Report Industry Investment Rating - Not provided in the content Core Viewpoints - In December, the year-on-year growth rate of industrial enterprise profits rebounded significantly by 18.4 percentage points to 5.3%, pulling the cumulative year-on-year growth rate for the whole year to 0.6%, but the profit margin remains at a historical low. [1] - In January, the manufacturing PMI fell back into the contraction range. The input price was stronger than the finished product price, and the trend of squeezing enterprise profits still exists. Recently, the rotation of commodity prices is mainly driven by the cost side rather than overheated demand, which has limited suppression on the bond market. [1] - The economic data is weak. The long Spring Festival holiday in February may hinder credit issuance. Coupled with the recent stock market fluctuations and commodity price adjustments, short - term favorable factors are concentrated. Considering that it is the beginning of the "15th Five - Year Plan" and the PPI is in the cycle of turning positive, if the interest rate continues to decline, it is recommended to be cautious about chasing the long - end interest rate in the short term. [1] Summary by Relevant Catalogs Domestic Market News - **Diplomatic Event**: The British Prime Minister visited China again after an 8 - year interval. During the visit, China and the UK reached a series of positive results, including promoting the development of a long - term and stable comprehensive strategic partnership, holding a new round of strategic dialogue, economic and financial dialogue, and other mechanism - based dialogues, and establishing a China - UK financial working group. China is also considering implementing a unilateral visa - free policy for British citizens and reducing the import tariff rate of whisky from 10% to 5%. [2][9] - **Industrial Policy**: China Aerospace Science and Technology Corporation plans to promote the development of new fields such as space tourism during the "15th Five - Year Plan" period, including accelerating the iteration of sub - orbital and orbital space tourism aircraft products, and conducting related flight verifications. It will also carry out the demonstration of the "Tianguangkaiwu" major project. [2][9] - **Real Estate Policy**: Many real estate enterprises are no longer required by regulatory authorities to report the "Three Red Lines" indicators monthly. However, some troubled real estate enterprises are required to regularly report financial indicators such as asset - liability ratio to the special team in the city where their headquarters are located. [2][10] - **Consumption Policy**: The General Office of the State Council issued the "Work Plan for Accelerating the Cultivation of New Growth Points in Service Consumption", proposing 12 policy measures in three aspects: stimulating the development vitality of key fields, cultivating the development momentum of potential fields, and strengthening support and guarantee. [2][10] - **Data Security Policy**: The Cyberspace Administration of China solicited opinions on the classification and grading rules for financial information service data. The "Guidelines for the Classification and Grading of Financial Information Service Data (Draft for Comment)" classifies financial information service data into three primary categories: business data, user data, and enterprise data, with further subdivisions. [2][10] - **Financial Data**: By the end of 2025, the cumulative installed power generation capacity in China increased by 16.1% year - on - year, with solar power generation and wind power generation having significant growth. The profit of industrial enterprises above designated size increased by 0.6% year - on - year in 2025, reversing the three - year decline trend. At the end of the fourth quarter of 2025, the balance of RMB real estate loans was 51.95 trillion yuan, a year - on - year decrease of 1.6%, with a reduction of 963.6 billion yuan for the whole year. The manufacturing PMI in January 2026 was 49.3%, a decrease of 0.8 percentage points from the previous month. [2][11][13] Overseas Key Data and Events - **Federal Reserve Decision**: The Federal Reserve's interest - rate meeting decided to keep the interest rate unchanged with a 10 - to - 2 vote. Two members opposed and advocated a 25 - basis - point interest rate cut. [2][14] - **US Government Issue**: The US government appropriation bill failed to pass the Senate, and the US federal government faces the risk of partial "shutdown" again. [2][14] - **Exchange Rate Observation**: The US Treasury Department included 10 economies such as China, Japan, and South Korea in the exchange - rate observation list, claiming that the RMB was significantly undervalued. [2][14] - **Canada's Action**: Canadian Prime Minister Carney said that a formal review of the US - Mexico - Canada Agreement would be launched in a few weeks. [2][14] - **South Korea's Semiconductor**: South Korea's semiconductor exports were strong in January, with the total export amount reaching $20.5 billion, a year - on - year increase of more than 102%. [2][15] - **Precious Metal Market**: US President Trump's nomination of Wash as the Federal Reserve Chairman triggered a sharp sell - off in the precious metal market. Spot gold had an intraday decline of nearly 13%, and spot silver plunged by more than 35%. [2][15] Market Performance - **Stock and Bond Market**: This week, the stock market fluctuated. The yields of most 3 - to 10 - year treasury bonds declined, with the yield of the 10 - year ChinaBond treasury bond falling to 1.8112%. The yield of the 30 - year ChinaBond treasury bond rose slightly to 2.289%, and the term spread between the 10 - year and 30 - year bonds widened again. [1]

1月以来，债券收益率整体先上后下，上行主要受年初以来股市持续上涨、 风险偏好上升的影响。从经济基本面来看，内需仍然处于回落的趋势中，外需 保持韧性，但对债市影响有限。通胀逐步回升，1月工业品价格也多数上涨，使 得市场通胀预期逐步上行，对债市偏利空。货币政策方面，在央行进行结构性 降息后，短期内进一步降准降息的概率有所下降，但会维持资金面稳定。目前 债市的主要矛盾仍然集中在逐步好转的基本面预期、股市和商品市场的持续上 涨以及风险偏好的整体抬升，利率呈现易上难下的特征。2月处于数据真空期， 预计短期内上述预期持续，对债市较为不利。建议短期内交易盘保持谨慎，配 置盘有年初早配置的需求，可在利率受冲击上行至区间上沿时择机介入。 1 南京银行 2026 年 1 月宏观利率展望 风险偏好抬升，利率易上难下 阿 内容摘要： 宏观经济方面，12月经济显示内需继续放缓，需求端固定资产投资降幅扩 大，其中房地产、制造业、基建投资增速均继续下行。消费增速回落，显示内 需仍然在走弱的过程中。供给端生产略有回升，主要受高技术产业生产加速拉 动。12月CPI和PPI同步回升，显示通胀逐步进入温和上行的趋势中。 1 月以来，资金面月初偏宽 ...

Economic Overview - Domestic demand continues to weaken, with fixed asset investment declining by 3.8% year-on-year, a decrease of 1.2 percentage points from the previous value[8] - Real estate investment dropped by 17.2%, down 1.3 percentage points, indicating ongoing weakness in the sector[9] - Consumer spending growth fell to 0.9% in December, a decline of 0.4 percentage points from the previous month, reflecting weak consumer sentiment[12] Inflation and Production - CPI rose by 0.8% year-on-year in December, up 0.1 percentage points, indicating a mild upward trend in inflation[41] - PPI increased by 0.2% month-on-month, with a year-on-year decline of 1.9%, but the decline is narrowing by 0.3 percentage points compared to the previous month[49] - High-tech industries showed growth, with industrial value-added increasing by 5.9% year-on-year, although overall industrial production growth was slightly down[37] Monetary Policy and Liquidity - The central bank implemented an unexpected structural interest rate cut, indicating a continued commitment to liquidity support[56] - Short-term funding rates remained stable, with DR001 operating within 15 basis points below the policy rate[58] - The central bank's measures include increasing the quota for targeted loans to small and medium-sized enterprises by 1 trillion yuan, reflecting a focus on supporting the real economy[82] Market Trends - Bond yields initially rose but later fell, influenced by rising risk appetite and stock market performance[2] - The overall market sentiment remains cautious, with expectations of continued pressure on bond prices due to improving economic fundamentals and inflation concerns[2] - The trade surplus expanded to $114.14 billion in December, driven by a rebound in exports, particularly in automotive and electronic products[22]

Summary of Conference Call Notes Industry Overview - The macroeconomic outlook for December 2025 indicates a weakening influence of the equity market on the bond market, with overall weak performance and reduced trading volume expected in the equity market. Seasonal factors typically lead to increased fiscal spending and loose monetary policy in December, which may result in a downward trend in interest rates [1][4][3]. Key Points and Arguments - **Monetary Policy**: The monetary policy is expected to maintain a supportive stance, with a high probability of interest rates declining in December due to seasonal patterns. However, the impact of upcoming important meetings on the market needs to be monitored [1][4]. - **Credit Spread**: The 1-5 year non-financial credit spread has returned to the 30th percentile of the past 24 years, indicating a thin safety cushion. The compression of non-financial medium to long-term credit spreads may face challenges due to year-end regulatory changes [5][3]. - **Fiscal Policy for 2026**: The fiscal policy is projected to maintain a certain level of spending intensity, with a deficit rate expected between 4% and 4.5%. The net financing scale of government debt may reach approximately 14.5 trillion yuan [12][10]. - **Investment and Consumption Outlook**: Investment and consumption are expected to recover moderately in 2026, but inflation remains an uncertain factor. The PPI decline is expected to narrow, while CPI may return to positive growth [7][16]. - **Interest Rate Projections**: The after-tax yield on 10-year government bonds is anticipated to fluctuate between 1.7% and 1.9%, with a median estimate between 1.75% and 1.95% [2][19]. - **Investment Strategy**: In a low-interest-rate environment, a focus on coupon strategies is recommended, along with opportunities for phase-based trading. The overall economic recovery is expected to be moderate, supporting a low-interest-rate environment [21][15]. Additional Important Insights - **Economic Structure Transition**: The current macroeconomic policy framework emphasizes structural transformation, with a focus on medium to long-term planning and industrial policy, aiming for sustainable growth while stabilizing short-term economic conditions [9][14]. - **Fourth Quarter Economic Support**: There is a significant amount of new funding (1 trillion yuan) allocated for the fourth quarter, which includes policy financial tools and local government debt limits, aimed at boosting economic growth [8][11]. - **Inflation Risks**: Inflation is identified as a key uncertainty for the bond market in 2026, with potential short-term volatility due to rising prices, although the overall macro policy aims to prevent financial system stagnation [16][20]. This summary encapsulates the essential insights from the conference call, focusing on the macroeconomic outlook, fiscal and monetary policies, investment strategies, and potential risks in the bond market.

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The bond market is affected by a combination of bullish and bearish factors, with bond yields expected to maintain a range - bound oscillation. Trading positions can take the opportunity to close when interest rates decline, and allocation positions can enter the market when prices are high. Medium - and long - term bonds have better allocation value [3][121]. - In the fourth quarter, the pressure to achieve the annual economic goal is relatively small, and the space for incremental policies such as reserve requirement ratio cuts and interest rate cuts may be limited. The central bank may prefer to use open - market operations such as outright repurchases to reduce the cost of banks' liability side, and structural monetary policies will play a greater role in stabilizing growth and foreign trade [2][88]. Summary by Directory 1. Macroeconomy: Domestic Demand Continues to Decline, and Inflation Rises Slowly - **Demand: Domestic demand continues to decline, and production maintains resilience** - The cumulative year - on - year GDP growth rate in the first three quarters is 5.2%, reducing the pressure to stabilize growth in the fourth quarter, and the probability of policy intensification in the short term is low [7][8]. - From January to September, the cumulative year - on - year growth rate of fixed - asset investment was - 0.5%, with the growth rate turning negative. The growth rates of real estate, manufacturing, and infrastructure investment all declined, dragging down fixed - asset investment [9]. - From January to September, real estate development investment and sales growth rates continued to decline. Real estate is still in the process of bottom - seeking, and real estate investment is expected to remain at a low level [10]. - In September, the consumption growth rate continued to decline to 3%. Affected by the withdrawal of subsidies and weak catering consumption, it is expected to further decline below 3% in October [15][18]. - In September, the national urban survey unemployment rate decreased slightly after the graduation season. The employment demand of large, medium, and small enterprises all increased, alleviating some employment pressure [19]. - From January to September, the cumulative year - on - year export growth rate was 6.1%, and the import growth rate increased significantly. The trade surplus narrowed in September and is expected to continue narrowing [23][27][28]. - High - frequency data shows that the daily coal consumption of power plants decreased in October, the steel and coking enterprise start - up rates were differentiated, and the truck tire start - up rate decreased [33][35][39]. - **Production: Production shows strong resilience** - From January to September, the cumulative year - on - year growth rate of the added value of large - scale industries was 6.2%. In September, the added value of industries increased by 6.5% year - on - year, indicating strong production resilience [44]. - **CPI remains negative, and the decline of PPI continues to narrow** - In September, CPI increased slightly but remained negative, and PPI increased year - on - year. It is expected that CPI will gradually recover in the fourth quarter [47][55]. - The year - on - year decline of PPI narrowed by 0.6 percentage points. Some industries showed positive price changes, and the impact of anti - involution policies was significant [57][62]. 2. Liquidity and Monetary Policy: The Central Bank Conducts Outright Repurchase Operations with Increased Volume, and the Liquidity is Expected to be Balanced and Slightly Loose - **Liquidity review: The central bank conducts outright repurchase operations with increased volume, and short - term interest rates return to stability after the quarter** - Since October, the liquidity has remained loose, and DR007 mostly operates within 5bp above the policy rate. The central bank conducts outright repurchase operations with increased volume, and the large - scale banks' fund lending is mostly above 4 trillion [2][64]. - The long - term fund price has changed little, and the pressure on inter - bank certificates of deposit repayment in October has decreased [70][72]. - **Financial data: New credit increases less year - on - year, the growth rate of social financing declines, and the growth rate of M1 exceeds expectations** - In September, new credit increased less year - on - year, mainly due to the weak credit demand of residents and enterprises. Social financing also increased less year - on - year, mainly dragged down by government bonds and RMB loans [79][83]. - In September, M2 increased by 8.4% year - on - year, a decrease of 0.4%. M1 increased by 7.2% year - on - year, and the gap between M1 and M2 narrowed [84]. - **Next - stage liquidity outlook: The bond supply pressure in the fourth quarter eases, and the liquidity is expected to be balanced and slightly loose** - Since October, the liquidity has remained loose, and the central bank conducts outright repurchase operations with increased volume. Although the supply - demand contradiction in the first half of the fourth quarter is relatively large, the liquidity disturbance is expected to be limited [2][88]. - The central bank may prefer to use open - market operations to reduce the cost of banks' liability side, and structural monetary policies will play a greater role [88]. 3. Interest - Rate Bond Strategy: A Combination of Bullish and Bearish Factors, with Interest Rates Oscillating within a Range - **Interest - rate bond trend review** - Bond yields first rose and then fell. The 10 - year treasury bond yield is around 1.85%, and the 10 - year CDB bond yield rose to around 2.01%. The yield curve first steepened and then flattened [90]. - Since September, the implicit tax rate has generally increased, with the 1Y and 3Y implicit tax rates being relatively high [100]. - **Analysis of interest - rate bond influencing factors** - **Economic fundamentals**: Domestic demand continues to decline, but the bond market is more sensitive to bearish fundamentals [103]. - **Inflation**: Inflation is gradually recovering from a low level, but the impact on the bond market is currently small [104]. - **Broad liquidity**: Social financing and loans increase less year - on - year, while M1 continues to rise [105]. - **Narrow liquidity**: The central bank of funds is stable, and the repurchase trading volume increased in October [109][111]. - **Sino - US interest rate spread**: The inversion amplitude has narrowed, and the exchange rate is relatively stable, not restricting monetary policy [112][113]. - **Stock - bond ratio**: It continues to decline, and the allocation value of bonds increases [114][116]. - **Bond supply and demand**: The overall supply pressure has decreased, but the supply of policy - based financial bonds is expected to increase slightly [117]. - **Interest - rate bond strategy: A combination of bullish and bearish factors, with interest rates oscillating within a range** - Bond yields are expected to maintain a range - bound oscillation. Trading positions can close when interest rates decline, and allocation positions can enter the market when prices are high. Medium - and long - term bonds have better allocation value [121].

Economic Indicators - August CPI decreased by 0.4% year-on-year, while PPI fell by 2.9% year-on-year[15] - August manufacturing PMI stood at 49.4, indicating a slight contraction in the manufacturing sector[14] - Exports in August grew by 4.4% year-on-year, down from 7.2% in the previous month[15] Market Trends - Social financing growth rate has declined for the first time since October last year, indicating weak overall demand[1] - The 10-year government bond yield briefly exceeded 1.8%, suggesting a potential buying opportunity[1] - The bond market is expected to benefit from continued monetary easing as the economic fundamentals remain under pressure[1] Policy Developments - The government is expected to implement new policies to support the bond market, including early issuance of local government debt limits for 2026[21] - The State Council has approved the establishment of a national-level nature reserve, reflecting ongoing environmental policy initiatives[9] External Environment - The U.S. and Europe are discussing new sanctions against Russia, which may introduce uncertainties in external demand[1] - Global central banks' gold reserves have surpassed U.S. Treasury holdings, indicating a shift in reserve asset preferences[18]

Group 1: Economic Outlook - July global PMI fell short of expectations, indicating limited export growth in the second half of the year[1] - Manufacturing sector remains weak due to production restrictions, with economic growth in the first half providing a stable foundation[1] - The next round of growth stabilization measures is expected in Q4, with no need for premature tightening of monetary policy[1] Group 2: Market Dynamics - The "seesaw" effect between stock and bond markets continues, with funds being diverted from the bond market as equity markets gain momentum[1] - Major commodity exchanges issued risk warnings, leading to a broad decline in commodity futures, which may help stabilize interest rates[1] - The Shanghai Composite Index briefly surpassed 3600 points, reflecting a positive market sentiment[1] Group 3: Key Developments - The third batch of 690 billion yuan in special government bonds has been allocated to support consumption upgrades[8] - The issuance of replacement bonds has reached 90% of the annual quota, with 1.8 trillion yuan issued by the end of June[8] - The insurance industry has lowered the maximum guaranteed interest rate for new products to 2.0%[9] Group 4: International Context - The U.S. and EU reached a 15% tariff agreement, with the EU committing to invest an additional $600 billion in the U.S.[12] - The EU has paused interest rate cuts after eight consecutive reductions, citing "exceptional uncertainty" in the current environment[12] - India's trade agreement with the UK will eliminate tariffs on 99% of Indian exports to the UK[12]