Group 1: Wealth Management Trends - The wealth management scale decreased by CNY 286.4 billion to CNY 31.33 trillion during the week of June 23-27, 2025, marking a significant decline compared to previous years[1] - Historical data shows that the decline in the second quarter has consistently exceeded CNY 1.1 trillion in recent years, indicating a seasonal pattern[2] - In July, the wealth management scale typically experiences seasonal expansion, with historical increases ranging from CNY 1.4 trillion to CNY 2.2 trillion, while June declines are generally between CNY 0.8 trillion and CNY 1.5 trillion[3] Group 2: Market Dynamics - The average daily purchase of liquidity management assets, such as certificates of deposit, was CNY 12.9 billion from June 16-27, significantly higher than the average of CNY 1.4 billion during the same period in 2022-2024[4] - The average leverage ratio in the interbank market rose from 108.00% to 108.11% during the week of June 23-27, indicating increasing leverage despite a controlled liability pressure on banks[5] - The weighted issuance rate of certificates of deposit decreased to 1.64%, reflecting manageable pressure on banks' balance sheets[6] Group 3: Fund Duration and Risk Indicators - The duration of medium- and long-term bond funds decreased, with the duration of interest rate-based funds dropping from 5.29 years to 5.11 years, while credit-based funds saw a slight decrease from 2.44 years to 2.41 years[7] - The overall negative yield rate for wealth management products decreased to 1.46%, down 2.55 percentage points from the previous week, indicating improved performance[8] - The proportion of underperforming wealth management products fell to 16.3%, a decrease of 0.3 percentage points from the previous week, suggesting a stabilization in product performance[9]

1. Report Industry Investment Rating No information regarding the report industry investment rating is provided. 2. Core Views of the Report - **Hua'an's View**: The bond market is favorable, but the odds of further decline in interest rates are limited. It is still advisable to adopt a trading mindset. The current market sentiment is rising, with investors both bullish and taking action. The fundamental factors still support the bond market, but the potential for interest rate decline is limited. Given the historical performance of the bond market in June, it is recommended to approach it with a trading perspective [2]. - **Seller's View**: More than half of the fixed - income sellers are bullish on the bond market, with a significant increase in sentiment this week [3]. - **Buyer's View**: The buyer sentiment is relatively cautious, with nearly 60% holding a neutral view. Overall, the fixed - income buyer's view is neutral with a slight bullish bias [3]. 3. Summary by Relevant Catalogs 3.1 Seller and Buyer Markets 3.1.1 Seller Market Sentiment Index and Interest - rate Bonds - The weighted sentiment index this week is 0.43, indicating a predominantly bullish view, up from last week. The unweighted index is 0.54, an increase of 0.12 from last week. Among the institutions, 16 are bullish, 12 are neutral, and 1 are bearish. 55% of the institutions are bullish, 41% are neutral, and 3% are bearish [10]. 3.1.2 Buyer Market Sentiment Index and Interest - rate Bonds - This week's buyer sentiment index is 0.23, showing a neutral - with - a - slight - bullish view, down 0.12 from last week. Among the institutions, 10 are bullish, 16 are neutral, and 1 is bearish. 37% of the institutions are bullish, 59% are neutral, and 4% are bearish [11]. 3.1.3 Credit Bonds - Market hot topics include quarter - end wealth management repatriation and central bank monetary policy. Quarter - end wealth management repatriation poses resistance to credit spread compression and disturbs the credit market in the short term. Monetary policy easing may drive interest rate changes, but the room for further spread compression is limited [16]. 3.1.4 Convertible Bonds - This week, institutions generally hold a neutral - with - a - slight - bullish view. One institution is bullish and 11 are neutral. 8% of the institutions are bullish, and 92% are neutral [17]. 3.2 Treasury Bond Futures Tracking 3.2.1 Futures Trading - As of June 13, the prices of TS/TF/T/TL contracts increased. The contract prices were 102.46 yuan, 106.18 yuan, 109.02 yuan, and 120.5 yuan respectively, up 0.01 yuan, 0.03 yuan, 0.09 yuan, and 0.72 yuan from last Friday. The contract holdings increased, while the trading volumes and trading - to - holding ratios decreased [19][20]. 3.2.2 Spot Bond Trading - On June 13, the turnover rate of 30Y treasury bonds was 3.62%, up 0.06 pct from last week and 0.10 pct from Monday, with a weekly average of 4.33%. The turnover rate of 10Y China Development Bank bonds was 5.90%, up 0.04 pct from last week. The weekly average turnover rate of interest - rate bonds decreased to 0.92% on June 13, down 0.07 pct from last week [31]. 3.2.3 Basis Trading - As of June 13, except for the TF contract, the basis of other contracts narrowed. The net basis of the TS contract narrowed, while that of others widened. The IRR of the TS contract decreased, while that of others increased [36][39]. 3.2.4 Spread Trading - As of June 13, except for the TL contract, the inter - delivery spread of other contracts narrowed. The inter - variety spreads of all main contracts widened [45].

Group 1: Market Overview - From June 9-13, the second round of China-US negotiations became a major variable affecting interest rate trends, with tariffs remaining unchanged, benefiting bonds and gold as safe-haven assets[1] - As the tax period approached, liquidity tightened, leading to cautious short-term pricing in the bond market, with interest rates and similar rate products slowing down[1] - The one-year government bond yield struggled to break 1.4%, resulting in an overly flat yield curve[3] Group 2: Liquidity and Central Bank Actions - Market concerns about liquidity stability eased as the month progressed, with 1.83 trillion yuan in interbank certificates of deposit successfully renewed[2] - The central bank's proactive measures included increasing the daily open market operation (OMO) injection to 202.5 billion yuan on June 13, reflecting a firm stance on liquidity support[2] - The central bank's actions shifted from implicit to explicit, effectively guiding market expectations and stabilizing funding rates[2] Group 3: Yield Curve Dynamics - Historical analysis indicates that extreme flattening of the yield curve is often linked to central bank tightening, with subsequent steepening reliant on a shift in the central bank's stance[3] - The current yield curve is at a critical point where it may transition from flat to steep, contingent on the central bank's future actions and market adaptation[3] - The 10Y-1Y yield spread is currently at 24 basis points, placing it in the 13th percentile of historical data, indicating limited room for further compression[3] Group 4: Investment Strategy - In anticipation of a potential steepening of the yield curve, investment strategies should focus on increasing duration in portfolios, particularly in 10-year non-active bonds and high-quality local government bonds[6] - The duration of interest rate bond funds has reached a historical high of 5.23 years, while credit bond funds have risen to 2.43 years, indicating heightened risk exposure in the market[6] - Despite high duration levels, the market's sensitivity to negative factors may increase, necessitating careful monitoring of market conditions[6]