Report Industry Investment Rating No relevant content provided. Core View of the Report The bond market has not formed a trend - based market, and it is expected to return to a volatile state after short - term emotional fluctuations. To obtain excess returns in the volatile market, one can first seek assets with relative volatility and liquidity on the curve, and then look for individual bonds with relative value. Currently, 30 - year Treasury bonds are recommended [25]. Summary by Relevant Catalogs This Week's Bond Market Review - This week, the bond market fluctuated sharply. The first half of the week saw a cycle of repair - decline - repair around the performance of the commodity and equity markets and the "anti - involution" policy expectations. The second half was initially stabilizing but was hit by a sharp volatility at the end of Friday due to tax policy changes. However, the 10 - year Treasury yield remained in a narrow range of 1.70% - 1.75% [1][9]. - From 25th July to 1st August, the yields of 1 - year, 5 - year, 10 - year, and 30 - year Treasury bonds decreased by 1.0BP, 3.6BP, 2.7BP, and 2.3BP respectively [11]. Next Week's Key Bond Market Concerns - A sudden change in the tax system for Treasury bonds occurred on Friday night. Next week, the bond market will first price this event. "New bonds" refer to those issued on or after 8th August with new codes, while "old bonds" are those existing before this date, including active and non - active ones [18]. - Next week, the focus is on the allocation desks' scramble for active old bonds. Old bonds may be more popular among allocation desks due to tax advantages. Non - active bonds are already concentrated in allocation desks with limited liquidity, so it is expected that allocation desks will target active old bonds. Trading desks may sell at this time and wait to trade new bonds later. Also, trading desks may increase purchases of short - term credit bonds and certificates of deposit in the short term [2][19]. - Bond yields are expected to quickly price the scramble behavior next week. The spread between new and old bonds is expected to be smaller than the static calculation result. Old bonds will have a liquidity discount after being held by allocation desks, and some institutions are insensitive to tax rates [2][20]. Next - Stage Strategy Considerations - The bond market is in a volatile state and has not shown a trend reversal. To gain excess returns, one can first find assets with relative volatility and liquidity on the curve and then look for individual bonds with relative value. Currently, 30 - year Treasury bonds are recommended [25]. - The ultra - long end of the curve has volatility and opportunities. In the second quarter, ultra - long bonds created relative volatility in a "sideways" market. They are more sensitive to short - term factors. Since the second quarter, the intraday amplitude of the 30 - year Treasury active bond was higher than that of the 10 - year Treasury active bond on 60 out of 84 trading days [25]. - After the bond market adjustment in mid - to - late July, the spread of ultra - long - end interest - rate bonds has widened. As of 1st August, the 30 - year - 10 - year Treasury spread was 24BP, at the 90% percentile in the past year [34]. - In August, there will be issuance disturbances for ultra - long bonds. After the issuance of the 50 - year special Treasury bond on 1st August, 3 more ultra - long special Treasury bonds are to be issued. With the expected reduction of the预定 interest rate in September and the possible scramble for old bonds by insurance companies after the tax reform, the allocation demand for ultra - long bonds is expected to be strong [4][36]. - During the issuance of ultra - long bonds, the relative value of individual bonds will change. If the issuance scale of "25 Special Treasury 05" on 8th August remains the same as the previous two issues, its scale will reach 24.9 billion yuan. It may become the second - most active bond, and the yields of the three bonds are expected to converge, with the yield of "25 Special Treasury 02" possibly decreasing by about 2BP [5][37].

Core Viewpoint - The expansion of the ETF market in the U.S. is expected to temporarily enhance turnover rates, while the liquidity premium of domestic bond ETFs is already relatively high [1]. Group 1: U.S. Bond ETF Market Trends - The U.S. bond ETF market is projected to grow significantly from $554.48 billion in 2023 to $1,152.81 billion in 2024, marking a growth rate of 107.9%. However, a noticeable decline is expected in 2025, with the market size dropping to $441.57 billion by June 2025 [2]. - During the periods of market expansion, particularly in early 2022, the turnover rate of U.S. credit bond ETFs increased, with an annual average turnover rate of 41% and peaks of 43% and 45% during specific months [2]. - There is no clear positive correlation between the expansion of the U.S. bond ETF market and turnover rates over a longer time frame, as evidenced from 2018 to 2020 when market size increased but turnover rates did not [2]. Group 2: Trading Activity and Liquidity Premium - The number of transactions for constituent bonds has significantly increased with the expansion of ETFs. For instance, the proportion of constituent bonds in the AAA benchmark market-making credit bond index has risen to 91.7% since July 2025 [3]. - The liquidity premium is reasonably anchored within 10 basis points (BP). Since 2024, the risk associated with high-grade urban investment bonds and secondary capital bonds has been similar, with a central spread of 0 and fluctuations generally within 10 BP [4]. - Some constituent bonds are experiencing liquidity premiums exceeding 15 BP due to heightened buying sentiment among certain institutions [5]. Group 3: Market Sentiment and ETF Dynamics - The expansion of ETFs is unlikely to lead to a sustained increase in the liquidity of constituent bonds. The physical redemption mechanism makes it easier to increase the scale of credit bond ETFs, but the liquidity of some constituent bonds may peak and decline as their market size decreases [5]. - Market sentiment significantly influences liquidity, with changes in ETF scale reflecting market emotions. The fluctuation in cash redemption products may be more pronounced during market adjustments, potentially putting pressure on the constituent bonds in the PCF list [5].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The increase in the scale of the US ETF market has a temporary impact on the turnover rate, and the liquidity premium of domestic bond ETF component bonds is already relatively high [1]. - The expansion of ETFs is difficult to bring about a continuous improvement in the liquidity of component bonds. The liquidity premium of some component bonds is already at a high level, and the valuation difference between the exchange and the inter - bank market may lead to a narrowing of the spread [2][5][6]. - It is recommended to pay attention to the impact of market sentiment changes on liquidity [6]. 3. Summary According to the Directory 3.1 US Bond ETF Market Scale and Liquidity Comparison - The scale of the US bond ETF market increased significantly from 2023 - 2024 and declined significantly in 2025. In 2023, the scale was $554.482 billion, rising to $1152.808 billion in 2024 with a growth rate of 107.9%. As of June 2025, it was only $441.57 billion [2][11]. - During the periods when the scale of the US bond ETFs increased, the turnover rate of US credit bond ETFs increased significantly in 2022. However, in the long - term, there is no obvious positive correlation between the increase in the scale of US bond ETFs and the change in the turnover rate [2][12]. 3.2 Current Changes in Domestic ETF Liquidity and Component Bond Liquidity - Under the expansion of ETFs, the number of component bond transactions has increased significantly. Taking the Shanghai Stock Exchange AAA Benchmark Market - making Credit Bond Index as an example, the proportion of component bonds in the top three component entities has been continuously rising since 2025, reaching 91.7% since July [21]. - The valuation difference between the exchange and the inter - bank market for medium - long - term and medium - high implicit rating component bonds is more obvious. The spread between Shanghai market - making component bonds and inter - bank comparable bonds is currently between - 1BP and 13BP. The spread difference between central enterprises and local industrial state - owned enterprises is more obvious, while that of urban investment and transportation - related entities is relatively small [21]. - The exchange - inter - bank excess spread of science and technology innovation bond component bonds has widened since July [22]. 3.3 Component Bond Liquidity Pricing: Reasonable Liquidity Premium and Potential Risks - The reasonable pricing anchor for liquidity premium is within 10BP. Since 2024, under the expectation of debt resolution, the spread between high - grade urban investment bonds and secondary capital bonds is centered at 0, and the spread fluctuation range is basically within 10BP. The same is true for the spread between high - grade securities firm bonds and secondary capital bonds [35]. - The risk points of the valuation difference between the exchange and the inter - bank market: the spread of some benchmark market - making bonds and science and technology innovation bonds between the exchange and the inter - bank market has exceeded 10BP, and the spread of some component bonds with high institutional buying enthusiasm has exceeded 15BP [35]. - Three views on liquidity premium and risk points: ETF expansion is difficult to bring continuous improvement in component bond liquidity; the liquidity premium of some component bonds is already at a high level; after the valuation difference between the exchange and the inter - bank market, the exchange corporate bonds become more offensive, while inter - bank bonds are more defensive, and the spread may narrow with the increase in supply [36].

Group 1 - The core logic behind the recent surge in commodity futures is attributed to the "economic recovery expectations + supply rigidity + liquidity premium" [3] - The main contracts for polysilicon and coking coal have shown remarkable performance, with polysilicon prices rising over 70% from just above 30,000 yuan/ton to over 50,000 yuan/ton in less than a month [1] - Other commodities such as industrial silicon, coke, glass, and soda ash have also experienced significant rebounds, with industrial silicon prices reaching over 10,000 yuan/ton, marking a nearly 50% increase from early June [1] Group 2 - The recent collective rise in commodity futures is driving an investment trend in related industries, fueled by supply-demand dynamics and policy guidance [4] - The central government's recent meeting emphasized the need to regulate low-price disorderly competition, which is interpreted as potentially beneficial for related commodity prices [3] - A focus on sub-industries like pesticides and organic silicon is suggested due to the combination of seasonal demand and supply adjustments [3]

Group 1 - The recent surge in commodity futures prices has attracted widespread market attention, with polysilicon contracts reaching over 50,000 yuan/ton, marking a more than 70% increase from late June [1] - Coking coal contracts also showed strong performance, closing at over 1,100 yuan/ton, reflecting a rebound of over 50% from early June [1] - Other commodities such as industrial silicon and coke have also seen significant price increases, with industrial silicon surpassing 10,000 yuan/ton, a nearly 50% rise since early June [2] Group 2 - The central government's recent meeting emphasized addressing key challenges, including regulating low-price competition and promoting integrated development of domestic and foreign trade [2] - Analysts attribute the commodity price surge to a combination of economic recovery expectations, supply rigidity, and liquidity premiums, with both the US and China manufacturing PMIs returning to expansion territory [2] - The chemical industry is expected to see a recovery in the second half of 2025, driven by reduced capital expenditure and a resurgence in domestic demand [3] Group 3 - Companies with market capitalizations below 10 billion yuan and institutional ratings include those in the pig farming, coal, glass, and organic silicon sectors [3] - Yaxing Chemical, with a market cap of approximately 2.644 billion yuan, specializes in chlorinated polyethylene and other chemical products [4] - Dongrui Co., a modern agricultural enterprise, operates a full industry chain in pig farming, while Beibo Co. focuses on glass deep processing equipment [4]

Summary of Key Points from the Conference Call Industry Overview - The focus is on the gold market and its performance relative to other asset classes since 2018, highlighting the strategic importance of gold in asset allocation [1][2][3]. Core Insights and Arguments - **Gold Performance**: Since 2018, most asset classes have struggled to outperform gold, with only a few strategies and styles, particularly those involving smaller market caps, showing significant returns [1][3]. - **2025 Gold Price Target**: The target price for gold in 2025 is set between $3,300 and $3,500, based on a new pricing formula that incorporates factors like declining dollar credit [1][4]. - **Virtual Assets**: Virtual assets like Bitcoin are seen as potential long-term outperformers against gold due to their advantages in cross-border payments, technological innovation, and supply reduction mechanisms [1][6]. - **Short-term Outperformance**: In the short term, sectors such as large finance, new consumption, new technology, and military industries may outperform gold [1][11]. - **Central Bank Purchases**: Global central banks, particularly in Poland and China, are increasing their gold reserves, which supports a bullish outlook for gold prices [1][15][20]. - **Key Price Drivers**: The main factors influencing gold prices include its financial attributes (negative correlation with the dollar and U.S. Treasury yields), monetary attributes (weakened dollar credit), and geopolitical risks [1][17]. Additional Important Insights - **Asset Allocation**: Gold should constitute at least 5% of an investment portfolio to reduce volatility and enhance returns, as it has historically shown better annualized returns and lower volatility compared to stocks [2][27][32]. - **Long-term Outlook**: Long-term, few assets can consistently outperform gold, with virtual currencies and specific indices like the micro-cap stock index showing potential [5][14]. - **Market Trends**: The gold market has shown strong performance in 2025, with significant price movements influenced by geopolitical events and U.S. economic conditions [23][40]. - **ETF Dynamics**: The North American gold ETF market has seen a shift from net selling to net buying, indicating growing investor optimism about gold prices [24][40]. - **Geopolitical Risks**: While geopolitical events can temporarily affect gold prices, they do not fundamentally alter monetary policy, which is more critical for long-term investors [26]. Conclusion - The gold market is positioned for potential growth, driven by central bank purchases, macroeconomic factors, and strategic asset allocation. Investors are encouraged to maintain a significant allocation to gold to mitigate risks and enhance portfolio performance.

Group 1 - The report suggests that for most investors, it is time to gradually take profits on ultra-long credit bonds due to declining odds of capital gains, limited arbitrage opportunities, and weak coupon protection [6][14][18] - The performance of ultra-long credit bonds has been primarily driven by the compression of liquidity premiums in June, but this trend is expected to be difficult to sustain moving forward [7][14] - The report indicates that the current coupon advantage of ultra-long credit bonds is not significant, and their ability to protect against interest rate fluctuations is lacking, leading to a low probability of success for short-term holdings [12][18] Group 2 - The weekly review of credit bonds shows that the issuance volume remained stable, with a slight increase in maturity amounts, resulting in a net inflow of 452 billion yuan, which is a decrease compared to previous weeks [20][22] - The average coupon rates for newly issued AAA and AA+ rated bonds were 1.99% and 2.24%, respectively, indicating a mixed trend in issuance costs [20][21] - The liquidity of credit bonds continues to weaken, with a decrease in turnover rate to 1.76%, reflecting a return to a relatively low level [23]

Core Insights - The article discusses the complex motivations behind wealthy individuals holding multiple properties, emphasizing that real estate serves as a crucial component of their asset allocation strategy [1][5][12] - It highlights the stability and reliability of rental income from real estate investments, which provides a consistent cash flow despite market fluctuations [1][6][12] Group 1: Investment Logic - Real estate is perceived as a "hard currency" due to its high preservation rate, with core urban residential properties maintaining a value retention rate of 98.7% in 2024 [2] - The rental yield in first-tier cities remains stable between 2.5% and 3.2%, which, while modest, is valued for its reliability [1][2] - Investors view real estate as a "ballast" in their diversified portfolios, providing stability during market volatility [2][10] Group 2: Economic and Policy Context - The ongoing urbanization process supports housing demand, with the urbanization rate reaching 67.5% by the end of 2024, indicating a steady influx of population into cities [5] - The government's "housing is for living, not speculation" policy framework suggests that property prices will not experience extreme fluctuations, benefiting long-term holders [5][12] Group 3: Tax and Wealth Preservation - Holding real estate offers tax advantages compared to frequent buying and selling, as selling may incur significant personal income tax liabilities [6] - Real estate serves as a means of wealth preservation, especially in uncertain economic times, as it provides a tangible asset that can safeguard capital [6][10] Group 4: Long-term Value and Legacy - Wealthy individuals often purchase properties not just for personal use but also for future generations, as real estate is easier to pass down and less likely to cause disputes [7] - The investment philosophy of these individuals focuses on long-term strategic value rather than short-term gains, reflecting a more patient and calculated approach to wealth accumulation [7][12] Group 5: Market Trends and Future Outlook - Despite a cooling market, structural opportunities remain in core urban areas and high-quality districts in strong second-tier cities, which are still considered scarce resources [8][12] - The article suggests that real estate will continue to be a significant pillar of the Chinese economy, with a clear intention from policymakers to stabilize the market [12][13]

Group 1: Report Highlights - The active bond phenomenon is caused by the differentiation between the allocation portfolio and the trading portfolio. New bonds go through a cycle of "liquidity accumulation → premium widening → switching to active bonds → premium continuing to widen → premium compression" after issuance. The new-old bond spread is an indicator of liquidity premium [4][7]. - For a new bond to become an active bond, it must meet three core conditions: longer maturity, larger scale, and continuous issuance. Other factors such as issuance timing and code convenience can also be considered [4][8]. - The shape of the new-old bond spread shows a divergent evolution trend among bond types. The spread center has shifted downward, the active bond cycle has generally shortened, and the time for the spread to reach its peak has also decreased. In the future, the active bond phenomenon may gradually weaken [4][9][10]. - The new-old bond spread arbitrage strategy can be divided into four stages, and the report calculates the arbitrage space and stop-profit indicators for each stage [4][11]. Group 2: Active Bond Phenomenon - The active bond phenomenon is driven by the pursuit of liquidity by market participants. Each new bond experiences a cycle of strong to weak liquidity, corresponding to the active bond lifecycle. The liquidity premium of active bonds is an important indicator of market sentiment and capital flow and creates multiple trading arbitrage opportunities [20]. - The active bond phenomenon is caused by the differentiation between the allocation portfolio (banks, insurance) and the trading portfolio (funds, securities firms, etc.). The allocation portfolio holds bonds until maturity, weakening the demand for liquidity, while the trading portfolio relies on price difference returns, strengthening the dependence on liquidity [21]. - The active bond is not permanent but changes over time. When a new bond is issued, it may gradually replace the old bond as the new active bond, a process called new-old bond alternation [22]. Group 3: Conditions for New Bonds to Become Active Bonds - Longer maturity: Active bonds need to have sufficient duration sensitivity to attract trading funds for band operations. Long-term bonds (such as 10Y/30Y) are suitable for trading to obtain capital gains due to their long duration and sensitivity to interest rate fluctuations [36]. - Larger scale: Scale is the cornerstone of liquidity. A single bond's circulation volume needs to exceed a certain scale threshold to accommodate high-frequency trading. Large-scale bonds can avoid being "bought out" by the allocation portfolio and provide capacity for short-term leveraged trading [37]. - Continuous issuance: Frequent issuance helps maintain market attention and prevent existing bonds from being marginalized. Interruptions in issuance can lead to a rapid decline in liquidity [43]. - Issuance timing: If a new bond is issued at a relatively high interest rate and continued to be issued during a period of rapid interest rate decline, the switching of active bonds may be hindered. An interest rate shock period is relatively favorable for new bonds to switch to active bonds [50][51]. - Code convenience: Complex codes may increase trading friction costs, while simple codes can improve trading efficiency. Bonds with convenient codes are more likely to attract trading [56]. Group 4: Patterns of New-Old Bond Spread Trends - The new-old bond spread shows regular fluctuations along with the active bond switching cycle, generally presenting an "M-shaped" trend. The spread first widens, then narrows, widens again, and finally converges [62]. - The shape of the new-old bond spread shows a divergent evolution trend among bond types. The 10-year CDB bond shows a trend of changing from an "inverted V-shaped" to an "M-shaped", the 10-year Treasury bond evolves in the opposite direction, and the 30-year Treasury bond maintains an "M-shaped" [9][64]. - The center of the new-old bond spread has shifted downward, and the maximum spread average of the three major bond types has been compressed to varying degrees. The driving factors include the allocation portfolio's continuous increase in holding existing old bonds, the diversion effect of special Treasury bonds on liquidity, and the enhanced consistency of the trading portfolio's pursuit of new bonds [80][83][85]. Group 5: Shortening of Active Bond Cycle and Spread Peak Time - The active bond cycle has generally shortened. The active bond cycles of 10-year Treasury bonds and CDB bonds have been shorter this year due to the faster switching rhythm. The cycle characteristics of 30-year Treasury bonds are mainly reflected in the shorter active cycle of special Treasury bonds [10][89]. - The spread peak usually lags behind the switching date. In recent years, due to the advancement of market expectations, the time for the peak to appear has shortened, reflecting a shift from long-term cyclical to short-term event-driven liquidity premium gaming [10][91]. Group 6: New-Old Bond Spread Arbitrage Strategy - The new-old bond spread arbitrage strategy can be divided into four stages: arbitrage of the primary-secondary market spread from the new bond's payment date to the listing date, arbitrage of the spread widening from the listing date to the "sub-maximum spread day" before the switching date, arbitrage of the spread widening from the switching date to the peak of the active bond spread, and trading of the spread convergence from the peak decline to the retirement of the active bond [11][92]. - From the payment date to the listing date of a new bond, the spread generally widens. A "long new bond, short old bond" strategy can be adopted on the payment date and closed on the listing date to complete short-term arbitrage [93]. - After the new bond is listed, the spread fluctuates in a pattern of "first widening, then a phased correction". A "long new bond, short old bond" strategy can be adopted on the listing date and stopped for profit on the "sub-maximum spread day" [98].

Core Viewpoint - The internationalization of the Renminbi (RMB) is a long-term task that has not kept pace with China's growing economic stature globally. The article explores the potential acceleration of RMB internationalization and analyzes the associated benefits and drawbacks, particularly from the perspective of "liquidity premium" [2][3]. Group 1: Current State of RMB Internationalization - The current level of RMB internationalization does not match China's economic scale, with RMB's share in foreign exchange trading, international payments, trade financing, and reserve currency significantly lower than its economic weight [6][8]. - RMB payment share globally may be underestimated, with actual RMB payment settlement estimated at around 8%, despite SWIFT reporting a lower figure [10][17]. - Historical evidence suggests that accelerating RMB internationalization does not necessarily lead to depreciation; for instance, after the 2005 exchange rate reform, the RMB appreciated against the USD for nine consecutive years [9][27]. Group 2: RMB Valuation and Liquidity - The market exchange rate of the RMB is undervalued compared to its purchasing power parity (PPP) rate, primarily due to insufficient global liquidity, resulting in a high liquidity premium [4][29]. - The high M2 money supply does not equate to significant depreciation pressure, as a large portion of M2 consists of foreign exchange reserves due to trade surpluses [4][34]. - The current excessive liquidity of the USD, which dominates global payments and reserves, contributes to its overvaluation, while the RMB's liquidity needs to be improved to enhance its valuation [4][50]. Group 3: Opportunities for RMB Internationalization - The current environment is favorable for accelerating RMB internationalization, with a declining USD index and increasing demand for RMB in cross-border transactions due to Chinese enterprises expanding overseas [40][50]. - The use of RMB in cross-border payments has significantly increased, with 2023 figures showing RMB cross-border payment amounts for goods and services at 24.8% and 31.9%, respectively [52]. - The low financing costs of RMB, driven by the divergence in interest rates between China and the US, enhance its attractiveness as a financing currency [53]. Group 4: Recommendations for RMB Internationalization - Suggestions include further opening the capital account and providing exchange facilitation for enterprises and residents to enhance RMB's global circulation [56][60]. - The establishment of a legal framework for RMB stablecoins is recommended to improve the currency's liquidity and international standing [63][64]. - The central bank should consider reducing its holdings of USD assets while increasing gold reserves to strengthen RMB's credibility [64][68]. Group 5: Economic Implications of RMB Internationalization - RMB internationalization is expected to support high-quality economic growth, allowing for a potential adjustment of GDP growth targets [71]. - The internationalization of RMB can help Chinese enterprises optimize asset allocation globally, enhancing their competitiveness and market valuation [75][76]. - While RMB appreciation may negatively impact exports, the overall benefits of internationalization are expected to outweigh the drawbacks, particularly as trade quality improves [80].