1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - Short - term bond market may face downward pressure. Small - position active participation in band trading after adjustments, emphasizing reverse operations. Consider the market's concerns about factors such as the supply pressure of ultra - long - term government bonds in Q1, the impulse of credit issuance at the beginning of the year, and the continuous rise of equity and commodity prices. Long - term bonds may continue to be under pressure. The strategy is mainly based on short - duration carry strategies, and small - position participation in band trading after adjustments [3][15]. - Next week, the capital market will face phased pressure, but the pressure during the tax period is expected to be controllable. It is necessary to pay attention to the central bank's capital injection during the tax period [2]. 3. Summary According to the Directory 3.1 Review and Outlook of the Bond Market - This week, under the combined effects of equity market adjustment, policy game, and capital market fluctuations, the bond market oscillated and recovered with increased volatility. The yields of 10Y and 30Y government bonds changed by - 4bp and + 0.1bp respectively. The capital price first rose and then fell due to the reserve payment day and the delayed release of outright repos [10][11]. - Next week, the capital market will face phased pressure. The net withdrawal of the open - market will increase to 1.1015 trillion yuan, and the government bond issuance scale will increase to 706.6 billion yuan. However, due to the relatively late Spring Festival this year and the structural interest rate cut, the capital pressure is expected to be controllable [2][14]. 3.2 Bond Market Review 3.2.1 Funding: Central Bank Net Injection, Funding Rates First Up Then Down - This week, the central bank's open - market net injection was 81.28 billion yuan. From January 12th to January 16th, the central bank injected 951.5 billion yuan and had 138.7 billion yuan of reverse repos mature. The capital price first rose and then fell. R001 and DR001 rose by 3bp and 5bp respectively compared with January 9th [19][20]. 3.2.2 Secondary Trend: Oscillating Downward, Increased Volatility - This week, yields oscillated downward with increased volatility. Except for 3M and 30Y, the yields of other key - term government bonds declined. Except for 5Y - 3Y and 50Y - 30Y, the term spreads of other key - term government bonds widened. As of January 16th, the yields of 10Y and 30Y government bonds changed by - 4bp and + 0.1bp respectively compared with January 9th [27]. 3.2.3 Bond Market Sentiment: Widening of 30Y - 10Y Government Bond Spread, Recovery of Bond Fund Duration - From January 12th to January 16th, the weekly turnover rate of 30Y government bonds dropped to 37%. As of January 16th, the 50Y - 30Y government bond spread narrowed by 1.9bp compared with January 9th, and the 30Y - 10Y government bond spread widened by 3.7bp. The inter - bank leverage ratio slightly decreased to 108.1%, and the exchange leverage ratio decreased to 123.2%. The median duration of medium - and long - term pure - bond funds recovered, and the divergence decreased [33]. 3.2.4 Bond Supply: Increase in Government Bond Issuance Scale Next Week - This week, the net financing of interest - rate bonds decreased and turned negative, with a net financing of - 174.4 billion yuan. The net financing of government bonds and local government bonds decreased, while that of policy - bank bonds increased. Next week, the planned issuance of government bonds is 475 billion yuan, and the planned issuance of local government bonds is 231.6 billion yuan [49][52][53]. 3.3 Economic Data: Improvement in Real Estate Transactions, Weak Performance in Automobile Consumption - In December, imports and exports ended at a high level. The growth rate of social financing slightly declined, and household credit remained weak. Since January, real estate transactions have improved, and automobile consumption has been weak. High - frequency data shows that new - home transactions have turned positive month - on - month, and the year - on - year decline has narrowed. Thirteen - city second - hand housing transactions have increased month - on - month, and the year - on - year decline has narrowed. Automobile consumption has turned negative both month - on - month and year - on - year [58][59]. 3.4 Overseas Bond Market: Cooling of Core Inflation in the US in December - In December, the core inflation in the US cooled down. The Fed's interest - rate cut expectation was further dampened. Overseas bond markets showed that US bonds declined, and emerging markets mostly declined. This week, the 2Y US bond yield rose 5bp to 3.59%, and the 10Y US bond yield rose 6bp to 4.24%. The 10Y - 2Y US bond spread widened from 64bp on January 9th to 65bp [68][69]. 3.5 Major Asset Classes: Strength in Shanghai Gold and Crude Oil, Adjustment in Shanghai Copper - The CSI 300 index slightly adjusted this week. As of January 16th, 2026, it closed at 4731.9 points, down 0.57% from January 9th. This week, Shanghai gold, the Nanhua Pig Index, and the Nanhua Crude Oil Index rose, while Shanghai copper weakened. The performance of major asset classes was: Shanghai gold > Pig > CSI 1000 > Crude oil > Rebar > US dollar > Chinese bonds > Chinese - funded US dollar bonds > Convertible bonds > CSI 300 > Shanghai copper [75]. 3.6 Next Week's Bond Market Calendar - The calendar includes information on liquidity injection and maturity, government bond supply, fundamental data, and important domestic and international events from January 19th to January 25th, 2026 [80].

Monetary Policy - Federal Reserve officials signaled a dovish stance, with support for a rate cut in December from officials like Waller and Daly[9] - Economic data showed a slowdown in U.S. retail sales and durable goods orders, indicating weakened consumer momentum[9] - The 10-year U.S. Treasury yield fell by 4 basis points to 4.02% as markets continued to price in rate cut expectations[23] European Central Bank - The European Central Bank (ECB) is likely to maintain current interest rates, citing economic resilience and stable inflation[10] - Market expectations indicate a low probability of further rate cuts in 2025, with a 40% chance of a cut by the end of 2026[10] Economic Data - U.S. retail sales grew by only 0.2% in September, significantly lower than August's 0.6%[13] - Durable goods orders increased by 0.5% in September, down from 3.0% in August, with non-defense orders rising just 0.1%[13] - Eurozone economic sentiment index rose to 97.0 in November, up from 96.8 in October, indicating improved economic confidence[22] Fiscal Policy - The UK government announced an additional £26 billion in taxes, raising the overall tax burden to 38% of GDP by the end of the parliamentary term[12] - The largest revenue increase will come from freezing the personal income tax threshold, expected to generate £12.7 billion by the 2030-31 fiscal year[12]

1. Report Industry Investment Rating There is no information provided in the report regarding the industry investment rating. 2. Core Viewpoints of the Report - The slowdown of deposit relocation does not mean it has ended. Further data observation is needed as the YoY growth rate of non - bank deposits remains at a relatively high level, and there are seasonal disturbances. Asset relocation may continue due to factors such as the high economic base and trade frictions in Q4 [2][14] - The bond market is likely to remain weakly volatile. A defensive approach is recommended, with control over the duration level, and seizing allocation and trading opportunities after adjustments [3][15] 3. Summary by Relevant Catalogs 3.1 Review Summary and Bond Market Outlook - This week, the bond market showed a "first decline then rise" trend. The 10Y and 30Y Treasury bond rates changed by +0.4bp and -3bp respectively. Market sentiment was affected by factors such as US - China negotiation signals, stock market trends, and economic data [10] - Deposit relocation accelerated in July and August but slowed down in September. It is still too early to conclude that it has ended [11][14] - The bond market is expected to be weakly volatile. It is recommended to focus on defense, control the duration, and choose to allocate certificates of deposit and short - term interest - rate bonds [15] 3.2 Bond Market Review 3.2.1 Fundamentals - The central bank had a net withdrawal this week, and the capital interest rate increased. Next week, the maturity volume of reverse repurchases is less than that of the previous week [16] - The R001 and DR001 increased by 5bp and 1bp respectively compared to October 11th. The 3M certificate of deposit issuance rate first rose, then fell, and then rose again [18] 3.2.2 Secondary Market Trends - Bond yields first rose and then fell. Except for the 7Y, 20Y, and 30Y Treasury bonds, the yields of other key - term Treasury bonds increased. Most of the term spreads of Treasury bonds narrowed [26] - The spread between new and old 10Y Treasury bonds first widened and then narrowed, the spread of 10Y China Development Bank bonds widened negatively, and the spread of 30Y Treasury bonds narrowed [29][30] 3.2.3 Bond Market Sentiment - The median duration of the full - sample bond funds slightly increased. The turnover rate of ultra - long bonds increased, and the 30Y - 10Y Treasury bond spread narrowed rapidly. The inter - bank leverage ratio rose to 107.6%, and the exchange leverage ratio decreased to 122.4%. The implied tax rate of 10 - year China Development Bank bonds slightly narrowed [33] 3.2.4 Bond Supply - This week, the net financing of interest - rate bonds decreased. Next week, the issuance scale of Treasury bonds will increase, and the 10Y Treasury bond 250016.IB will be re - issued. The issuance scale of local government bonds will also increase [48][51] - The net financing of certificates of deposit increased this week, and the average issuance rate rose to 1.63% [53] 3.3 Economic Data - In September, the import and export growth rates significantly rebounded, and prices generally recovered. The YoY decline of the freight rate index slowed down in October, and industrial production improved marginally [59][60] - The YoY growth rate of non - bank deposits declined in September, and the M1 growth rate increased [60] 3.4 Overseas Bond Market - The release of key US inflation data was postponed due to the government "shutdown." The expectation of a Fed rate cut in October has increased again, mainly due to the weak employment market [69] - US bonds rose, and most emerging markets had more gains than losses [70] 3.5 Major Asset Performance - The Shanghai Gold Index performed the best, followed by Chinese - funded US dollar bonds, Chinese bonds, the US dollar, convertible bonds, Shanghai Copper, rebar, the CSI 300 Index, live pigs, the CSI 1000 Index, and crude oil [74] 3.6 Policy Review - On October 17th, multiple policies were introduced, including promoting logistics cost reduction, expanding green trade, adjusting the Hainan duty - free shopping policy, and more. These policies aim to support economic development and stabilize market expectations [77][82]