Group 1 - The basis between the 5-year National Development Bonds and the same-term FR007 interest rate swap is 20 basis points (BP), which has increased by 17 BP compared to the end of 2024 [1] - In 2025, the overall basis between cash bonds and swaps is expected to rise, with the 1-year National Development Bonds and FR007 interest rate swap basis at 5 BP, up 31 BP from the end of 2024, and the 5-year basis at 20 BP, up 17 BP [1] - At the beginning of 2025, due to rising funding rates, interest rate swaps lead cash bonds, causing the basis to drop to a low of -20 BP for the 1-year National Development Bonds and 3 BP for the 5-year basis [1] Group 2 - Since February, the rise in the equity market has led to some capital diversion, impacting cash bonds and causing yields to rise, which has gradually expanded the basis between cash bonds and interest rate swaps [1] - In the second quarter, as the cash bond market recovered, yields fell, leading to a narrowing of the basis between cash bonds and interest rate swaps [1] - In the second half of the year, the cash bond market faced multiple disruptions from VAT collection, institutional behavior, and new rate regulations, resulting in a greater increase in yields and a subsequent expansion of the basis [1]

Report Industry Investment Rating No relevant information provided. Core Viewpoints - From January 26 - 30, 2026, the central bank's short - term reverse repurchase had a net injection of 58.05 billion yuan, and the treasury cash fixed - deposit injection was 15 billion yuan. From January 26 - February 1, 2026, the net payment scale of government bonds increased, the maturity yield of inter - bank certificates of deposit (NCDs) was overall flat, and the average leverage ratio of the inter - bank bond market decreased slightly. From February 2 - 8, 2026, the expected net payment of government bonds is 390.4 billion yuan, and the maturity scale of NCDs is about 169.7 billion yuan. On January 30, 2026, the median durations of medium - long - term and short - term interest - style pure bond funds decreased by 0.32 years and 0.16 years week - on - week respectively [2]. - At the end of the month, the central bank had a net injection of 7 - day reverse repurchases. In February, 1.5 trillion yuan of medium - long - term liquidity will mature. The impact on the capital market in February may mainly come from the increasing cash withdrawal by residents before the Spring Festival, but the central bank is expected to smooth short - term disturbances, and the capital market is expected to cross the Spring Festival relatively smoothly [6]. - The capital interest rate increased marginally and crossed the month smoothly. The net financing scale of government bonds increased. The maturity yield of NCDs was overall flat, and the net financing amount continued to be negative [7][8]. - The average leverage ratio of the inter - bank bond market decreased slightly. The durations of medium - long - term and short - term interest - style pure bond funds decreased marginally [9]. Summary by Directory Capital Market - From January 26 - 30, 2026, the central bank's 7 - day reverse repurchase had a net injection of 58.05 billion yuan; the treasury cash fixed - deposit injection was 15 billion yuan; the MLF matured 20 billion yuan, and 90 billion yuan was injected this month, with a total net injection of 70 billion yuan. In February, the 3M and 6M repurchase - style reverse repurchase maturities are 70 billion and 50 billion yuan respectively, and the MLF maturity is 30 billion yuan, with a total medium - long - term liquidity maturity of 1.5 trillion yuan [6]. - From January 26 - 30, 2026, the average values of DR001 and R001 increased by 0.3 and 3.7 basis points respectively compared with January 19 - 23, 2026; the average values of DR007 and R007 increased by 8.4 and 8.7 basis points respectively [7]. - From January 26 - February 1, 2026, the net financing amount of government bonds was about 515.03 billion yuan, an increase of about 268.5 billion yuan compared with January 19 - 25, 2026. From February 2 - 8, 2026, the expected net financing amount of government bonds is about 390.4 billion yuan [7]. Inter - bank Certificates of Deposit (NCDs) - As of January 30, 2026, the 1M and 3M NCD maturity yields increased by 4.5 and 0.2 basis points respectively compared with January 23, 2026; the 1Y NCD maturity yield was flat. The NCD yield entered a consolidation phase after two weeks of recovery. There may still be room for the NCD yield to decline, but short - term pre - Spring Festival capital market fluctuations may hinder the realization of the decline [8]. - From January 26 - February 1, 2026, the net financing amount of NCDs was about - 51.3 billion yuan. The expected maturity repayment amount from February 2 - 8, 2026 is 169.7 billion yuan, and the previous week's maturity repayment amount was 428.4 billion yuan. The NCD maturity scale in February is about 1.86 trillion yuan, a decrease of 0.46 trillion yuan month - on - month [8]. Institutional Behavior - From January 26 - 30, 2026, the average leverage ratio of the inter - bank bond market was 107.68%, compared with 107.81% from January 19 - 23, 2026. On January 30 and January 23, 2026, the estimated leverage ratios of the inter - bank bond market were about 107.41% and 107.68% respectively [9]. - On January 30, 2026, the median duration (MA5) of medium - long - term interest - style pure bond funds was 4.02 years, a week - on - week decrease of 0.32 years, at the 68.0% quantile since the beginning of 2022; the median duration (MA5) of short - term interest - style pure bond funds was 1.45 years, a week - on - week decrease of 0.16 years, at the 15.0% quantile since the beginning of 2022 [9].

1. Report Industry Investment Rating - No relevant information provided 2. Core View of the Report - The "Guojin Securities Fixed Income - Bond Market Micro - trading Thermometer" reading continued to rise to 57%, up 3 percentage points from the previous period. Some indicators' positions increased, while others decreased. The proportion of indicators in the over - heated range remained at 35% [15][21]. 3. Summary According to Relevant Catalogs 3.1. Micro - trading Thermometer Reading - The micro - trading thermometer reading continued to rise to 57%. The positions of institutional leverage, policy spread, bond fund profit - taking pressure, stock - bond ratio, and overall market turnover rate increased by 48, 18, 18, 16, and 12 percentage points respectively. The TL/T long - short ratio and commodity ratio positions also rose by 11 percentage points. However, the position values of fund - small and medium - sized bank buying volume, long - term treasury bond trading volume ratio, and listed company wealth management buying volume decreased by 33, 18, and 15 percentage points respectively [3][15]. 3.2. Proportion of Indicators in the Over - heated Range - Among the 20 micro - indicators, 7 (35%) were in the over - heated range, 7 (35%) were in the neutral range, and 6 (30%) were in the cold range. The long - term treasury bond trading volume ratio and listed company wealth management buying volume dropped from the over - heated range to the cold range; institutional leverage and policy spread rose from the neutral range to the over - heated range; the overall market turnover rate rose from the cold range to the neutral range [4][21]. 3.3. Long - term Treasury Bond Trading Volume Ratio - In the trading heat indicators, the proportion of indicators in the over - heated range remained at 67%, the proportion in the neutral range rose to 33%, and the proportion in the cold range dropped to 0%. The overall market turnover rate position increased by 12 percentage points, rising from the cold range to the neutral range; institutional leverage position increased by 48 percentage points, rising from the neutral range to the over - heated range; the long - term treasury bond trading volume ratio position decreased by 18 percentage points, dropping from the over - heated range to the neutral range [6][22]. 3.4. Bond Fund Profit - taking Pressure - In the institutional behavior indicators, the proportion of indicators in the over - heated range dropped to 25%, the proportion in the neutral range remained at 13%, and the proportion in the cold range rose to 63%. The listed company wealth management buying volume position decreased by 15 percentage points to 58%, dropping from the over - heated range to the neutral range; the fund - small and medium - sized bank buying volume position decreased by 33 percentage points to 31%, dropping from the neutral range to the cold range [7][26]. 3.5. Policy Spread - The yield of 3 - year treasury bonds continued to decline, the policy spread narrowed by 2bp to 0bp, and the position value rose slightly by 18 percentage points to 76%, rising from the neutral range to the over - heated range. The credit spread and agricultural development - state - owned development spread remained the same as the previous period, the IRS - SHIBOR 3M spread widened by 3bp, and the average spread of the three widened slightly by 1bp to 17bp. Its position value decreased by 4 percentage points to 61%, still in the neutral range [8][32]. 3.6. Stock - Bond Ratio - Among the ratio indicators, the proportion of indicators in the cold range remained at 75%, and the proportion in the neutral range remained at 25%. The position values of stock - bond, commodity, and real estate ratios increased by 16, 11, and 18 percentage points to 57%, 56%, and 51% respectively, all still in the neutral range [9][34].

Core Viewpoint - Recent fluctuations in 30-year government bonds have been significant, while local government bonds remain stable, raising market concerns about the future trajectory of local bonds [1][5]. Group 1: Factors Influencing Local Government Bonds - The local government bond and government bond yield spread is influenced by multiple factors, including the risk-free interest rate anchor, funding costs, institutional behavior, risk appetite, local bond supply, and trading liquidity [2][8]. - The risk-free interest rate anchor reflects the macro interest rate environment and directly affects the valuation of interest rate bonds, with a negative correlation between the risk-free rate and the local bond-government bond spread [8]. - Short-term funding costs, indicated by the rise in DR007, lead to increased marginal costs for institutions, causing a preference for more liquid government bonds and widening the local bond-government bond spread [10]. Group 2: Market Dynamics and Predictions - The model indicates that the current 10-year local bond-government bond spread is close to its fitted value, while the 30-year spread is significantly above it, suggesting that the long-end local bonds are undervalued with limited upward space [3][30]. - Predictions for 2026 suggest that the average spreads for 10-year and 30-year local bonds will be lower than current levels, at approximately 14.3bps and 14.9bps respectively, indicating limited risk for further increases in spreads [31]. - The current market environment presents both challenges and opportunities for local bonds, with rising bond yields improving relative value, and a shift in supply dynamics observed in the issuance schedule [34].

1. Report Title and Period - The report is titled "Liquidity and Institutional Behavior Weekly Observation: CD Rates May Face Upward Pressure, Pay Attention to Allocation Value after Adjustment" and covers the period from January 5th to January 18th, 2026 [1][2]. 2. Core View - In the short - term, the impact of capital frozen by new share subscriptions on the Beijing Stock Exchange on the capital market should be noted from January 12th to 16th, 2026. In the medium - term, cash withdrawals by residents before the Spring Festival in mid - January will affect market liquidity, and the pressure of "deposit migration" in banks also needs further observation. The CD rates are expected to face upward pressure in the first quarter, and it is recommended to pay attention to the allocation value of CDs after adjustment [7][8]. 3. Summary by Section 3.1 Capital Market - **Central Bank Operations**: From January 5th - 9th, 2026, the central bank's short - term reverse repurchase had a net withdrawal of 122.14 billion yuan, and the 3M repurchase was renewed at the same amount of 110 billion yuan. From January 12th - 16th, 7 - day reverse repurchases worth 13.87 billion yuan and 6M repurchases worth 60 billion yuan will expire [6]. - **Funding Rates**: From January 5th - 9th, 2026, the average values of DR001 and R001 were 1.27% and 1.34% respectively, down 0.4 and 5.3 basis points compared to December 29th - 31st, 2025. The average values of DR007 and R007 were 1.45% and 1.51% respectively, down 30.0 and 54.1 basis points [7]. - **Government Bond Net Financing**: From January 5th - 11th, 2026, the government bond net payment was about 43.27 billion yuan, including about 31.5 billion yuan for national bonds and about 11.77 billion yuan for local government bonds. From January 12th - 18th, the government bond net payment is expected to be - 9.31 billion yuan [7]. 3.2 Negotiable Certificates of Deposit (NCDs) - **Yield**: As of January 9th, 2026, the yields of 1M and 3M NCDs were 1.5325% and 1.5950% respectively, up 3.7 and 5.5 basis points compared to December 31st, 2025. The 1Y NCD yield was 1.6325%, up 0.8 basis points [8]. - **Net Financing**: From January 5th - 11th, 2026, the NCD net financing was about - 15.2 billion yuan. From January 12th - 18th, the NCD maturity repayment is expected to be 80.85 billion yuan, with a significant increase in the renewal scale [8]. 3.3 Institutional Behavior - **Bank - Interbank Bond Market Leverage Ratio**: From January 5th - 9th, 2026, the average leverage ratio of the bank - interbank bond market was 108.11%, up from 107.78% in the period of December 29th - 31st, 2025. On January 9th, 2026, it was about 108.19%, compared to about 107.36% on December 31st, 2025 [9]. - **Duration of Pure Bond Funds**: On January 9th, 2026, the median duration of medium - and long - term interest - rate style pure bond funds (MA5) was 4.89 years, down 0.21 years week - on - week, at the 91.2% quantile since early 2022. The median duration of short - term interest - rate style pure bond funds (MA5) was 1.87 years, up 0.18 years week - on - week, at the 59.8% quantile since early 2022 [9].

1. Report Industry Investment Rating - Not provided in the content 2. Core Views - The long - end interest rate bonds in the bond market in 2025 were restricted by low odds, and the long - end interest rates tried to break through the previous lows multiple times but failed, showing a rounded bottom state. The leverage strategy's effectiveness increased, and there was still a large carry space for medium - and short - duration credit bonds. The performance of major asset classes in 2025 was metal commodities > equities > credit > interest rates [3][5][22]. 3. Summary by Relevant Catalogs 2025 Bond Market Trends - **Long - end rate constraints**: Long - end interest rate bonds were restricted by low odds throughout 2025 [3]. - **Multiple attempts to break through lows**: The 10Y Treasury yield attempted to break through the previous low 5 times in 2025 but failed. Different attempts were influenced by factors such as the economic data window period, central bank policies, institutional behavior, and overseas environments [5][6]. - **Leverage strategy effectiveness**: The effectiveness of the leverage strategy increased in 2025, and there was still a large carry space for medium - and short - duration credit bonds. The 10 - 1Y Treasury term spread first compressed and then widened, and the 30Y - 10Y Treasury spread widened after oscillation. The holding experience of long - duration Treasury bonds in Q4 2025 was average, while the volatility of the Wind All - A Index decreased and the returns were stable [9][10][13]. 2025 Performance of Major Asset Classes - The performance ranking of major asset classes in 2025 was metal commodities > equities > credit > interest rates. In Q4 2025, metal commodities outperformed equities, and credit outperformed interest rates [22][23]. 2025 Stock - Bond Performance - The stock - bond performance in 2025 implied relatively high economic growth expectations [24]. Bond Supply and Demand - The supply - demand structure of ultra - long - duration bonds changed, with the net buying volume of ultra - long - term Treasury bonds by funds and insurance companies declining [34]. Fundamentals - The "anti - involution" trend promoted the expectation of rising prices. The report also provided forecasts for PPI and CPI, and presented data on social financing scale and manufacturing PMI [39]. Institutional Behavior - **Fund performance differences**: In 2025, the returns of medium - and long - term interest - rate bond funds were significantly lower than those of credit bond funds [62]. - **Insurance asset allocation**: In Q3 2025, insurance institutions reduced their allocation of bonds and bank deposits and increased their allocation of equities. The static YTM requirements of insurance institutions for fixed - income assets could be used to infer the corresponding points of 30Y Treasury bonds [67][69]. - **Wealth management product characteristics**: In 2026, wealth management products may have incremental liabilities, but they prefer short - duration assets and have relatively limited leverage utilization. The demand for controlling net - value drawdown of wealth management products may increase [71].

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the outlook for the debt market in 2026, indicating a continuation of the deleveraging phase with high corporate leverage and government leveraging while household debt pressure eases [1][3]. Core Insights and Arguments - **Debt Cycle Outlook**: The debt cycle in 2026 is expected to remain in a deleveraging and debt crisis clearing phase, with corporate leverage remaining high and government leverage increasing [3]. - **Debt Pressure Changes**: Household debt costs, particularly mortgage-related, are expected to decrease, while corporate leverage remains high. Government debt financing costs are manageable due to previous interest rate declines [4]. - **Inflation Trends**: Inflation is anticipated to enter a mild recovery phase, with food prices, particularly from the pig cycle, expected to rise in 2026. However, overall price improvements are not expected to be significant [5]. - **Policy Recommendations**: A dual easing policy of fiscal and monetary measures is recommended, with a projected broad deficit rate of around 10% in 2026. Monetary policy should include slight interest rate cuts to maintain low nominal rates [6]. - **Nominal GDP Growth**: Nominal GDP growth is expected to approach zero, relying more on actual output improvements rather than price increases. This necessitates stabilizing total demand through fiscal and monetary easing [7][8]. - **Liquidity and Monetary Policy**: The liquidity situation in 2025 was positive, with expectations of continued easing in 2026. The focus of monetary policy is shifting towards short-term interest rates and liquidity management [9]. - **Credit Growth Expectations**: Credit growth, particularly in the household sector, is expected to continue declining, with new credit primarily driven by policy-induced investment demand [11][12]. - **Deposit Trends**: The deposit situation is expected to stabilize in 2026, with no significant pressure on liabilities, although growth rates will not match previous highs [13]. Additional Important Insights - **Institutional Behavior**: State-owned banks are expected to continue profit realization, with a shift towards bond investment strategies. Insurance companies are focusing on long-duration bonds, while bank wealth management products are growing [14]. - **Interest Rate Strategy**: A recommendation for a term strategy under a steep yield curve is made, with low probabilities of significant long-end yield increases [15][16]. - **Credit Strategy Focus**: Attention should be given to changes in risk premiums in urban investment bonds and the supply changes brought by the rise of the Sci-Tech Innovation Board. There are opportunities in medium-term urban investment bonds and infrastructure sectors [17]. - **Macro Environment Conclusion**: The overall macro environment is characterized by dual easing policies, leading to a likely continuation of a steep yield curve, suggesting that term strategies will remain relevant [18].

1. Report Industry Investment Rating No relevant content provided in the report. 2. Core Viewpoints of the Report - In November 2025, the new bond issuance scale decreased year - on - year, mainly dragged down by inter - bank certificates of deposit. The new custody volume of interest - rate bonds decreased slightly, while that of corporate credit bonds increased, mainly supported by industrial bonds [3][4]. - In November 2025, banks significantly increased their bond allocations, while the demand from other investors was weak. After considering the central bank's outright reverse repurchase, commercial banks' bond investments increased year - on - year, and the proportion of banks' increased government bond holdings to the net supply of government bonds was at a relatively high level [3][17]. - In December 2025, the government bond supply decreased year - on - year, and it is expected to increase significantly year - on - year in January 2026. The bond supply after the New Year will rise, and the market's carrying capacity will face a test [3][40]. 3. Summary by Relevant Catalogs 3.1 Bond New Custody Volume in November 2025 - The bond custody balance in November 2025 was 193.57 trillion yuan, with a year - on - year growth rate of 13.37%, a decrease of 0.67 percentage points from the previous month. The new custody scale in November was 143.97 billion yuan, a year - on - year decrease of 82.21 billion yuan [5]. - The new custody volume of inter - bank certificates of deposit and local government bonds decreased by 68.67 billion yuan and 15.19 billion yuan year - on - year respectively. The decline in the supply of inter - bank certificates of deposit was the main reason for the overall decline in bond supply [8]. - The new custody volume of interest - rate bonds decreased slightly year - on - year. Among them, the new custody volumes of treasury bonds and local government bonds were lower than the previous year, while that of policy - financial bonds was higher [11]. - The new custody volume of corporate credit bonds increased by 3.74 billion yuan year - on - year, entirely supported by industrial bonds. The net financing of urban investment bonds and industrial bonds changed by - 7.87 billion and 16.61 billion yuan year - on - year respectively [16]. 3.2 Bond Allocation by Different Institutions in November 2025 - Banks significantly increased their bond allocations, while other investors' demand was weak. After considering the central bank's outright reverse repurchase, commercial banks increased their bond holdings by 91.7 billion yuan year - on - year, while asset management accounts (i.e., non - legal entity products) increased their bond holdings less by 118.62 billion yuan year - on - year, and insurance companies basically remained the same [19]. - Banks' strong bond - allocation efforts may be a passive choice due to the weak demand from non - banks. Banks mainly increased their allocation to various interest - rate bonds. The ratio of banks' increased government bond holdings to the net supply of government bonds in November was 90.9%, higher than the previous month and the average of the past 12 months [22][25]. - Insurance companies' bond - allocation efforts weakened marginally, mainly reducing their allocation to local government bonds and corporate credit bonds. After excluding supply disturbances, the bond - allocation efforts of insurance companies also weakened [29]. - The bond - allocation efforts of asset management accounts weakened, which may be affected by the liability side of wealth management products and the supply of inter - bank certificates of deposit. The new scale of wealth management products and the supply of inter - bank certificates of deposit both decreased significantly year - on - year, leading to less bond - buying by asset management accounts [30]. - Foreign investors and securities brokers mainly reduced their bond holdings. Foreign investors sold 1.36 billion yuan more bonds year - on - year, mainly inter - bank certificates of deposit. Securities brokers sold 27.38 billion yuan more bonds year - on - year, mainly treasury bonds [39]. 3.3 Outlook for Bond Supply and Institutional Behavior - In December 2025, the government bond supply decreased by nearly 1 trillion yuan year - on - year. In January 2026, the government bond supply may increase significantly year - on - year, with the issuance of new special bonds and special refinancing bonds likely to rise [44]. - In December 2025, banks may have a relatively large bond - allocation volume. After the New Year, the supply - demand contradiction of bonds will further test banks. The supply - demand contradiction of long - term bonds remains significant, and attention should be paid to banks' actions [46]. - The value of bond allocation for insurance companies is prominent, and their demand may be supported. The spread between the yield of 30 - year local government bonds and the insurance预定利率 is more than 50BP, and insurance companies are expected to increase their bond - buying as the government bond supply recovers in January 2026 [50]. - The bond - allocation volume of asset management accounts in December 2025 may decrease year - on - year, and there is great uncertainty after the New Year. The decrease in December may be due to bond market adjustments and the significant decrease in the supply of inter - bank certificates of deposit. The pace of deposits moving to wealth management products is uncertain, and asset management accounts may also reduce their positions [54].

1. Report Industry Investment Rating No relevant information provided. 2. Core Views of the Report - The core background for the bond market in 2026 remains the continuation of the "liquidation phase" of the debt cycle. The bond yield central - downward space is limited, and the risk of a significant upward movement is also controllable [3]. - Inflation is likely to enter a mild recovery phase in 2026. The drag of inflation on nominal growth is expected to disappear, but it is unlikely to drive interest rates up [4]. - Fiscal policy maintains a more proactive stance, with a high supply of government bonds in 2026. The supply shock of government bonds remains the main risk factor in the "low - interest - rate" phase [5]. - Monetary policy continues its moderately loose tone, shifting its focus from quantity to price. There is still room for a small - scale reduction in policy rates [6]. - In 2026, the bond market's capital structure will be dominated by allocation - type accounts. The yield curve is likely to remain steep, and the riding strategy may be the best choice [7]. - For the credit strategy, avoid the re - evaluation of risk premiums and apply the riding strategy to safe assets. Focus on the riding opportunities of medium - region urban investment bonds, infrastructure chains, and cyclical industrial bonds [8]. 3. Summary by Relevant Catalogs 3.1 Debt Cycle: "Liquidation Phase" Still in Progress - **Leverage Ratio Clearing and Transfer in 2026**: The macro - leverage ratio is in a state of "structural differentiation and overall stability". The de - leveraging process of the household sector is deepening, the enterprise sector's leverage ratio fluctuates at a high level, and the government sector's leverage ratio is expected to rise [23][25][26]. - **Relief of Liability Pressure in Three Sectors**: The liability cost of the household sector has decreased, the enterprise sector's interest - payment pressure has eased but the overall debt pressure remains large, and the government sector's interest - payment pressure is under control [31][35][38]. - **Policy Combination and Asset Prices in the "Liquidation Phase"**: China's debt cycle is still in the "liquidation phase". Fiscal and monetary policies need to maintain a "double - loose" combination. Asset prices should reflect new kinetic energy and improved expectations while considering the background of the debt cycle [43][44][45]. 3.2 Price Trends: Inflation May Enter a Mild Recovery Phase - **Food Prices**: The pig cycle may reach an inflection point in mid - 2026. Food prices are expected to show a trend of "stable first, then rising, with converging fluctuations", and the negative contribution of food prices to CPI is expected to weaken [52]. - **Energy Prices**: In 2026, energy prices are likely to be in a pattern of "strong supply, weak demand, and fluctuating weakly", with limited direct support for inflation [55]. - **Core Inflation**: Policy may drive the central trend to be low in the first half and high in the second half of the year, with a mild recovery throughout the year. The core CPI central may be between 0.8% - 1.2% [59]. - **Industrial Product Prices**: With the implementation of the "anti - involution" policy, the decline of PPI is expected to narrow. The PPI is expected to have an annual central around - 1.95%, and may turn positive periodically [63]. - **Inflation Outlook**: The drag of inflation on nominal growth is expected to be zero. CPI is expected to rise moderately, and PPI's decline is expected to narrow to - 2.0% [66]. 3.3 Fiscal Policy: More Proactive Stance with Maintained Debt - Issuing Scale - **Policy Tone**: Fiscal policy remains proactive in 2026. The general deficit rate is expected to remain around 4%, and the general deficit scale is about 14.55 trillion yuan, remaining stable compared to 2025 [74]. - **Treasury Bonds**: The maturity pressure in 2026 is reduced, and the net issuance is expected to increase steadily. The annual issuance is expected to be 13.9 trillion yuan, and the net financing target is about 6.9 trillion yuan [77]. - **Local Government Bonds**: The issuance scale in 2026 is expected to be 11.12 trillion yuan, slightly increasing. The issuance rhythm may be more front - loaded, and attention should be paid to the progress of debt - resolution work [85]. 3.4 Monetary Policy: Continued Loose Tone with Focus Shifted to Price Regulation - **Policy Tone**: In 2026, the pattern of stable and loose liquidity is likely to continue. The reform of the monetary policy framework will deepen, and the marketization of the interest - rate corridor, policy - rate system, and liability - side price mechanism will further improve [97][98]. - **Price - based Tools**: There is still room for a 20BP reduction in policy rates in 2026, which may guide a new round of adjustments in the interest - rate system [101][102]. - **Quantity - based Tools**: The necessity of reserve requirement ratio cuts has significantly decreased. The regular operations of repurchase and MLF are expected to continue, and the scale of central bank bond - buying operations may decline [105][110][111]. - **Credit and Social Financing**: The de - leveraging cycles of households and enterprises continue, and credit growth faces continuous pressure. Government bond financing and enterprise bond financing expand to offset the weakening of general loan demand [117][120][123]. - **Deposit Situation**: Personal savings continue to grow at a high rate, and non - bank deposits show high - volatility and high - growth characteristics. Unit deposits show differentiated fluctuations [129]. - **Narrow - sense Liquidity**: Liquidity will continue the "low - volatility and stable" characteristics of a downward price central and further converging volatility [140]. 3.5 Institutional Behavior: Allocation - type Accounts Dominate, Trading - type Accounts Under Pressure - **Banks**: In 2025, banks' bond investment thinking has changed systematically. In 2026, the main line of banks' bond investment with an allocation mindset will continue [155]. - **Insurance**: Insurance has a rigid demand for asset - liability duration matching. The allocation of secondary - tier and perpetual bonds has decreased, and the allocation of high - grade credit bonds and policy - based financial bonds has increased [175][180][186]. - **Wealth Management**: The scale of wealth management products is expected to grow in 2026. Asset allocation will focus on "net - value stability", with a preference for short - duration, high - liquidity assets [205][217]. - **Bond Funds**: The pattern of public - offering bond funds is about to change significantly. The trends of amortized - cost and ETF products will continue [218][230][231]. 3.6 Interest Rate Strategy: The Limit of Steepness and the Boundary of Riding - **Curve Shape**: In 2026, the yield curve is likely to remain steep, with the short - end likely to fall and the long - end difficult to decline [237][238]. - **Four Constraints**: Four factors limit the significant upward movement of long - end yields, including the decline of ROIC, the downward trend of long - term loan rates, the neutral stock - bond ratio, and the decline of banks' and insurance companies' liability costs [239][242][244]. - **Interest Rate Strategy**: The riding strategy may be the best choice in 2026, with a focus on the 5 - year Treasury bond [253][254][258]. 3.7 Credit Strategy: Supply Pattern Changes Significantly, Risk Premium Re - evaluated - **Credit Bond Supply**: The issuance of urban investment bonds continues to decline, while the issuance of industrial bonds and quasi - urban investment bonds increases rapidly. Science and technology innovation bonds have become the main incremental source of credit bond supply [263][276][281]. - **Capital Bond Supply**: The issuance of secondary - tier and perpetual bonds continues to decline, and there is still a small gap in TLAC for some banks [290][296]. - **Credit Strategy**: Avoid the re - evaluation of risk premiums in some credit bond sectors. The riding strategy is applicable to short - duration credit bonds, and attention should be paid to the riding opportunities of medium - region urban investment bonds and infrastructure - related industrial bonds [303][316][320].

Group 1 - The core viewpoint of the article emphasizes that the market will continue to exhibit characteristics of stock game under a low interest rate environment, with a focus on tracking the indicators and position changes of allocation and trading accounts to better understand market congestion and short-term direction [1] - The analysis highlights that institutional behavior, particularly from allocation institutions, has significantly impacted market volatility this year, with a noted lack of willingness to hold long-term bonds due to interest rate risks [1][2] - The article suggests that the demand for long-term bonds will likely remain weak next year, influenced by the insurance institutions' lower willingness to allocate to long-term government bonds and the overall supply-demand dynamics in the market [2] Group 2 - The expected core strategy for interest rate bonds next year is described as "defensive counterattack," with a forecast that the ten-year government bond yield will fluctuate between 1.5% and 2.0%, and the yield curve is likely to steepen [3] - Key trading opportunities are identified based on three expected discrepancies: narrative consensus, policy expectations, and liability tracking, which will influence the performance of related bond products [3] - The article recommends focusing on the ten-year government bond ETF (511260) as it offers both allocation and trading value, with expectations of good returns for investors by 2026 [4]