Core Insights - The recent inclusion of credit bond ETFs in the pledged repo trading has significantly boosted trading activity, with two benchmark market-making credit bond ETFs exceeding transaction volumes of 10 billion yuan on June 11 [1][2] - The rapid influx of capital has led to four credit bond ETFs, established for less than six months, joining the "100 billion club" [1][2] Trading Activity - On June 11, the Southern CSI Benchmark Market-Making Corporate Bond ETF recorded a transaction volume exceeding 15.5 billion yuan, marking an increase of over 7 billion yuan from the previous trading day and setting a new single-day transaction record [2] - Other ETFs, such as the E Fund CSI Benchmark Market-Making Corporate Bond ETF, also saw significant trading volumes, with over 9 billion yuan, while several others surpassed 6 billion yuan [2] Fund Inflows - In the past month, four major credit bond ETFs have seen net inflows exceeding 5 billion yuan, with the E Fund and Southern ETFs leading the way [3] - The inclusion of credit bond ETFs in the pledged repo has enhanced liquidity and provided a tool for liquidity management, allowing investors to use these ETFs for financing during tight liquidity periods [3] Investment Strategies - The inclusion of credit bond ETFs in pledged repo trading is viewed as a key measure to address developmental shortcomings, significantly enhancing their investment appeal [4] - Investors can utilize a "buy ETF - pledge financing - reinvest" leverage strategy to increase returns, improving overall capital efficiency for institutional investors [4] - Various investment strategies, including pure bond strategies, multi-asset strategies, and structured investment strategies, can benefit from leveraging credit bond ETFs [4]

Group 1 - The report indicates that the bond market is currently experiencing adjustments due to a self-correction of excessive risk appetite, with significant fluctuations observed from July 9 to 11, where daily adjustments exceeded 1 basis point [1][22][25] - Despite the frequent negative rotations in the bond market, key variables influencing the market direction, such as fundamentals, central bank attitudes, and external circulation pressures, have not changed [1][25][37] - The report highlights that the bond market's pricing reference may shift from the stock market to fundamentals as economic data is released, indicating a weak correlation between stock market rebounds and bond market pricing [3][36] Group 2 - The report notes that the recent adjustments in the bond market have led to the 10-year and 30-year government bonds returning to relatively high positions at 1.65% and 1.85%, respectively, making the market more sensitive to positive news and less responsive to negative news [4][37] - It emphasizes that the liquidity situation will be a critical observation period for the central bank's attitude, especially with a significant funding gap expected in mid-July [4][26][39] - The report suggests that despite recent increases in funding prices, overnight rates remain relatively low, indicating that leverage strategies may still be preferred in July [6][39][40] Group 3 - The report discusses the impact of recent adjustments in the bond market, where the duration of bond funds has decreased, reflecting a shift in market behavior as institutions reduce their duration amid tightening liquidity [6][24][25] - It also mentions that the government bond issuance volume remains above 400 billion, indicating ongoing government financing activities [6][21] - The report highlights that the leverage ratio in the non-bank sector has decreased significantly, indicating a market-wide trend towards deleveraging [6][24] Group 4 - The report outlines the recent changes in the interest rate environment, with the overnight rates rising to 1.40% and 1.51% for R001 and R007, respectively, indicating a tightening liquidity situation [15][25][26] - It notes that the recent adjustments in the bond market have led to a significant increase in the issuance rates of certificates of deposit, reflecting rising costs for banks [29][30] - The report also highlights the ongoing adjustments in the credit bond market, particularly in the long-end segment, where yields have been affected by negative rotations [17][16] Group 5 - The report indicates that the recent changes in tariffs by the U.S. government may have implications for global trade dynamics, with increased tariffs on key countries potentially impacting the bond market [31][32] - It suggests that the market is currently cautious regarding tariff changes, with a wait-and-see approach being adopted by investors [31][32] - The report emphasizes that the bond market's response to external factors, such as tariffs, may not be immediate, and investors are advised to monitor developments closely [31][32]

Core Viewpoint - The Governor of the Bank of England, Bailey, emphasizes that financial stability is fundamental to growth, highlighting ongoing risks and uncertainties in the market [1] Group 1: Financial Stability - Financial stability is identified as the cornerstone of economic growth [1] - There is a particular focus on leveraged strategies due to associated risks [1] - A discussion paper has been released to enhance the resilience of the repurchase market [1] Group 2: Global Economic Outlook - Global economic risks remain elevated, impacting overall market conditions [1] - The trend of a steepening yield curve is observed globally, not limited to the UK [1] - Quantitative tightening (QT) remains an open option for monetary policy [1] Group 3: Banking Sector Resilience - UK borrowers are noted for their resilience, indicating a stable borrowing environment [1] - The banking sector is positioned to provide necessary support amidst current economic challenges [1]

Core Viewpoint - The Governor of the Bank of England, Andrew Bailey, has expressed particular concern regarding leveraged strategies in the financial markets [1] Group 1 - The Bank of England is closely monitoring the implications of leverage on financial stability [1] - Bailey highlighted that excessive leverage can amplify risks within the financial system [1] - The central bank is considering potential regulatory measures to address concerns related to leveraged trading [1]

Report Industry Investment Rating No relevant content provided. Core View of the Report - Leverage can be more aggressive, and positions can be heavier. The certainty of loose funds allows for a more active leverage strategy, and a heavier position can increase bargaining chips in subsequent market games [2][3][17]. - The growth of financing is mainly from the government sector, and the gap between deposit and loan growth rates is still being repaired. The risk of the bank's liability side has been significantly alleviated, reducing the risk of liquidity tightening [2][9]. - The two operations of the repurchase agreement mainly aim to reduce uncertainty, and the change in the scale of medium - and long - term liquidity injection this month may be small [2][11]. - The downward breakthrough of the overnight price center is related to the recovery of the large banks' lending capacity, and the downward trend of the capital price center has not reached its end [2][13]. - Seasonal fluctuations in capital prices will still exist. In the first and middle of July, capital prices may continue the downward trend, and the capital market may return to a stable and loose state [3][15]. Summary by Directory 1 Leverage can be more aggressive - **Previous Views Summary** - There is a possibility that the capital market will be more loosely liquid than expected. There is a chance that the capital price center will be below 1.4%. - The reasonable pricing center for the NCD of state - owned and joint - stock banks after the decline of capital prices in the future may be 1.6%. Currently, 1.7% is too high, and it has obvious allocation value, but it is difficult for the CD interest rate to decline significantly in June. - The main line of the bond market is the downward repair of liability costs and the return repair of position losses, which requires time. After the interest rate reaches a relatively low level, trading often fluctuates between "anticipating the market" and "falling behind" [8]. - **Financing and Credit Situation** - In May, credit growth was still weak. Corporate sector credit increased less year - on - year, and the long - term credit of the household sector showed a stable trend. Corporate sector bond financing increased slightly year - on - year, possibly related to the opening of the bond technology board. Government bonds increased by 236.7 billion year - on - year, and the growth of financing still relied on the government sector [9]. - **Function of Repurchase Agreement Operations** - The two operations of the repurchase agreement this month totaled an injection of 1.4 trillion, but considering the possible 1.2 trillion maturity in the same month, the net injection scale for the whole month is not large. The MLF and the repurchase agreement are currently in a relatively balanced state, and the space for large - scale incremental injection is decreasing. These two operations should be considered comprehensively [11]. - **Factors Affecting Capital Price Center** - The downward breakthrough of the overnight price center is related to the recovery of the large banks' lending capacity. After April, the liability risk problem of large banks has been significantly alleviated. The performance of the capital market in the past two weeks has verified that the large banks' lending capacity has recovered, and the downward trend of the capital price center has not ended [13]. - **Seasonal Fluctuations of Capital Prices** - In mid - June, there is the impact of the tax period, and in late June, the cross - quarter factor will dominate the trend of capital prices. Near the end of the month, fiscal funds may be released to supplement liquidity. In July, the tax period is relatively large, and the fluctuation of the capital market may increase. Before that, in early and mid - July, capital prices may continue the downward trend, and the capital market may return to a stable and loose state [3][15]. - **Bond Market Strategy** - Recently, the short - end and long - end of the bond market still have downward space, but the long - end space is still limited. The 1 - year treasury bond has returned to the recent low, and it is not difficult for it to break through downward. The downward range of short - end treasury bond interest rates can be larger than that of other short - end varieties, which may bring some changes to the flat treasury bond yield curve. Therefore, the leverage strategy can be more aggressive, and a heavier position can increase bargaining chips in subsequent market games [3][17].

Core Viewpoint - The investment philosophy of Morgan Asset Management's China Bond Investment Director emphasizes the importance of proactive risk management and creating a defensive investment strategy in a low-interest-rate environment [1][2]. Group 1: Investment Strategy - The investment team focuses on strict drawdown control and detailed strategy layout to create a "defensive bottom warehouse" for investors [1]. - Zhang Yige has developed a dual-track risk control mechanism that emphasizes proactive risk assessment through real-time monitoring of market sentiment, policy signals, and yield curve shapes [2]. - The Morgan Rui Xin interest rate bond fund, launched in May 2024, exclusively invests in government bonds and policy financial bonds to avoid credit risk, targeting investors who wish to completely avoid credit risk [2]. Group 2: Fund Performance - Since its establishment, the Morgan Rui Xin interest rate bond fund has achieved a net value growth of 4.19% as of May 30, 2025, outperforming its benchmark return of 2.92% [3]. - The fund's one-year return is 4.10%, exceeding the benchmark of 2.80% and the Wind long-term pure bond index of 3.01% [3]. - The fund's maximum drawdown over the past year was -0.70%, significantly better than the average maximum drawdown of -1.56% for similar funds [3]. Group 3: Team and Resources - Morgan Asset Management has over $3.7 trillion in assets under management globally, with more than 310 fixed income research personnel [4]. - The China team combines global perspectives with local characteristics, with an average industry experience of over 10 years [4]. Group 4: Market Outlook - Zhang Yige identifies fiscal policy direction as a key variable affecting the bond market, with trade negotiations potentially influencing fiscal stimulus [5]. - The monetary policy is expected to remain accommodative but moderate, leading to continued market fluctuations and lower return expectations [5]. - Concerns about the impact of increased supply of ultra-long-term government bonds on the market are mitigated by stable long-term bond yields, with the core focus being on supply-demand dynamics [5].

Core Insights - The recent inclusion of credit bond ETFs in the pledged repo trading has significantly boosted trading activity, with two benchmark market-making credit bond ETFs exceeding 10 billion yuan in trading volume on June 11 [1][2] - The rapid influx of funds has led to four credit bond ETFs, established for less than six months, joining the "100 billion club" [1][2] - Fund managers believe that the ability to use credit bond ETFs for pledged financing enhances their attractiveness and expands the potential investor base [1][3] Trading Activity - On June 11, the trading volume of the Southern CSI Benchmark Market-Making Corporate Bond ETF surpassed 15.5 billion yuan, marking an increase of over 7 billion yuan from the previous trading day, setting a new single-day trading record [1] - The E Fund CSI Benchmark Market-Making Corporate Bond ETF also saw trading volume exceed 9 billion yuan, while several other ETFs recorded volumes above 6 billion yuan [1] Growth in Scale - As of June 10, four benchmark market-making credit bond ETFs have surpassed the 10 billion yuan mark in scale, with specific figures being 13.72 billion yuan for E Fund, 13.21 billion yuan for Southern, 10.76 billion yuan for Hai Fu Tong, and 10.17 billion yuan for Hua Xia [2] - Other ETFs like Bosera and GF have also shown significant scale growth, reaching 9.01 billion yuan and 8.27 billion yuan respectively [2] Leverage Strategies - The recent month has seen net inflows exceeding 5 billion yuan for the top four credit bond ETFs, with GF's deep credit bond ETF seeing net inflows over 4 billion yuan [2] - The ability to employ a "buy ETF - pledge financing - reinvest" strategy allows investors to enhance returns through leverage [4] Liquidity Management - The inclusion of credit bond ETFs in the pledged repo trading enhances liquidity and serves as a liquidity management tool, allowing investors to mitigate short-term liquidity risks [3] - This move is seen as a critical step in addressing the developmental shortcomings of credit bond ETFs, significantly increasing their investment appeal [3]

Core Viewpoint - The 0-4 Year Local Government Bond ETF (159816) has shown a slight increase in value and significant trading activity, indicating a positive trend in the local bond market supported by ample liquidity from the central bank [1][2]. Group 1: Market Performance - As of April 16, 2025, the 0-4 Year Local Government Bond ETF rose by 0.03%, with a latest price of 113.27 yuan [1]. - Over the past six months, the ETF has accumulated a total increase of 1.17% [1]. - The ETF's trading volume reached 15.02 billion yuan, with a turnover rate of 81.66%, reflecting active market participation [1]. Group 2: Liquidity and Monetary Policy - The central bank has injected over 1.4 trillion yuan in medium to long-term funds from January to March 2025, ensuring sufficient liquidity and stable money market rates, which has laid the groundwork for a rebound in the bond market [1]. - The market's expectations for continued monetary easing have been reinforced by these actions [1]. Group 3: Investment Opportunities - The 0-4 Year Local Government Bond ETF allows ordinary investors to participate in local bond investments more easily, as it has a lower entry threshold compared to traditional rate bonds [2]. - The T+0 trading mechanism enables investors to capitalize on daily price fluctuations, enhancing the efficiency of idle funds [2]. - Investors can also leverage the ETF for short-term financing through pledging, allowing for the purchase of additional financial assets [2].

Group 1 - The core idea emphasizes the importance of foundational knowledge in investment and fund selection, suggesting that a solid understanding of investment basics is crucial for success [1] Group 2 - The article explains that the asset ratio of bond funds can exceed 100%, primarily due to the use of leverage strategies. These strategies involve borrowing and margin financing to enhance returns, which can result in total assets surpassing net assets [2]