Core Viewpoints - In February, influenced by the Spring Festival timing, expanded service demand, and rising international oil and gold prices, the CPI increased to 1.3% year-on-year, while the core CPI rose to 1.8%, reaching a recent high [5] - The PPI showed a narrowing decline due to rising prices of international non-ferrous metals and crude oil, driven by resource nationalism and the US-Iran conflict [5] CPI Analysis - The increase in CPI is supported by government initiatives aimed at boosting residents' income, cultivating consumption scenarios, implementing paid leave, and establishing special funds to promote domestic demand [5] - The recent strengthening of domestic pig production capacity control is expected to accelerate the reduction of pig production capacity, leading to a rebound in pork prices in the second half of the year [5] PPI Analysis - External price increases of resource products and the domestic "anti-involution" policy are expected to resonate positively [5] - The ongoing disruptions in the Strait of Hormuz due to the US-Iran situation have led to production cuts by oil-producing countries, significantly driving up oil prices [5] - It is anticipated that with oil prices remaining high, the PPI may turn positive year-on-year in March [5]

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The GDP target was lowered to 4.5 - 5% in 2026, similar to the GDP target cut in 2016, aiming at "reducing supply + increasing prices" [3]. - "Anti - involution" + "dual - carbon leadership" = "Supply - side structural reform 2.0", with measures to reduce supply and the goal to increase prices [4]. - The core expectation for 2026 - 2027 is "improved corporate profitability and a resurgence of consumption upgrading" [6]. - In the equity market, it is recommended to narrow the scope of the technology sector to technology stocks with performance. Non - technology sectors such as non - ferrous metals and chemicals are expected to rise, and large - finance and large - consumption sectors may reverse, with related convertible bonds expected to achieve excess returns [7]. - The bond market is expected to emerge from the low - interest - rate era, and the 10 - year Treasury bond yield is expected to return to the 2 - 3% range, with a central level of 2.5% [8]. Summary by Related Catalogs 1. Content in the Government Work Report Related to "Reducing Supply" - The government pointed out "strong supply" issues since December 2025, different from previous years [4][14]. - The work deployment includes "continuously expanding domestic demand and optimizing supply", which actually means "eliminating overcapacity" [4][14]. - The inflation target aims to improve the general supply - demand relationship, including supply - side measures [4]. - The anti - involution measures now prioritize capacity control [4][15]. - The dual - carbon part involves actions to improve quality, reduce costs and carbon emissions in key industries and accelerate the elimination of backward production capacity [4][16]. 2. "Optimizing Supply" Needs to Be Coordinated with the "GDP Target Downgrade" - Since GDP is calculated by the production method, optimizing supply will reduce production to some extent, leading to a decline in GDP growth. Similar to 2016 - 2017, the GDP target was also lowered in 2026 [5][18]. 3. Logic of Supply - side Structural Reform - The goal of supply - side structural reform is to "focus on improving the quality and efficiency of development", and the 2026 policy orientation of "seeking progress while maintaining stability and improving quality and efficiency" is similar [19]. 4. Effects of Supply - side Structural Reform from 2016 - 2017 - The effects of supply - side structural reform from 2016 - 2017 were: rising prices → improved corporate profitability → increased household income → consumption upgrading [21]. - The PPI fixed - base index can more accurately reflect the price trend, and since September 2025, it has been on an upward trend [21][23]. - There is a strong correlation between price levels and corporate profitability, and the median ROE of non - financial companies in the Wind All - A Index rebounded slightly in Q3 2025 [22]. - Since July 2025, China's prices have been rising, and it is expected that prices will enter an accelerated upward trend in 2026, leading to "improved corporate profitability and a resurgence of consumption upgrading" [26]. 5. Convertible Bond Market: The Direction of Prices and Corporate Profitability Determines the Style of the Convertible Bond Market - Although the equity market bull market since September 2024 is similar to the 2013 - 2015 bull market in appearance, the key factors are the directions of prices and corporate profitability [7][27]. - In 2013 - 2015 and 2024 - H1 2025, prices and corporate profitability were both declining. In 2016, as prices and corporate profitability rose, the stock market style shifted. It is expected that a similar change will occur in 2026 [27]. - In the equity market, it is recommended to focus on technology stocks with performance, and non - technology sectors such as non - ferrous metals and chemicals are expected to rise. Large - finance and large - consumption sectors may reverse, and related convertible bonds may achieve excess returns [7][27]. 6. Bond Market Viewpoint: The Bond Market Is Expected to Emerge from the Low - Interest - Rate Era - Bond yields are determined by the direction of prices (or price expectations) and the direction of capital interest rates (the central bank's attitude) [8][28]. - Historically, the directions of prices and capital interest rates often converge, but there are also some deviations. In such cases, the bond market follows the central bank's attitude [28]. - In H1 2026, capital interest rates may remain stable, short - term yields may stay low, while prices will rise more significantly, and long - term bond yields may trend upward [28]. - If the 12 - month average of PPI month - on - month can be maintained at around 0.2%, the year - on - year PPI will rise above 2%, and the 10 - year Treasury bond yield is expected to return to the 2 - 3% range, with a central level of 2.5% [29][30].

1. Report Information - Report Title: Fixed Income Report - Release Time: December 8, 2025 - Analysts: Liang Weichao (SAC Registration No.: S1340523070001), Cui Chao (SAC Registration No.: S1340523120001) [1][2] 2. Core Views - High - frequency economic data focuses on: production heat is differentiated; real estate market has seasonal improvement; prices continue to rise; the Baltic Dry Index continues to rise rapidly. Short - term focus on consumer and investment incremental policies and real estate market recovery [2][33] 3. Detailed Summaries by Section Production - Steel: Coke oven capacity utilization increased by 0.62 pct, blast furnace开工率 decreased by 0.93 pct, and rebar production decreased by 16.77 tons [3][10] - Petroleum Asphalt: Asphalt开工率 increased by 0.1 pct but remained at a low level [3][10] - Chemicals: PX开工率 decreased by 0.92 pct, and PTA开工率 remained flat [3][10] - Automobile Tires: All - steel tire开工率 increased by 0.17 pct, and semi - steel tire开工率 increased by 1.73 pct [3][11] Demand - Real Estate: The transaction area of commercial housing continued to rise, the inventory - to - sales ratio declined, land supply area decreased from a high level, and the premium rate of residential land transactions rebounded [4][15] - Movie Box Office: Increased by 1.648 billion yuan compared with the previous week [4][15] - Automobiles: The average daily retail sales of automobile manufacturers increased by 54,500 vehicles, and the average daily wholesale sales increased by 90,300 vehicles [4][18] - Shipping Freight Rates: SCFI index decreased by 0.39%, CCFI index decreased by 0.62%, and BDI index increased by 6.52% [4][21] Prices - Energy: Brent crude oil price rose by 0.87% to $63.75 per barrel, and coking coal futures price rose by 9.49% to 1,165 yuan per ton [5][23] - Metals: LME copper, aluminum, and zinc futures prices increased by 4.38%, 1.24%, and 1.56% respectively, and domestic rebar futures price increased by 2.13% [5][24] - Agricultural Products: The overall price increased, with the wholesale price index of agricultural products rising by 1.81%. Pork, eggs, vegetables, and fruits prices changed by - 0.84%, + 1.22%, + 2.42%, and + 2.63% respectively compared with the previous week [5][26] Logistics - Subway Passenger Volume: Decreased in Beijing and Shanghai [29] - Flight Volume: Domestic and international flight volumes decreased [31] - Urban Traffic: The peak congestion index of first - tier cities decreased slightly [31]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report - High - frequency economic data focuses on four aspects: production end heat is differentiated, the real - estate market has seasonal improvement, prices continue to rise, and the Baltic Dry Index continues to rise rapidly. Short - term attention should be paid to the implementation of incremental policies on the consumption and investment sides and the recovery of the real - estate market [2][33] 3. Summary by Relevant Catalogs 3.1 Production: Steel Output Declines, Asphalt Operating Rate Rises Slightly at a Low Level - **Steel**: Coke oven capacity utilization increased by 0.62 pct, blast furnace operating rate decreased by 0.93 pct, and rebar output decreased by 16.77 tons. On the week of December 5th, the coke oven capacity utilization of domestic independent coking plants (230 samples) was 72.64%, the blast furnace operating rate of steel mills (247 samples) was 80.16%, and the national building materials steel mill rebar output was 189.31 tons [3][10] - **Petroleum Asphalt**: The operating rate increased by 0.1 pct but remained at a low level. On the week of December 3rd, the domestic petroleum asphalt plant operating rate was 27.9% [3][10] - **Chemical Industry**: PX operating rate decreased by 0.92 pct, and PTA operating rate remained flat. On December 4th, the domestic chemical PX operating rate was 89.21%, and the PTA operating rate was 73.81% [3][10] - **Automobile Tires**: The operating rate of all - steel tires increased by 0.17 pct, and that of semi - steel tires increased by 1.73 pct. On the week of December 4th, the operating rate of automobile all - steel tires was 63.5%, and that of semi - steel tires was 70.92% [11] 3.2 Demand: Seasonal Improvement in Commodity Housing Transactions, Rapid Uptrend of BDI Index - **Real Estate**: The commodity housing transaction area continued to rise, the inventory - to - sales ratio declined, the land supply area declined from a high level, and the residential land transaction premium rate rebounded. On the week of November 30th, the commodity housing transaction area of 30 large and medium - sized cities was 2.4449 million square meters, the inventory - to - sales ratio of 10 large cities was 89.07, the land supply area of 100 large and medium - sized cities was 34.2804 million square meters, and the residential land transaction premium rate was 3% [15] - **Movie Box Office**: It increased by 1.648 billion yuan compared with the previous week. On the week of November 30th, the national movie box office revenue was 211.1 million yuan [15] - **Automobile**: On the week of November 30th, the daily average retail sales of manufacturers increased by 54,500 vehicles, and the daily average wholesale sales increased by 90,300 vehicles [18] - **Shipping Freight Rates**: The SCFI index decreased by 0.39%, the CCFI index decreased by 0.62%, and the BDI index increased by 6.52%. On the week of December 5th, the SCFI was 1397.63 points, the CCFI was 1114.89 points, and the BDI was 2727 points [21] 3.3 Prices: Prices of Crude Oil, Metals, Coking Coal, and Agricultural Products All Rise - **Energy**: Brent crude oil price increased by 0.87% to $63.75 per barrel. On December 5th, the settlement price of Brent crude oil futures (continuous contract) was $63.75 per barrel [23] - **Coking Coal**: The futures price increased by 9.49% to 1165 yuan per ton. On December 5th, the settlement price of coking coal futures (active contract) was 1165 yuan per ton [23] - **Metals**: The futures price changes of LME copper, aluminum, and zinc were +4.38%, +1.24%, and +1.56% respectively, and the domestic rebar futures price increased by 2.13%. On December 5th, the closing price of LME copper futures (active contract) was $11,665 per ton, LME aluminum was $2900.5 per ton, LME zinc was $3098.5 per ton, and the domestic rebar futures settlement price was 3164 yuan per ton [24] - **Agricultural Products**: The overall price increased, with the 200 - index of agricultural product wholesale prices rising by 1.81%. The price changes of pork, eggs, vegetables, and fruits compared with the previous week were - 0.84%, +1.22%, +2.42%, and +2.63% respectively. On December 5th, the 200 - index of agricultural product wholesale prices was 128.78, the average wholesale price of pork was 17.68 yuan per kg, eggs were 7.44 yuan per kg, 28 kinds of key - monitored vegetables were 5.93 yuan per kg, and 7 kinds of key - monitored fruits were 7.41 yuan per kg [26][27] 3.4 Logistics: Both Domestic and International Flight Volumes Decline, and the Urban Congestion Index Drops Slightly - **Subway Passenger Volume**: It decreased in both Beijing and Shanghai. On December 4th, the seven - day moving average of Beijing's subway passenger volume was 9.6202 million person - times, and that of Shanghai was 10.5057 million person - times [29] - **Flight Execution Volume**: Both domestic and international flight volumes declined. On December 5th, the seven - day moving average of domestic (excluding Hong Kong, Macao, and Taiwan) flight execution volume was 12,359.14 flights, the seven - day moving average of domestic (Hong Kong, Macao, and Taiwan) flight execution volume was 364.43 flights, and the seven - day moving average of international flight execution volume was 1816.14 flights [31] - **Urban Traffic**: The peak congestion index of first - tier cities dropped slightly. On December 5th, the seven - day moving average of the peak congestion index of first - tier cities was 1.72 [31]