote a more open economic environment that encourages risk-taking and innovation among market participants [5][6]. - The article advocates for comprehensive reforms to eliminate barriers to market efficiency and foster a competitive legal market order, ultimately improving investment returns and addressing the asset shortage [5][6].

Group 1 - The core viewpoint emphasizes the importance of improving the government bond yield curve as a foundation for the financial market [1][2] - The Ministry of Finance has initiated operations to support the market for government bonds, specifically through selling operations for 2025 government bonds, with amounts of 270 million and 280 million respectively [1][2] - The current market conditions, including a significant decrease in household deposits and an increase in non-bank deposits, highlight the need for a healthy government bond yield curve to ensure financial stability [2] Group 2 - The government bond market is experiencing liquidity issues due to a strong preference for safe assets among investors, driven by an ongoing asset shortage [3][4] - The Ministry of Finance's selling operations aim to address supply-demand imbalances in the market, preventing excessive price increases and ensuring liquidity [2][3] - A comprehensive approach is needed to reform and open up various sectors, removing barriers to market efficiency and enhancing the marginal return on investments [4][5]

Core Viewpoint - The article emphasizes the importance of improving the government bond yield curve and establishing a solid pricing foundation for the financial market, which requires addressing the benefits and drawbacks of low interest rate policies and fostering market participants' risk-taking spirit and creativity [1][4][5] Group 1: Government Bond Market Operations - The Ministry of Finance announced operations to support the market for government bonds, specifically through selling operations for the 2025 government bonds, with amounts of 270 million and 280 million respectively [1][2] - The government bond market support operations are not new, having been implemented since the issuance of the operational rules in September 2016, and are increasingly regularized due to recent changes in the financial market [1][2] - The current selling operations reflect a supply-demand imbalance in the market for key maturity government bonds, aiming to prevent excessive price increases and improve liquidity in the secondary market [2][3] Group 2: Financial Asset Distribution Changes - In July, there was a net decrease of 1.11 trillion yuan in household deposits, highlighting the significance of a healthy government bond yield curve as the distribution of household financial assets changes [2] - The shift in household asset exposure risks necessitates a more stable and predictable financial system, which places higher demands on the healthy operation of the government bond yield curve [2] Group 3: Market Pricing Mechanism - To create a healthy liquidity environment for the government bond market, it is crucial to establish a sound pricing mechanism and reduce transaction costs, allowing the yield curve to effectively cover risk exposures [3][4] - The current market's risk-averse behavior is driven by a persistent asset shortage and low policy interest rates, leading to liquidity issues in the government bond secondary market [3][4] - The article suggests that addressing low interest rates and enhancing the marginal investment return is essential for guiding changes in the government bond yield curve [4][5] Group 4: Structural Reforms - Comprehensive reforms and opening up various sectors are necessary to broaden the productive boundaries of market participants and eliminate non-market barriers to effective market operation [4][5] - The government bond market support operations are seen as a starting point, with the ultimate goal being to improve the yield curve and market pricing foundation through deeper reforms [5]

Group 1 - The yield curve for U.S. 2-year and 10-year Treasury bonds has steepened, with the spread widening to 60 basis points, marking the largest spread since April of this year [1]

Group 1 - The release of CPI data has led to a steepening of the yield curve for 2-year and 10-year U.S. Treasury bonds, with the latest spread reported at 50.5 basis points [1] - The yield on the 10-year U.S. Treasury bond has been affected by the CPI data [1]

Group 1: Report Industry Investment Rating - No information provided Group 2: Core Viewpoints of the Report - On June 5, the 30 - year Treasury bond futures main contract fell 0.16%, the 10 - year main contract fell 0.01%, the 5 - year main contract rose 0.02%, and the 2 - year main contract rose 0.04% [2] - The trend strength of Treasury bond futures is 0, indicating a neutral outlook [8] Group 3: Summary by Relevant Catalogs 1. Fundamental Tracking - **Treasury Bond Futures Prices**: On June 5, the 30 - year Treasury bond futures main contract (TL2509) closed at 119.310, down 0.16%; the 10 - year main contract (T2509) closed at 108.720, down 0.01%; the 5 - year main contract (TF2509) closed at 106.030, up 0.02%; the 2 - year main contract (TS2509) closed at 102.430, up 0.04% [2][3] - **Funding Rates**: Overnight shibor was 1.4080%, unchanged from the previous trading day; 7 - day shibor was 1.5340%, down 0.9bp; 14 - day shibor was 1.5910%, up 1.5bp; 1 - month shibor was 1.6200%, unchanged from the previous trading day [2] - **Repo Market**: On June 5, the inter - bank pledged repo market traded 2.7 billion yuan, an increase of 10.23%. Overnight repo rate was 1.40%, down 2bp; 7 - day repo rate was 1.60%, up 10bp; 14 - day repo rate was 1.60%, up 2bp; 1 - month repo rate was 1.60%, down 6bp [4] - **Yield Curves**: Treasury bond yield curve showed mixed movements (2Y down 2.36BP to 1.44%; 5Y down 0.67BP to 1.56%; 10Y up 0.43BP to 1.67%; 30Y up 0.70BP to 1.90%). Credit bond yield curve also showed mixed movements [4] 2. Macro and Industry News - On June 5, 126.5 billion yuan of 7 - day reverse repurchase operations were carried out, with 266 billion yuan of 7 - day reverse repurchases maturing, resulting in a net withdrawal of 139.5 billion yuan [7] - On June 6, 2025, the People's Bank of China will conduct 1 trillion yuan of outright reverse repurchase operations with a term of 3 months (91 days) [7] 3. Trend Intensity - The trend intensity of Treasury bond futures is 0, with a neutral outlook [8]

Group 1 - The demand for Japan's 10-year government bonds has unexpectedly strengthened, providing a boost to the recently volatile bond market, with a key demand indicator reaching a new high since April 2024 [1] - The 10-year government bond futures rose slightly to 139.14 yen, corresponding to a yield decrease of 2.5 basis points to 1.48%, despite rising yields in major global economies [1][4] - The upcoming 30-year government bond auction is seen as a critical test of market sentiment towards ultra-long-term bonds, with traders remaining cautious [1][4] Group 2 - Senior interest rate strategist Miki Den from Sumitomo Mitsui Trust Securities noted that the 1.5% yield level is attractive for allocation funds, which is key to the recovery in demand [4] - However, he warned that the downward yield potential may be limited due to the upcoming 30-year bond issuance, indicating that the market needs to digest the supply pressure from ultra-long-term bonds [4] - The global bond market is currently experiencing a crisis of confidence, with concerns over large fiscal deficits in major economies increasing debt burdens, compounded by the Bank of Japan's gradual exit from large-scale bond purchases [4][5] Group 3 - Recent auction data shows that the subscription multiple for the 2.6 trillion yen 10-year government bonds significantly increased to above the one-year average, despite yields rising over 50 basis points from the 2023 low [5] - The attractiveness of Japanese bonds relative to other developed countries is a primary reason for the influx of allocation funds [5] - The upcoming 30-year bond auction is expected to be a crucial observation point, as its yield has reached the highest level since issuance, which will directly impact global investors' risk assessment of the Japanese bond market [5]

Report Industry Investment Rating - Not mentioned Core Viewpoints - On May 29, most treasury bond futures closed down, with the 30 - year main contract down 0.04%, the 5 - year and 2 - year main contracts down 0.01%, and the 10 - year main contract flat. The equity market adjusted throughout the day, with the ChiNext Index leading the decline. The market lacks strong driving factors, and a cautious attitude is recommended [1] - The trend strength of treasury bond futures is 0, indicating a neutral outlook [9] Summary by Relevant Catalogs [Fundamentals Tracking] - On May 29, the treasury bond futures index was 0.48. The volume - price and fundamental factors were bullish. Without leverage, the cumulative returns of the strategy were 0.05% in the past 20 days, - 0.58% in the past 60 days, - 0.02% in the past 120 days, and 1.26% in the past 240 days [1] - In the equity market, as of the close, the Shanghai Composite Index was down 0.18%, the Shenzhen Component Index was down 0.61%, and the ChiNext Index was down 0.68%. Market hotspots were scattered, and the number of rising and falling stocks was roughly equal [1] - In the money market, on May 28, the overnight shibor was 1.4110%, down 4.1bp from the previous trading day; the 7 - day shibor was 1.5780%, down 2.0bp; the 14 - day shibor was 1.6690%, up 0.2bp; the 1 - month shibor was 1.6150%, up 0.1bp [2] - The trading volume of the inter - bank pledged repurchase market on May 28 was 2.3 billion yuan, a decrease of 5.90%. Overnight rates closed at 1.35%, down 10bp; 7 - day rates closed at 1.50%, down 20bp; 14 - day rates closed at 1.68%, up 3bp; 1 - month rates remained flat at 1.60% [4] - The yield curves of treasury bonds and credit bonds showed mixed trends. The 2Y - term treasury bond yield moved down 0.03BP to 1.47%; the 5Y - term moved up 0.50BP to 1.58%; the 10Y - term moved down 4.06BP to 1.68%; the 30Y - term moved up 0.50BP to 1.91%. Among credit bonds, the 6M - term yield of AAA - rated medium - and short - term notes remained at 1.75%, the 1Y - term moved up 1.00BP to 1.79%, the 3Y - term moved up 3.50BP to 1.80%, and the 5Y - term moved up 8.00BP to 2.07% [4] - In terms of the net long - position changes of different institutional types, on a daily basis, private funds decreased by 0.38%, foreign capital decreased by 0.9%, and wealth management subsidiaries decreased by 1.75%. On a weekly basis, private funds decreased by 5.52%, foreign capital decreased by 4.93%, and wealth management subsidiaries decreased by 5.27% [6] [Market Data] - The opening, high, low, and closing prices, as well as trading volume and open interest of the 2 - year, 5 - year, 10 - year, and 30 - year treasury bond futures main contracts on the previous trading day are provided. For example, the 2 - year TS2509 opened at 102.412, closed at 102.400, down 0.01%, with a trading volume of 27,085 and an open interest of 106,440 [3] - The 2 - year active CTD bond was 250006.IB with an IRR of 1.96%; the 5 - year was 240020.IB with an IRR of 1.91%; the 10 - year was 220010.IB with an IRR of 1.68%; the 30 - year was 210014.IB with an IRR of 1.06%. Currently, R007 is about 1.6948% [3] [Macro and Industry News] - On May 28, the central bank conducted 215.5 billion yuan of 7 - day reverse repurchase operations at an interest rate of 1.40%, unchanged from before [8] [Trend Intensity] - The trend intensity of treasury bond futures is 0, indicating a neutral view. The range of trend intensity is from - 2 (most bearish) to 2 (most bullish) [9]

Report Summary 1. Report Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Core View of the Report The report presents the market conditions of treasury bond futures on May 27, 2025, including price changes, trading volume, and related factors, and also mentions the situation of the equity market, money market, and macro - industry news, indicating that the expectations for treasury bond futures are limited and the market is in a state of waiting for a direction [1]. 3. Summary by Related Catalogs 3.1 Treasury Bond Futures Market Conditions - On May 27, treasury bond futures closed down across the board, with the 30 - year, 10 - year, 5 - year, and 2 - year main contracts down 0.26%, 0.11%, 0.03%, and 0.02% respectively [1]. - The treasury bond futures index was - 0.12. The volume - price factor was bullish, and the fundamental factor was bearish. Without leverage, the cumulative returns of the strategy in the past 20, 60, 120, and 240 days were 0.04%, - 0.53%, 0.14%, and 1.27% respectively [1]. - The trading volume of the 2 - year, 5 - year, 10 - year, and 30 - year main contracts was 32,028, 43,924, 58,575, and 62,401 respectively, and the open interest was 104,798, 128,934, 165,848, and 92,091 respectively [3]. - The IRR of the 2 - year, 5 - year, 10 - year, and 30 - year active CTD bonds was 1.95%, 2.07%, 1.88%, and 3.58% respectively, and the current R007 was about 1.6794% [3]. 3.2 Equity Market Conditions - On May 27, the equity market oscillated and adjusted throughout the day, with the ChiNext Index leading the decline. The Shanghai Composite Index fell 0.18%, the Shenzhen Component Index fell 0.61%, and the ChiNext Index fell 0.68%. The market hotspots were scattered, and the number of rising and falling stocks was basically the same [1]. 3.3 Money Market Conditions - On May 27, the overnight shibor was 1.4520%, down 5.4bp from the previous trading day; the 7 - day shibor was 1.5980%, up 1.9bp; the 14 - day shibor was 1.6670%, down 2.1bp; the 1 - month shibor was 1.6140%, up 0.2bp [2]. - The bank - to - bank pledged repurchase market traded 2.4 billion yuan, an increase of 1.62%. The overnight rate closed at 1.45%, up 1bp from the previous trading day; the 7 - day rate closed at 1.70%, up 19bp; the 14 - day rate closed at 1.65%, down 4bp; the 1 - month rate closed at 1.60%, down 6bp [4]. 3.4 Bond Yield Curve Conditions - The treasury bond yield curve rose by 0.29 - 1.10BP (the 2 - year yield rose 0.29BP to 1.47%; the 5 - year yield rose 0.78BP to 1.57%; the 10 - year yield rose 0.38BP to 1.72%; the 30 - year yield rose 1.10BP to 1.90%). The credit bond yield curve showed mixed changes [4]. 3.5 Net Long Position Changes by Institution Type - The daily net long position of private funds decreased by 3.27%, foreign capital decreased by 2.46%, and wealth management subsidiaries decreased by 2.4%. The weekly net long position of private funds decreased by 5.28%, foreign capital decreased by 4.11%, and wealth management subsidiaries decreased by 3.69% [6]. 3.6 Macro and Industry News - On May 27, the central bank conducted 448 billion yuan of 7 - day reverse repurchase operations at an operating rate of 1.40%, unchanged from before. There were 357 billion yuan of reverse repurchases due on the same day [8]. 3.7 Trend Intensity - The trend intensity of treasury bond futures was 0, indicating a neutral state [9].