Report Industry Investment Rating - The report does not provide an industry investment rating [1][7] Core Viewpoints - After the holiday, the bond market continued to recover because the two reasons for the bond market adjustment in the third quarter had subsided: the deflation repair expectation was fully priced, and there was an expectation of regulatory policy loosening [6][9] - From the perspective of institutional behavior, if only the trading desks shift from defense to offense without the cooperation of allocation desks, the bond market recovery will not be significant. Last week, while the funding rate and Treasury bond rate both declined, the certificate of deposit (CD) rate rebounded from a low level, which is indicative of bank behavior and worthy of attention [6][9] - After the holiday, the issuance of CDs by various banks showed a simultaneous increase in volume and price, which may be due to two reasons: First, joint - stock banks and city commercial banks are more eager to catch up on CD issuance progress as their cumulative issuance scale is lower. Second, banks are pessimistic about their fourth - quarter asset - liability relationship, and large - scale banks are more likely to face this pressure [6][9] - If the first reason dominates, the CD issuance will be sensitive to the issuance price, and the primary market will shift from an increase in both volume and price to an increase in volume with stable or decreasing prices. If the second reason dominates, the CD issuance will be insensitive to the price, and the increase in both volume and price in the primary market will continue [6][10] - If the second situation dominates, it means that banks face significant asset - liability pressure, and their willingness to allocate bonds will not increase significantly, which will also affect the bond market recovery. Therefore, it is recommended to focus on the interest rate changes in the CD market. If the central bank strengthens its monetary policy to help solve banks' liability problems, bond yields are expected to decline more rapidly [6][10] Summary by Directory 1. Bond Market Weekly Viewpoint: Focus on CD Interest Rate Changes - The bond market continued to recover after the holiday due to the subsiding of the two factors causing the third - quarter adjustment. The analysis can refer to the previous report "The bond market will turn around in the fourth quarter, but it won't be an overnight success" [9] - The rebound of CD rates last week while other rates declined is worthy of attention as it reflects bank behavior [9] - The two possible reasons for the increase in CD issuance volume and price after the holiday are related to catching up on issuance progress and pessimistic asset - liability expectations [9] 2. This Week's Focus in the Fixed - Income Market: Interest - Bearing Bond Supply Reaches a High 2.1 Pay Attention to September Economic Data - This week, China will release September economic data and October LPR, while the US will release September seasonally - adjusted CPI and October University of Michigan Consumer Sentiment Index [16][17] 2.2 This Week's Interest - Bearing Bond Issuance Reaches around One Trillion - This week, the issuance scale of interest - bearing bonds is seasonally rising and is at a relatively high level compared to the same period in previous years, with a total issuance of about 1.0852 trillion yuan expected [17] - Treasury bonds: Four key - term general Treasury bonds with terms of 3, 5, 7, and 10 years are planned to be issued, with scales of 127 billion, 129 billion, 118 billion, and 149 billion yuan respectively. Three discount Treasury bonds with terms of 91, 91, and 182 days are also planned. The total Treasury bond issuance is expected to be around 688 billion yuan [18] - Local bonds: 79 local bonds are planned to be issued, with a total scale of 247.2 billion yuan, including new general bonds, new special bonds, refinancing general bonds, and refinancing special bonds [18][20] - Policy - bank financial bonds: The issuance is expected to be around 150 billion yuan [18] 3. Interest - Bearing Bond Review and Outlook: Narrowing of Term Spreads 3.1 Open - Market Operations Maintain Net Withdrawal - Reverse repurchases had a large - scale maturity, and open - market operations continued to have a net withdrawal. Last week, the net reverse - repurchase injection was 673.1 billion yuan, with a maturity volume remaining at a high level of around one trillion yuan. After a net withdrawal of 347.9 billion yuan from reverse - repurchases and a 150 - billion - yuan maturity of Treasury - deposit placements, the total net withdrawal from open - market operations was 497.9 billion yuan [21][22] - Funding rates mostly rebounded from a low level but remained in a loose range. The repurchase trading volume generally showed an upward trend, with a weekly average of over 8 trillion yuan, and the average overnight share was around 89.6%. In terms of price, funding rates rose from a low level and then declined, generally remaining stable [22] - CD issuance pressure increased, and secondary - market rates rebounded from a low level. From October 13th to October 19th, the issuance scale was 729.5 billion yuan (an increase of 513.6 billion yuan from the previous week), the maturity scale was 504.9 billion yuan (an increase of 369.9 billion yuan from the previous week), and the net financing was 224.7 billion yuan (an increase of 143.6 billion yuan from the previous week) [28] 3.2 Bond Market Sentiment Recovers - Last week, the bond market fluctuated around the expectation of Sino - US trade frictions. Coupled with the weakening of the equity market and lower - than - expected price and financial data, all were positive for the bond market recovery. The market's expectation of the subsequent issuance of new 30 - year Treasury bonds drove the narrowing of the spread between new and old bonds [42] - Finally, the yields of the 10 - year Treasury bond and the active - issue policy - bank bond changed by 0.4bp and - 2.1bp respectively to 1.75% and 1.91%. In terms of yields, term spreads narrowed, and long - end rates mostly declined [42] 4. High - Frequency Data: Weakening of Commercial Housing Transaction Data - On the production side, the operating rates were divergent. The blast - furnace operating rate remained flat at 84.3%, the semi - steel tire operating rate increased from 46.5% to 72.7%, the PTA operating rate decreased from 77.8% to 75.6%, and the asphalt operating rate increased from 34.5% to 35.8%. The year - on - year decline in the average daily crude - steel output in early October narrowed to - 3.5% [53] - On the demand side, the year - on - year growth rates of passenger - car manufacturers' wholesale and retail improved. In the week of October 12th, the year - on - year changes in manufacturers' wholesale and retail were - 0.5% and 6.7% respectively, an improvement from - 21% and - 18% in the previous week. The year - on - year growth rate of commercial housing transaction area weakened again. In the week of October 12th, the land premium rate in 100 large - and medium - sized cities declined, and the year - on - year growth rate of land transaction area was significantly negative. The sales area of commercial housing in 30 large - and medium - sized cities remained at a low level, and the year - on - year growth rate declined to a low of - 42%. In terms of export indices, the SCFI and CCFI composite indices changed by 12.9% and - 4.1% respectively [53] - On the price side, crude - oil prices continued to decline, copper and aluminum prices decreased, coal prices were divergent, the building - materials composite price index decreased, the cement and glass indices declined, rebar production decreased, inventory remained volatile at 4.56 million tons, and the futures price changed by - 2%. In the downstream consumption sector, vegetable, fruit, and pork prices changed by 2.4%, 0.3%, and - 3.9% respectively [54]

Research Conclusion - The adjustment of the bond market in the third quarter was mainly due to two reasons: the repair of deflation expectations and regulatory policy changes. The negative impact of these two factors on the bond market will weaken in the fourth quarter [3][8]. - The bond market will "turn the corner" in the fourth quarter, but it won't happen overnight. The repair speed and rhythm in the fourth quarter are difficult to replicate those in April. The repair amplitude won't be large, and it's a relatively slow interest - rate peak - building process. The catalysts for the accelerated decline of interest rates are the relaxation of regulatory policies and the intensification of monetary policies [5][8][13]. - In terms of investment strategy, it is recommended to try to slightly go long on bonds in the short term but in a cautious way. Currently, bond market investment opportunities are still in the form of bands, not trend - based long opportunities. The short - end is more stable than the long - end, and credit is more stable than interest rates. The short - duration and high - liquidity strategy of credit bonds has higher certainty [5][17]. This Week's Focus in the Fixed - Income Market Attention to September Data - China will release September's social financing, export, and inflation data, and the US will release September's PPI [18]. Seasonal Increase in Interest - Rate Bond Issuance - This week, the issuance scale of interest - rate bonds will increase seasonally but remains at a relatively low level compared to the same period in previous years, with an expected total issuance of 443.3 billion yuan. Among them, the planned issuance of national bonds is around 261 billion yuan, local bonds is 32.3 billion yuan, and policy - bank bonds is about 150 billion yuan [19][22][23]. Review and Outlook of Interest - Rate Bonds Net Withdrawal in Open - Market Operations at the Beginning of the Quarter - At the beginning of the quarter, a large number of reverse repurchases matured, resulting in a significant net withdrawal in open - market operations. After the cross - quarter period, the central bank maintained a high - level reverse - repurchase injection, with a net injection of 114 billion yuan. However, due to a large number of maturities, the final net withdrawal was 153 billion yuan. The inter - bank funds rate seasonally declined at the beginning of the quarter. The trading volume of repurchase rose to over 750 billion yuan, and the overnight proportion fluctuated around 73% on average. In terms of price, the inter - bank funds rate significantly declined compared to the end of the previous quarter. The issuance volume of certificates of deposit increased, and most prices declined [24][26][31]. Recovery of Bond - Market Sentiment at the Beginning of the Quarter - At the end of the previous quarter, the market's expectation of the central bank's injection was unstable, and the liability - side stability of asset - management products was weak, leading to a strong willingness to realize profits, and ultimately a large increase in interest rates. After the holiday, the market sentiment marginally recovered, the funds rate declined, and the expectation of the central bank's loose monetary policy resurfaced, causing bond - market interest rates to return to a downward trend. On the 11th, Trump's tariff policy caused fluctuations again, driving interest rates down rapidly. Finally, the yields of the 10 - year treasury bond and the active state - development bond decreased by 4bp and 3.65bp respectively compared to last week, reaching 1.74% and 1.93%. The yields of interest - rate bonds with various maturities mainly declined [45]. High - Frequency Data Production - Side - The operating rates were divided. The blast - furnace operating rate remained flat at 84.3%, the semi - steel tire operating rate seasonally declined from 73.6% to 55.3%, and the PTA operating rate changed from 77.5% to 77.8%. The year - on - year growth rate of the average daily crude - steel output in early September turned negative, reaching - 8.6% [54]. Demand - Side - The year - on - year growth rates of the wholesale and retail sales of passenger - car manufacturers significantly improved. In the week of September 30th, the year - on - year growth rates of the wholesale and retail sales of passenger - car manufacturers were 57% and 43% respectively. The year - on - year growth rate of the commercial - housing transaction area turned positive. In the week of October 5th, the land premium rate of 100 large - and medium - sized cities increased, the land transaction area decreased, and the year - on - year growth rate turned positive. The sales area of commercial housing in 30 large - and medium - sized cities seasonally declined, but the year - on - year growth rate rapidly rose to a high of 58%. The SCFI and CCFI composite indexes changed by 4.1% and - 6.7% respectively [54]. Price - Side - Considering the price changes on October 11th compared to the end of the quarter (September 30th), the crude - oil price declined, the copper and aluminum prices increased, and the settlement price of the active coking - coal futures contract increased. In the mid - stream, the comprehensive building - materials price index slightly declined, and both the cement and glass indexes decreased. The output of rebar decreased, and inventory started to accumulate again. The futures price increased by 0.6% after the holiday. In the downstream consumer sector, the prices of vegetables, fruits, and pork changed by - 1.2%, 2.3%, and - 2.8% respectively [55].

Group 1: Macroeconomic Expectations - Global inflation and tightening monetary policy have led to increased concerns about liquidity, putting pressure on risk assets such as stocks and bonds, indirectly affecting fund performance [3] - Domestic CPI data for March fell below expectations, raising doubts about the strength of economic recovery and leading to downward adjustments in profit expectations for certain industries [3] Group 2: Geopolitical Conflicts - Recent tensions in the Middle East and ongoing Russia-Ukraine conflict have driven up prices of commodities like oil, increasing global supply chain uncertainties and heightening investor risk aversion [5] Group 3: Industry and Policy Adjustments - Regulatory changes have intensified scrutiny on certain sectors, such as real estate and platform economy, causing significant declines in related sectors like Chinese concept stocks and real estate bonds, which in turn drag down the net value of related thematic funds [6] - Rumors of a "fund fee reform" could further compress management fee income, raising concerns about the industry's profit model [6] - High-performing sectors in Q1, such as technology and new energy, have experienced profit-taking, leading to a shift of funds towards defensive assets like consumer goods and utilities, putting short-term pressure on growth-oriented funds [6] Group 4: Market Sentiment and Fund Flows - A wave of redemptions triggered by net value declines has forced fund managers to sell holdings, exacerbating market downturns, particularly in small-cap stocks and less liquid bonds [8] - Since March, foreign capital has continuously reduced holdings in A-shares, with a cumulative net outflow exceeding 20 billion, negatively impacting the performance of blue-chip stocks and the overall market index [8] Group 5: Short-term Technical Factors - The end of the quarter has led to portfolio adjustments by institutions, amplifying market volatility [8] - The derivatives market has seen a chain reaction with expanded index futures discounts and soaring options volatility, intensifying market panic [8]

Synchrony Financial (SYF) Conference Summary Company Overview - **Company**: Synchrony Financial (SYF) - **Date of Conference**: February 10, 2025 - **Participants**: Brian Wenzel (CFO), Erika Penala (Analyst) Key Points Industry and Economic Environment - The company navigated a challenging macroeconomic environment in 2024, focusing on curtailing net credit losses and maintaining margins [3][4] - The first half of 2025 is expected to be similar to the end of 2024, with muted progress against inflation and a pessimistic outlook on Federal Reserve rate actions [5][6] Financial Performance and Credit Metrics - The delinquency rate is reported at 4.7%, which is 19 basis points better than historical seasonality [14][15] - The charge-off rate stands at 6.2%, with expectations to outperform seasonal trends in the first quarter of 2025 [16] - The company anticipates a net charge-off rate between 5.8% and 6.1% for the full year [16] Consumer Behavior and Confidence - Consumer confidence is expected to be shaky in the first half of 2025, with consumers remaining cautious in their spending due to affordability issues [19][20] - Despite a strong purchase volume growth in 2024, the company acknowledges that consumer confidence may not align with spending patterns [19] Credit Actions and Strategy - Credit actions were initiated in mid-2023 and early 2024, focusing on the ability to pay and debt consolidation loans [22][23] - The company aims to protect its portfolio and prevent delinquency acceleration through these credit actions [24] Future Growth and Credit Box Strategy - The company is currently in a restrictive credit position but may consider loosening restrictions in the second half of 2025 if delinquency performance continues to improve [26][30] - Pro-growth credit actions may include credit line increases and upgrades from private label to dual cards [30] Regulatory Environment and Late Fees - The company is closely monitoring the regulatory landscape, particularly regarding the CFPB and potential changes to late fee rules [42][45] - There is uncertainty about the impact of regulatory changes on the company's operations and profitability [79][80] Partnership and Market Opportunities - The company is focused on maintaining strong partnerships and is disciplined in pricing during negotiations [59][60] - There is an increase in market activity and opportunities for new partnerships, with a focus on long-term sustainability [58][61] Funding Strategy and Digital Banking - The company does not plan to lead in digital banking pricing but aims to remain competitive while maintaining a focus on product quality [62][68] - The funding strategy includes a cautious approach to deposit growth and liquidity management [66][67] Capital Management and Share Buybacks - The company is preparing for its first stress capital buffer next year and is focused on optimizing capital towards an 11% CET1 [81][84] - Share buybacks are considered a tool for managing capital in response to market conditions [82] Conclusion - Overall, Synchrony Financial expresses a positive outlook for 2025, emphasizing disciplined growth, strong credit metrics, and a focus on consumer behavior amidst a challenging economic backdrop [7][18]