Group 1: Market Overview - Since mid-May, the bond market has entered a phase of consistent expectations due to the easing of US-China tensions and deposit rate cuts, leading to narrow fluctuations in long-duration bonds[1] - The recent weak issuance of government bonds reflects insufficient market allocation power, with a bid-to-cover ratio for the 30-year special treasury bond at only 1.68 times, significantly lower than 9.50 times earlier in the month[20][21] Group 2: Supply and Demand Dynamics - The supply-demand mismatch is a core issue in the current bond market, with government bond balances increasing by 20.7% year-on-year, while bank liabilities only grew by 7.4%, creating pressure on banks to absorb new government debt[21] - In Q1 2025, insurance premium income grew by only 0.9%, with life insurance premiums declining by 1.0%, limiting the appetite for long-duration government bonds[23] Group 3: Future Expectations - The supply pressure is expected to ease in June and July, with government bond maturities decreasing to approximately CNY 1.32 trillion, leading to a projected net supply of only CNY 1 trillion[3][27] - The net issuance of government bonds for the second half of 2025 is estimated at CNY 5.62 trillion, a significant reduction of CNY 2.23 trillion compared to 2024[27] Group 4: Investment Strategy - The bond market may experience a slight downward trend in the short term, with a recommended strategy of focusing on 3-5 year credit bonds and trading long-duration rate bonds within a 10-year treasury yield range of 1.6%-1.7%[36] - If the insurance industry sees a cost reduction in life insurance products, it may lead to increased demand for long-duration bonds, prompting early market positioning[27]