1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - In August 2025, most economic data showed a slowdown. Against the backdrop of credit - easing policies, the market risk appetite continued to improve, driving the Shanghai Composite Index to break through the high of the past 10 years. The "stock - bond seesaw" affected the bond market, with different - term bond yields generally rising. Looking forward to September, the bond market faces greater adjustment pressure, but if the 10Y Treasury bond rate breaks through 1.8%, the allocation portfolio may gradually enter the market [2][3][5]. - The economic fundamentals in July showed a slowdown trend, with only exports accelerating among the six major indicators. The divergence between domestic and foreign demand became more obvious, and the GDP reading weakened significantly compared with the second quarter. The Fed is likely to start cutting interest rates in September, and the RMB may appreciate in the second half of the year [4][28][72]. 3. Summary by Relevant Catalogs 3.1 2025 August China Capital Market Review 3.1.1 China Capital Market Trend Review - In August, most economic data weakened. Under the influence of credit - easing policies, the market risk appetite improved, and the Shanghai Composite Index broke through the high of the past 10 years. The bond market was affected by factors such as the "stock - bond seesaw" and the unexpected convergence of the capital market around the tax period, with the yields of different - term bonds rising. The yield of the 1 - year Treasury bond active bond decreased by 1.75BP to 1.35%, the 10 - year increased by 7.45BP to 1.78%, and the 30 - year increased by 10.4BP to 2.0180% [2][3][10]. 3.1.2 Bond Market Primary Issuance Situation - In August, the pressure of government bonds increased significantly. The net issuance of local bonds was 977.6 billion yuan, less than the planned amount by 183.2 billion yuan, mainly due to the shortfall in new special bonds. The net issuance of national bonds was 593.3 billion yuan, and that of policy - financial bonds was 771 billion yuan. The supply pressure of government bonds in September may decline month - on - month, and the pressure on the capital market may ease [18]. 3.1.3 Capital Market Tracking - In August, the central bank continued to make large - scale capital injections. The monthly central values of DR001 and R001 decreased. Looking forward to September, the pressure on the capital market may increase, and attention should be paid to the central bank's incremental monetary policies [23]. 3.2 China Bond Market Macroeconomic Environment Interpretation 3.2.1 Economic Fundamentals and Monetary Policy - In July, most economic data showed a slowdown. Industrial, service, consumption, investment, and real - estate sales growth rates were lower than the previous values, and the GDP reading weakened. The central bank continued to inject funds in August, and the Politburo meeting had a more positive attitude towards loose monetary policies [28][66]. 3.2.2 Overseas Economy - In July, the global de - dollarization process slowed down, but the downward pressure on the US economy began to emerge. The Fed is likely to start cutting interest rates in September. The US economic downward pressure is greater than the inflation upward momentum, and the RMB may appreciate in the second half of the year [68][72][79]. 3.3 2025 September China Bond Market Outlook and Allocation Strategy - In September, although it is very likely that economic data will continue to weaken, the bond market still faces great adjustment pressure. If the 10Y Treasury bond rate breaks through 1.8%, the allocation portfolio can gradually enter the market. Some local bonds with a spread of 30bp higher than national bonds have allocation value [80][81].

Group 1 - The report from Huaxi Securities indicates a significant decline in long-term interest rates, with 10-year and 30-year government bonds dropping by 2.2 basis points and 4.0 basis points, respectively, to 1.764% and 1.998%, marking a notable independent performance in the bond market compared to the equity market in August [1][2] - The team identifies three main reasons for this trend: rising market expectations for interest rate cuts, with the Federal Reserve's dovish stance alleviating concerns about a September rate hike, and indications of potential decreases in the prices of buyout repos and MLF, reinforcing confidence in monetary easing [1][2] - Long-term bonds are perceived to have reached a high value in terms of cost-effectiveness, attracting institutional buying primarily from large banks and brokerages, while fund net purchases of long-term bonds remain relatively low, suggesting a deeper capital initiation in the current bond market recovery [1] Group 2 - The proximity of key points in the stock market is contributing to a rise in bullish sentiment in the bond market, as the stock market continues to surge without significantly draining resources from the bond market, leading to increased confidence in a potential transition from a rapid bull market to a more stable one [2] - The overall market's substantial increase in volume reflects strong capital sentiment, while a significant rise in implied volatility signals a rapid increase in speculative activity [2] - Despite short-term market fluctuations being closely tied to trading behaviors, the three long-term bullish narratives—stable market policies, a focus on technology, and anti-involution discourse—remain robust, suggesting that any adjustments in the market could present new opportunities for investment [2]

Core Viewpoint - The bond market is under significant pressure, with rising yields leading to capital losses and a failure of traditional investment logic [1] Group 1: Market Conditions - Bond market yields have increased sharply, resulting in capital losses for investors [1] - The traditional investment logic in the bond market has become ineffective [1] Group 2: Pricing Factors - The three key factors influencing bond market pricing—liquidity, fundamentals, and policy—are theoretically supportive of lower interest rates [1] - The market has shifted to a pricing state driven by a single variable of risk appetite, leading to a trend of "investing in stocks while holding bonds" [1] Group 3: Future Outlook - Institutions believe that the most pessimistic phase may have passed, and the bond market is expected to return to its fundamental pricing logic [1] - After significant adjustments in the bond market, both trading and allocation opportunities have emerged [1]

Core Viewpoint - The bond market is experiencing significant pressure due to rising long-term yields and the failure of traditional interest rate pricing frameworks, leading to a state where stock market performance heavily influences bond pricing [1][14][13]. Group 1: Market Dynamics - Since mid-July, the bond market has faced capital losses due to a substantial rise in long-term yields, with 10-year and 30-year government bond yields increasing by 12 basis points and 25 basis points respectively from July 15 to August 22 [13][1]. - The stock market's extreme risk-reward ratio has maintained a rolling 3-month Calmar ratio above 4.0 since July, a level not seen during the previous year's "924" rally, putting additional pressure on the bond market [14][1]. - The bond market is currently in a pricing state dominated by risk appetite, leading to a "look at stocks, act on bonds" approach [1][14]. Group 2: Future Market Logic - Two potential scenarios for the stock market's future are identified: a rapid rise supported by the "93 consensus" or a period of volatility as investors take profits ahead of the September 3 military parade [17][2]. - If the rapid rise scenario occurs, the bond market may face further declines, with long-term rates potentially approaching March highs. Conversely, if the volatility scenario plays out, the bond market could see a recovery as yields decline [17][2]. Group 3: Institutional Behavior and Fund Flows - Institutional behavior indicates a potential for a more optimistic bond market outlook, with reduced net selling of bonds by funds from 358.7 billion yuan in late July to 202.8 billion yuan in mid-August [18][3]. - The bond market is seeing increased buying interest from institutions, including banks and brokerages, as they position for a potential market reversal [18][3]. Group 4: Monetary Policy and Liquidity - The Federal Reserve's dovish signals from the Jackson Hole meeting have shifted market expectations towards potential interest rate cuts, easing global monetary tightening pressures and opening up domestic monetary policy space for rate cuts and liquidity injections [22][3][23]. - The People's Bank of China has been active in maintaining liquidity through reverse repos and MLF operations, indicating a supportive stance for the bond market [4][23]. Group 5: Bond Market Strategy - Current strategies suggest a focus on a "barbell" approach in bond investments, with attention to long-term government bonds and a gradual rebuilding of duration positions as monetary policy space opens up [26][3]. - The average duration of bond funds has been adjusted downwards, indicating a shift in strategy as institutions respond to market conditions [50][3].

Group 1: Currency and Interest Rate Outlook - Goldman Sachs expects that a weaker dollar will drive strong performance in emerging market currency carry trades, with a positive outlook for the Indian Rupee, Brazilian Real, South African Rand, and Hungarian Forint as carry trade longs [1] - Barclays economists note a slowdown in UK core services inflation, suggesting a potential for a rate cut by the Bank of England in November [2] - Macro analysts from Capital Economics highlight that U.S. short-term interest rates face upward risks, indicating that the market may be overestimating the likelihood of Federal Reserve rate cuts [3] Group 2: Economic and Market Trends - Societe Generale analysts predict a gradual weakening of the British Pound due to a bleak fiscal outlook, with expectations of higher taxes and slower economic growth [3] - Societe Generale also indicates that the implied volatility of the Euro against the Dollar may soon rebound due to upcoming events that could lead to greater exchange rate fluctuations [4] - China International Capital Corporation forecasts that the global AI liquid cooling market will reach $8.6 billion by 2026, driven by increasing computational demands and the advantages of liquid cooling technology [5] Group 3: Commodity and Investment Insights - Huatai Securities anticipates a cyclical upward opportunity for cobalt prices between 2025 and 2027, driven by an improving supply-demand balance [6] - Huatai Securities reports that A-share market activity remains high, with significant contributions expected from foreign and insurance capital in the future [6] - CITIC Securities believes that leading brands in the ready-to-drink beverage sector, which possess product innovation and offline traffic capabilities, are likely to navigate through economic cycles successfully [7]

Group 1 - The core viewpoint of the report suggests that the logic of "buying stocks to invest in bonds" may continue in the third quarter due to policy disturbances and fund reallocation, coupled with redemption pressure [1] - The bond market is expected to maintain a volatile pattern, with the 10-year government bond yield projected to gradually be allocated within the range of 1.75%-1.80% [1] - The report recommends maintaining a tactical approach to interest rate bonds [1]

Group 1: Financial Data Overview - In July 2025, new social financing (社融) amounted to 1.16 trillion yuan, a decrease from 4.20 trillion yuan in the previous period[2] - The total social financing stock grew by 9.0% year-on-year, compared to 8.9% previously[2] - M2 money supply increased by 8.8% year-on-year, up from 8.3% in the prior period[2] - New M1 money supply rose by 5.6% year-on-year, compared to 4.6% previously[2] Group 2: Corporate Loan Trends - Corporate loans turned negative, with a decrease of 2.6 billion yuan in medium to long-term loans, reflecting a year-on-year decline of 3.9 billion yuan[47] - The contraction in corporate loans may benefit the Producer Price Index (PPI) by raising it year-on-year[3] - Despite weak loan performance, overall corporate financing is still growing, with improvements in equity and bond financing compared to the same period last year[3] Group 3: Economic Indicators and Market Sentiment - The ongoing recovery of the corporate-resident deposit gap indicates continuous improvement in the economic cycle, supporting the view that the worst phase is passing[7] - The ratio of resident deposits to the total stock market value remains high, suggesting significant potential for market growth as the economic cycle improves[38] - The current high growth of non-bank deposits (2.1 trillion yuan added in July) indicates ample liquidity in financial institutions[38]

Core Viewpoints - The contraction of corporate loans does not affect the judgment that the worst period of the economic cycle is passing [4][6] - Overall corporate financing scale is still growing, with improvements in equity and bond financing compared to the same period last year [4][6] - The level of loans does not necessarily correspond to the health of the economy, as the ongoing recovery of the corporate-resident deposit gap indicates continuous improvement in the economic cycle [4][6] - Current market policies have reduced stock volatility, enhancing risk-adjusted returns for equities, making them more attractive compared to bonds [4][6] Group 1: Understanding Corporate Loan Contraction - In July, corporate short-term loans decreased by 550 billion, and medium to long-term loans decreased by 260 billion, indicating a seasonal factor as July is traditionally a low month for credit [13][14] - The reduction in corporate loans may benefit the Producer Price Index (PPI) by controlling the flow of loans to the manufacturing sector, which has been a focus of recent supply-side reforms [16][19] - Corporate financing is not limited to loans; direct financing has shown strong performance, indicating a shift in economic structure towards more suitable financing methods for high-tech and innovative enterprises [19][23] Group 2: July Financial Data and Its Impact on Investment Judgments - In July, non-bank deposits increased by 2.1 trillion, marking the third highest value for the year, indicating ample liquidity in financial institutions [30][31] - The ratio of resident deposits to the market value of stocks remains high, suggesting significant potential for market growth as the economic cycle improves [30][31] - The Sharpe ratio for stocks compared to bonds is increasing, indicating a reversal in the attractiveness of equities over bonds, driven by clear market stabilization policies [31][36] Group 3: July Financial Data Overview - In July, the total social financing increased by 1.16 trillion, with a year-on-year growth of 9%, while corporate loans decreased significantly [37][38] - The M2 money supply grew by 8.8% year-on-year, reflecting a healthy increase in liquidity, while new M1 also showed a positive trend [38][39] - The overall corporate financing scale continues to recover, with improvements in direct financing methods such as corporate bond and equity financing [37][39]

Group 1: Economic Indicators - In July 2025, new social financing was 1.16 trillion yuan, down from 4.20 trillion yuan in the previous period[1] - The year-on-year growth of social financing stock was 9.0%, compared to 8.9% previously[1] - M2 increased by 8.8% year-on-year, up from 8.3% in the previous period[1] Group 2: Corporate Loan Trends - Corporate loans turned negative with a decrease of 2.6 billion yuan in medium to long-term loans and 5.5 billion yuan in short-term loans[11] - The contraction in corporate loans may benefit the year-on-year increase in PPI[2] - Despite weak loan performance, overall corporate financing is still growing, with improvements in equity and bond financing compared to the same period last year[2] Group 3: Market Outlook - The current market sentiment remains strong, with non-bank deposits increasing by 2.1 trillion yuan, marking the third highest value for the year[5] - The ratio of household deposits to the market capitalization of the Shanghai and Shenzhen stock markets remains at a historical high of 1.7 times, indicating potential for further market growth[5] - The Sharpe ratio for stocks continues to rise compared to bonds, suggesting that stocks still offer better risk-adjusted returns[7] Group 4: Policy Implications - The narrative of "watching stocks and doing bonds" remains unchanged despite the negative corporate loan trend, as the worst phase of the economic cycle is believed to be passing[4] - The increase in non-bank deposits may lead to central bank concerns about fund idling, potentially impacting the bond market[3]

Core Viewpoint - The document emphasizes that the research material is intended solely for professional investors associated with Huachuang Securities, highlighting the importance of appropriate investor suitability management [1][3]. Group 1 - The research team at Huachuang Securities is positioned to provide timely exchanges of viewpoints specifically for professional investors in the context of new media [3]. - The material is derived from previously published research reports by Huachuang Securities, and any discrepancies should refer to the complete content of the original reports [4]. - The opinions and analyses presented may change without notice based on subsequent reports from Huachuang Securities [4].