Core Viewpoint - The central bank's recent announcement of a 200 billion yuan liquidity injection through government bond purchases in October has led to disappointment in the market, as the scale is significantly lower than previous monthly averages, resulting in a rise in bond yields [1][2][3]. Group 1: Market Reaction - Following the announcement, major interest rate bond yields initially rose sharply but later saw buying interest that caused yields to retreat slightly [2]. - The 30-year government bond yield decreased by 0.4 basis points to 2.136%, while the 10-year bond yield remained stable at 1.79% [2]. - Analysts noted that the 200 billion yuan purchase was much lower than the expected 1000 to 3000 billion yuan monthly net purchases, leading to a sense of disappointment among investors [3]. Group 2: Central Bank's Strategy - The central bank's decision to resume bond purchases is seen as a move to stabilize liquidity and manage market expectations without causing a rapid decline in interest rates [3][6]. - The central bank's total bond purchases since last year have reached 1 trillion yuan, but it paused operations earlier this year due to market imbalances [2][3]. - Analysts suggest that the central bank may increase the scale of bond purchases in November to counterbalance other monetary tools maturing [7]. Group 3: Future Outlook - The market is expected to focus on the scale, duration, and method of future bond purchases by the central bank [7]. - There is a possibility that the total bond purchase scale for the year could exceed expectations, given the remaining government bonds to be issued [7]. - The impact of the central bank's bond purchases on market yields will depend on the rate movements; if yields decline too quickly, the purchase scale may be reduced [8][9].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The resumption of central bank bond purchases is mainly due to the objective need for base - money injection, and factors such as bond market supply - demand and yield curve shape no longer pose major constraints [2][17]. - After the resumption of bond purchases, the bond market curve may initially show a flattening trend, but in the future, it may tend to steepen, and attention should be paid to potential adjustment pressures after the positive news is realized [4][30]. - If there is no further easing expectation, the current 5BP pricing of the 10 - year active treasury bond may be relatively sufficient [4][31]. 3. Summary by Directory 3.1 This Year: Expectations' Repeated Fluctuations and Disappointments - In 2024 from August to December, the central bank's cumulative net bond - buying scale was 100 billion yuan. In January 2025, it announced a phased suspension of bond purchases in the open market [9]. - Reasons for the suspension in early 2025 include controllable government bond supply pressure, the availability of alternative liquidity management tools, and the need to avoid excessive market consensus expectations and potential interest - rate risks [9]. - From the perspective of curve regulation, the operation space was relatively limited at that time. Net selling of bonds to tighten liquidity was unlikely, and achieving a balance in "buying short and selling long" was restricted by the central bank's long - term bond holdings [10]. - Market expectations for the resumption of bond purchases have repeatedly fermented since June, mainly due to the need to improve the monetary policy toolbox, the market's expectation during the bond market adjustment, and the large - scale banks' increased short - term bond purchases [14][15]. 3.2 Reasons for Resuming Bond Purchases - The resumption is mainly due to the objective need for base - money injection. In the fourth quarter, the maturity scale of medium - and long - term liquidity is high, and there is also potential demand for liquidity, such as high - interest time - deposit maturities and the potential for new policy - based financial instruments to drive credit [17]. - Bond supply scale and the desired interest - rate level are not the main considerations for resuming bond purchases. Currently, government bond supply is nearing the end, and the bond market has previously faced interest - rate increases without resuming bond purchases [23]. - The weakening of bond demand, as reflected by the widening of the primary - secondary market spread of 30 - year treasury bonds since July, provides a logical basis for resuming bond purchases [3][27]. - In terms of the form of bond - buying operations, the scale may be more cautiously controlled this year, "buying short" may dominate, and "selling long" may not necessarily occur [3][29]. 3.3 Bond Market Pricing - Logically, bond purchases will benefit short - term bonds and steepen the curve. However, if large - scale banks have already held a large amount of short - term bonds and reduce their secondary - market replenishment, the impact on the curve may converge [4][30]. - On October 27, the curve flattened, which may indicate that the bond market's strength was driven by the restoration of buying confidence. Resuming bond purchases does not necessarily mean a prelude to reserve - requirement ratio cuts or interest - rate cuts [4][30]. - If there is no further easing expectation, the current 5BP pricing of the 10 - year active treasury bond may be relatively sufficient. In the future, the curve may steepen, and attention should be paid to potential adjustment pressures [4][31].

Group 1 - The bond market has experienced significant volatility, with the 10-year government bond yield rising above 1.8% again, and expectations for the People's Bank of China (PBOC) to resume government bond trading operations are increasing [1][2] - From August to December 2024, the PBOC conducted net purchases of government bonds totaling 1 trillion yuan, providing crucial support for liquidity adjustment and stable operation of the bond market [1] - The PBOC's decision to temporarily pause government bond purchases was made in response to a supply-demand imbalance in the bond market, with the 10-year yield previously dropping below 1.6% [1] Group 2 - The PBOC's operations in government bond trading are significant for financial market stability and macroeconomic regulation, serving both as a quantitative monetary policy tool and a price-based tool to guide bond yields [2] - A recent meeting between the Ministry of Finance and the PBOC emphasized the importance of coordinating fiscal and monetary policies, discussing topics such as government bond issuance management and the PBOC's bond trading operations [2] - The expectation for the PBOC to resume government bond trading is increasing, with analysts suggesting that clearer triggers are needed for interest rates to reopen a downward channel [3] Group 3 - The current market environment is considered favorable for the PBOC to resume government bond trading operations, as the bond market has shifted from rapid declines in rates to a more stable range [3] - Analysts indicate that the PBOC may take measures to protect against the rapid rise in long-term bond yields, which could include increasing liquidity, resuming bond trading, or guiding market interest rates downward [3]

Key Points - The article discusses recent significant events in the economic and financial landscape, including a meeting between Chinese and U.S. trade leaders aimed at addressing trade issues and promoting cooperation [2] - It highlights a key article by Xi Jinping emphasizing the need to regulate low-price competition among enterprises, particularly in areas suffering from excessive competition [2] - The article notes the Federal Reserve's decision to lower interest rates by 25 basis points, marking the first rate cut of 2025, with expectations of further cuts later in the year [2] Group 1: Important Events Review - On September 14-15, Chinese and U.S. trade leaders held talks in Madrid, focusing on resolving TikTok-related issues and reducing investment barriers [2] - Xi Jinping's article published on September 16 stresses the importance of addressing disordered competition among businesses [2] - The Federal Reserve announced a 25 basis point rate cut on September 18, with projections for additional cuts in the near future [2]

Core Viewpoint - The recent decline in government bond futures has led to increased expectations for the People's Bank of China (PBOC) to resume government bond trading operations, particularly in the fourth quarter, to release medium- to long-term funds and improve market sentiment [1][2]. Group 1: Market Conditions - The yields on 10-year and 30-year government bonds have fallen below 1.8% and 2.1%, respectively, indicating a significant rise in yields since the beginning of the year [1]. - The bond market sentiment is currently bearish, with the 10-year government bond yield recently rising to around 1.8% [2]. - The PBOC has suspended government bond trading operations for eight consecutive months, leading to a notable shift in the bond market compared to earlier in the year [2]. Group 2: PBOC Operations - The PBOC's resumption of government bond trading is seen as having suitable conditions, although the urgency is not strong at the moment [1][6]. - The PBOC has previously indicated that it would consider resuming operations based on market supply and demand conditions [1]. - The PBOC's operations are primarily aimed at managing liquidity and influencing government bond yield trends [2][3]. Group 3: Analyst Perspectives - Analysts believe that the resumption of government bond trading could stabilize bond prices and mitigate negative feedback loops from large-scale redemptions of wealth management products [6]. - Some analysts argue that the PBOC's bond trading operations are more flexible and effective compared to other liquidity management tools like reverse repos [5]. - The current market dynamics suggest that the resumption of bond trading may not fundamentally alter the interest rate trends, as the core factors are related to the stock-bond valuation relationship [6].

Core Viewpoint - The market expectations for the People's Bank of China (PBOC) to resume government bond trading operations are increasing as discussions between the Ministry of Finance and the PBOC have intensified, indicating a potential restart by the end of this year [1][2][3]. Group 1: Policy Coordination - Since the establishment of the joint working group between the Ministry of Finance and the PBOC, there has been a strengthening of coordination between fiscal and monetary policies, with the PBOC's government bond trading operations being a significant aspect of this [1][2]. - The PBOC plans to net purchase government bonds worth 1 trillion yuan in August 2024, followed by 2 trillion yuan in September, October, and November, and 3 trillion yuan in December, totaling 1 trillion yuan [1][2]. - The coordination between fiscal and monetary policies is expected to enhance, providing a favorable environment for government bond issuance and maintaining market liquidity [5][6]. Group 2: Market Environment - The current bond market conditions, including a recent rise in the 10-year government bond yield to approximately 1.8%, suggest that the PBOC may resume bond trading operations in the fourth quarter of this year [3][4]. - The PBOC's bond buying operations are seen as a tool for liquidity management and are expected to help stabilize the bond market and encourage financial institutions to increase credit issuance [3][4]. - The second meeting of the joint working group has broadened its focus to include various topics related to fiscal and monetary policy coordination, which is crucial for addressing the complex market environment and promoting economic recovery [5][6].

Key Events Review - On September 3, a grand ceremony was held in Beijing to commemorate the 80th anniversary of the victory in the Chinese People's Anti-Japanese War and the World Anti-Fascist War, featuring a large military parade at Tiananmen Square [2] - On September 5, the China Securities Regulatory Commission (CSRC) revised and released the "Regulations on the Management of Sales Expenses for Publicly Raised Securities Investment Funds," which includes measures to lower subscription fees, purchase fees, and sales service fee rates, marking the implementation of the third phase of public fund sales fee reform. The estimated annual reduction in sales expenses is approximately 30 billion yuan based on average data from the past three years [2] - On September 5, the U.S. Bureau of Labor Statistics reported that the adjusted non-farm employment population for August increased by 22,000, significantly below the market expectation of 75,000. The unemployment rate was recorded at 4.3%, meeting market expectations and indicating a continuous cooling in the labor market, which strengthens the expectation of an interest rate cut by the Federal Reserve this month [2] Weekly Market Review - The stock market has experienced increased volatility recently, while the bond market has shown some improvement but remains volatile. Due to short-term adjustments in the stock market, combined with a meeting of the joint working group of the Ministry of Finance and the central bank, which mentioned "central bank bond trading operations" and "coordinated efforts of fiscal and monetary policies," there is an optimistic expectation for the resumption of bond trading operations, leading to a recovery in the bond market. The yield on ten-year government bonds briefly fell below 1.75%. However, due to weak momentum for further buying in the bond market, it is expected to remain volatile in the short term, with the ten-year government bond yield not effectively breaking through 1.75% [5]

Group 1 - The meeting between the Ministry of Finance and the People's Bank of China (PBOC) emphasizes the coordination of fiscal and monetary policies to support economic recovery in a complex market environment [1][2] - The shift from a "single tool" approach to a "multi-policy collaboration" indicates a more synchronized rhythm, direction, and intensity of fiscal and monetary policies [2] - The meeting highlights the importance of the joint working group mechanism in enhancing cooperation and ensuring effective implementation of policies [2] Group 2 - From August to December 2024, the PBOC conducted net purchases of government bonds totaling 1 trillion yuan, providing crucial support for market liquidity [3] - The PBOC announced a temporary suspension of government bond purchases starting January 2025, with plans to resume based on market conditions [3] - The cost of issuing government bonds has increased, with the weighted average issuance rate for coupon bonds rising by 5 basis points to approximately 1.7% in August 2025 compared to July [3] Group 3 - The probability of the PBOC restarting government bond purchases within the year is considered high, with expectations for implementation in the fourth quarter [4] - Restarting government bond purchases is expected to release medium- to long-term liquidity, alleviating funding pressures in the banking system [4]