Report Industry Investment Rating No relevant content provided. Core Viewpoints - In early October, the bill rate dropped rapidly. The transfer and discount yield of 3M state-owned and joint-stock bank drafts across the year was only 0.47%. The expectation of real - economy credit supply within the year still needs to be boosted, and narrow - sense liquidity has an endogenous basis for loosening [1][2][10]. - Although narrow - sense liquidity has an endogenous basis for loosening, the central bank still emphasizes "preventing capital idling" in the third - quarter monetary policy meeting. The situation of a "lower limit" for repo rates still holds, and the yield range of 1 - year state - owned and joint - stock bank inter - bank certificates of deposit may be between 1.6% - 1.65% [3][11]. Summary by Directory 1. 10 - early - October Bill Rate Rapid Decline - The "five - factor method" shows that central bank investment, commercial bank credit supply, and fiscal factors may all be favorable to the capital market in the fourth quarter, indicating an endogenous basis for loosening of narrow - sense liquidity. The rapid decline in the transfer and discount yield of 3M state - owned and joint - stock bank drafts across the year in early October implies poor expectations for real - economy credit supply in the fourth quarter by commercial banks, which is favorable to narrow - sense liquidity. On October 9, the transfer and discount yields of overnight, 7 - day, 1M, 3M, and 6M state - owned and joint - stock bank drafts were 1.28%, 1.28%, 1.19%, 0.47%, and 0.77% respectively [2][10]. 2. Narrow - sense Liquidity 2.1 Central Bank Operations: Continuous Net Investment in Outright Repos - Short - term liquidity: In the past week (October 9 - 10), the central bank's pledged repos had a net withdrawal of 16423 billion yuan. As of October 10, the central bank's repo balance was 10210 billion yuan, significantly lower than on September 30 but still slightly higher than the seasonal level in previous years. The commercial bank system's excess reserves still depend on central bank investment [12]. - Medium - term liquidity: In October, the total maturity amount of outright repos was 13000 billion yuan, and the MLF maturity was 7000 billion yuan. On October 9, the central bank renewed 11000 billion yuan of 3M outright repos, with an excess renewal of 3000 billion yuan [13]. 2.2 Institution's Fund Lending and Borrowing Situation: Strong Supply and Demand - Fund supply: On October 10, large - scale banks' net fund lending (flow concept) was 38608 billion yuan, an increase of 14269 billion yuan compared to September 30. The net lending balance of large - scale banks was 45983 billion yuan, an increase of 3652 billion yuan compared to September 30. The net lending balance of money market funds was 18758 billion yuan, a decrease of 437 billion yuan compared to September 30. In early October, joint - stock commercial banks had large - scale net borrowing, and the net borrowing amount was at a relatively high level in the same period of previous years [16]. - Fund demand: On October 10, the balance of inter - bank pledged repurchase of bonds in the whole market was about 11.7 trillion yuan, an increase of 3358 billion yuan compared to September 30. The whole - market leverage ratio was 107%, an increase of 0.15 percentage points compared to September 30. The leverage ratio of non - legal person products was 112%, a decrease of 0.44 percentage points compared to September 30 [26]. 2.3 Repo Market Transaction Situation: Volume Increase and Price Decrease at the Beginning of the Month - Fund volume and price: In the past week, the volume of the inter - bank pledged repo market increased while the price decreased, in line with the seasonal pattern at the beginning of the month. The median daily trading volume of inter - bank pledged repos was 7.5 trillion yuan, an increase of 24969 billion yuan compared to September 29 - 30. The median R001 was 1.37%, a decrease of 9bp compared to September 29 - 30. The median spread between R001 and DR001 was 4.4bp, a decrease of 6.3bp; the median spread between GC001 and R001 was 13.2bp, an increase of 2.3bp, indicating small liquidity friction [28][30]. - Fund sentiment index: At the beginning of the month, the fund market was seasonally loose, and the fund sentiment index was around 50, generally loosening in the afternoon [32]. 2.4 Interest Rate Swaps: Slight Increase The 1 - year FR007 IRS interest rate decreased compared to last week. The median 1 - year FR007 IRS this week was 1.56%, a decrease of 2bp compared to last week, and the interest rate was at the 12% quantile since 2020 [33]. 3. Government Bonds: Low Net Payment Pressure for Government Bonds in the Coming Week 3.1 Next Week's Net Payment of Government Bonds - Affected by the holiday, the net payment of government bonds was small in the past week. In the coming week, the expected net payment of government bonds is 852 billion yuan, with a relatively low overall net payment pressure. Among them, the net payment of treasury bonds is 1261 billion yuan, and local bonds have a net repayment of 409 billion yuan. The net payment pressure is relatively large on Monday, and small on other weekdays [37]. 3.2 Current Issuance Progress of Government Bonds - As of October 11, the net financing progress of treasury bonds was 83.8%, an increase of 2.8% in the past week, with about 1.08 trillion yuan of remaining net financing space in 2025. The issuance progress of new local bonds was 83.6%, with 0.85 trillion yuan of remaining issuance space in 2025. The issuance progress of refinancing special bonds was 99.8%. Recently, the net supply scale of treasury bonds and special refinancing bonds has slowed down, but the issuance rhythm of new local bonds may still be relatively fast in October [38]. 4. Inter - bank Certificates of Deposit: Significant Decline in Net Financing Scale, and the Pressure on Banks' Long - term Liabilities May Be Controllable 4.1 Absolute Yield - On October 10, the SHIBOR quotes for overnight, 7 - day, 1M, 3M, 6M, 9M, and 1Y were 1.32%, 1.45%, 1.56%, 1.58%, 1.64%, 1.67%, and 1.68% respectively. Among them, overnight, 7 - day, and 1M increased by - 6bp, 5bp, and - 1bp respectively compared to September 30, and other terms remained unchanged. The yields to maturity of 1M, 3M, 6M, 9M, and 1Y inter - bank certificates of deposit of AAA - rated commercial banks on October 10 were 1.84%, 2.07%, 2.19%, 2.27%, and 2.33% respectively. Among them, 1M and 3M decreased by 1bp and 6bp respectively compared to September 30, and other terms remained unchanged [42]. 4.2 Issuance and Stock Situation - In the past week (October 9 - 10), the total primary issuance volume of inter - bank certificates of deposit was 16.52 billion yuan. In terms of issuance terms, the proportions of 1M, 3M, 6M, 9M, and 1Y were 70%, 7%, 5%, 8%, and 10% respectively. Among them, 1M increased by 59.19 percentage points compared to last week, while 3M, 6M, 9M, and 1Y decreased by 16.75 percentage points, 13.39 percentage points, 13.11 percentage points, and 15.93 percentage points respectively compared to last week [46]. 4.3 Relative Valuation - On October 10, the spread between the yield to maturity of 1 - year AAA - rated inter - bank certificates of deposit and R007 was 18bp, at the 37% quantile since 2020. The spread between the yield to maturity of 10 - year treasury bonds and 1 - year AAA - rated inter - bank certificates of deposit was 18bp, at the 41% quantile since 2020 [49].

Group 1: Investment Rating - No investment rating for the industry is provided in the report. Group 2: Core Viewpoints - The market's expectation of the capital market is marginally cautious based on certificates of deposit (CDs) and interest rate swaps [1]. - The central bank's continuous "incremental renewal" of MLF for seven months indicates its care for the capital market, and it is expected that the cross - quarter liquidity will be generally stable, with the capital market likely to ease after the holiday [4]. Group 3: Summary by Related Catalogs CDs and Interest Rate Swaps - Last week, the total maturity of CDs was 969.21 billion yuan, and the issuance was 791.87 billion yuan, with a net financing scale of - 177.34 billion yuan. As of the last trading day of last week, the 1 - year AAA CD maturity yield was 1.69%, up from the previous week. This week, the single - week maturity scale of CDs is about 168.84 billion yuan, with less maturity pressure than the previous week [1]. - In terms of interest rate swaps, the average value of the 1 - year FR007 interest rate swap last week was 1.57%, up from the previous week [1]. Repurchase Market - Last week, the pledged repurchase trading volume was between 6.7 trillion and 7.6 trillion yuan. The average R001 repurchase trading volume was 5.5536 trillion yuan, down 724.7 billion yuan from the previous week. As of the last trading day of last week, the outstanding repurchase balance was 12.2 trillion yuan, up from the previous week [2]. - By institution, the lending scale of large banks decreased, while that of money market funds increased. The borrowing scales of securities firms and funds decreased, while that of wealth management increased. As of Friday, the reverse repurchase balances of large banks and money market funds were 4.28 trillion yuan and 2.48 trillion yuan, down 110.3 billion yuan and up 145 billion yuan respectively from the previous week. The repurchase balances of securities firms, funds, and wealth management were 1.76 trillion yuan, 1.97 trillion yuan, and 867.5 billion yuan, down 30.7 billion yuan, 54.2 billion yuan, and up 122.8 billion yuan respectively from the previous week [2]. Bill and Exchange Rate - Last Friday, the 6M national stock bill transfer quotation was 0.85%, down from the last trading day of the previous week. The decline in bill interest rates indicates a decrease in credit demand and an increase in the demand for bill volume - boosting [3]. - Last Friday, the US dollar - to - RMB exchange rate was 7.13, up from the previous week, and the Sino - US interest rate spread widened. Last week, the number of initial jobless claims in the US dropped to the lowest level since July. The US also announced the PCE price index for August, showing that the increase in personal consumption expenditure in August exceeded expectations, and the basic inflation pressure remained stable [3]. Capital Market and Policy - Last week, the open market had a maturity of 2.1268 trillion yuan, including 1.8268 trillion yuan of reverse repurchase maturity and 300 billion yuan of MLF maturity. The open market made a total investment of 3.0674 trillion yuan, including 1.5674 trillion yuan of 7 - day reverse repurchase, 900 billion yuan of 14 - day reverse repurchase, and 600 billion yuan of MLF, with a net investment of 940.6 billion yuan [6]. - Last week, the capital market was generally tight. The average DR007 was 1.54%, up 2BP from the previous week; the average R007 was 1.62%, up 10BP from the previous week; the average DR001 and R001 were 1.41% and 1.46% respectively. The exchange repurchase interest rate increased, with the average GC007 at 1.82%, up 29BP from the previous week. As of the last trading day of last week, the outstanding balance of reverse repurchase was 2.4674 trillion yuan, up from the previous week [6]. This Week's Focus - This week, the open - market capital maturity is 516.6 billion yuan, all of which are reverse repurchase maturities [4]. - On Monday, the eurozone's economic sentiment index for September will be announced; on Tuesday, China's official manufacturing PMI for September will be announced; on Wednesday, the eurozone's harmonized CPI for September will be announced; on Friday, the US non - farm payroll data for September will be announced. There may also be a Politburo meeting this week [4].

Core Viewpoint - The article analyzes the main factors influencing bill interest rates, proposing a framework that includes funding rates, credit and social financing, and monetary policy as the three primary influences on bill interest rates since 2019 [1]. Group 1: Factors Influencing Bill Interest Rates - The bill market serves as a crucial channel for short-term financing for enterprises, with interest rate fluctuations influenced by multiple factors [2]. - The first factor is funding rates, which have a significant impact on bill prices, as evidenced by various studies showing a strong correlation between funding rates and bill interest rates [2]. - The second factor is credit and social financing scale, where the relationship between credit scale and bill interest rates is complex, with recent studies indicating a correlation that is more suitable for longer-term analysis [3]. - The third factor is monetary policy, which affects funding rates and total funds, with bill interest rates acting as a leading indicator of monetary policy changes [4]. Group 2: Data Selection and Main Conclusions - The observation period for the analysis spans from 2019 to June 2025, focusing on monthly weighted rates of 3M and 6M national bank discounted bills [5]. - Empirical results indicate a strong correlation between the three influencing factors and bill interest rates [6]. Group 3: Results Analysis - Funding rates show a clear positive correlation with bill interest rates, with variations in the relationship observed over different periods [10]. - The ratio of undiscussed bills to bill financing is positively correlated with bill interest rates, while the ratio of bill financing to short-term loans is negatively correlated [11]. - Monetary policy tools, particularly quantity-based tools, have a significant impact on bill interest rates, although the correlation is relatively weak compared to other factors [12]. Group 4: Future Research Directions - Future research could focus on refining the modeling of the three factors and their dynamic relationships with bill interest rates, including the use of text mining techniques for more timely data extraction [14][15]. - Additionally, exploring the temporal changes in the influence of these factors on bill interest rates during significant market events could provide deeper insights into market dynamics [15].

Market Overview - The bond market experienced a significant rise, with the 30-year government bond ETF (511090) increasing by 0.52% as of 10:00 AM [1] - The latest price for the 30-year government bond futures contract (TL2509) was 119.07 yuan, up 0.63%, with a trading volume of 46,165 contracts and a total open interest of 117,716 contracts [1] - Other government bond futures also saw increases, with the 10-year bond (T2509) up 0.16%, the 5-year bond (TF2509) up 0.07%, and the 2-year bond (TS2509) up 0.01% [1] Funding Conditions - The central bank conducted a 7-day reverse repurchase operation of 283.2 billion yuan, maintaining a bid rate of 1.40% [1] - Major interbank interest rates for government bonds generally declined, with the 10-year government bond yield dropping by 3.25 basis points to 1.715% and the 30-year bond yield decreasing by 4 basis points to 1.921% [1] Bond Market Insights - As the end of July approached, bill rates fell sharply, with the 1-month corporate acceptance bill rate dropping to 0.01% [2] - The demand from small and medium-sized institutions, represented by rural commercial banks, was strong, indicating insufficient credit issuance in July [2] - Major banks have been actively purchasing bills, with net purchases exceeding 210 billion yuan from July 21 to 25 and over 500 billion yuan for the entire month, compared to just over 120 billion yuan in the same period last year [2] - The bond market showed signs of recovery, with the 30-year government bond yield declining nearly 4 basis points and other maturities recovering by 2-3 basis points [2] Investment Product Highlight - The Pengyang 30-year government bond ETF (511090) is the first ETF tracking the 30-year government bond index, offering T+0 trading attributes [3] - This product allows investors to engage in day trading for profit and helps in extending portfolio duration or hedging equity positions [3] - It serves as a high-elasticity cash management tool and a duration adjustment tool, making it attractive for investors, especially in a low-interest-rate environment [3]

Core Viewpoint - The article discusses the significant fluctuations in the bill discount rates in the market, particularly highlighting the sharp decline on July 30, 2023, and the implications for credit demand and supply dynamics in the banking sector [1][2][3]. Group 1: Market Dynamics - On July 30, the central bank conducted a reverse repurchase operation of 309 billion yuan, resulting in a net injection of 158.5 billion yuan after accounting for maturing reverse repos [1]. - The bill discount rates experienced a dramatic drop, with the 6-month bill discount rate falling to 0.2%, marking a 30 basis point decrease from the previous day [2]. - The 3-month and 6-month bill discount rates rebounded significantly in the afternoon after reaching historical lows, indicating a volatile supply-demand balance in the market [2][3]. Group 2: Seasonal Trends - July is traditionally a "small month" for credit, leading to expectations of a seasonal decline in credit issuance, which is reflected in the lower bill discount rates [4][5]. - The 6-month bill discount rate has shown a downward trend throughout July, dropping from 1.19% at the end of June to 0.41%, a decrease of 78 basis points [3][4]. Group 3: Credit Demand and Supply - The article notes that the bill discount rates have been influenced by banks' shifting preferences towards short-term loans, which have reduced the demand for bills [5][6]. - The analysis indicates that the recent fluctuations in bill rates are symptomatic of a broader imbalance in supply and demand within the market, exacerbated by seasonal factors and changing lending practices [5][6]. Group 4: Financial Data Insights - In June, the total new corporate loans reached 1.77 trillion yuan, with short-term loans contributing significantly to this figure, reflecting a trend towards short-term financing over bill financing [5][6]. - The current spread between bill rates and other financial instruments, such as government bonds and interbank certificates of deposit, has reached new highs, indicating a potential misalignment in market pricing [6].

Core Viewpoint - The recent significant drop in bill discount rates indicates a potential weakening in credit demand, with the 6-month bill discount rate falling to a historical low of 0.2% [1] Group 1: Market Trends - On July 30, the bill discount rates experienced a sharp decline, with the maximum drop reaching 50 basis points (BP) [1] - The 3-month and 6-month bill varieties rebounded in the afternoon, with increases of over 20 BP [1] Group 2: Credit Demand Indicators - The decline in bill rates is viewed as a leading indicator of credit issuance sentiment, suggesting weaker credit demand [1] - July is traditionally a "small month" for credit issuance, and a seasonal decline in credit allocation is expected [1] Group 3: Market Dynamics - The bill market's function as a credit "barometer" has weakened this year due to short-term lending surges, leading to reduced demand for bills [1] - Changes in supply chain payment terms in certain industries have reinforced the substitution effect, impacting bill rates [1]

Group 1 - The bill market experienced significant volatility as the end of the month approached, with banks increasingly focusing on "using bills to fill loans" due to insufficient credit demand [2][5] - On July 30, the bill discount rates saw a sharp decline, with the six-month bill discount rate dropping to 0.2%, marking a historical low, while the three-month rate also fell significantly [3][4] - The overall trend for bill discount rates in July has been downward, with the six-month rate decreasing from 1.19% at the end of June to 0.41%, a drop of 78 basis points [4][5] Group 2 - The significant fluctuations in bill rates indicate a serious imbalance in supply and demand within the bill market, with banks competing for bills leading to a drop in rates [4][6] - The traditional seasonal characteristics of bill rates have been affected, with a notable shift towards short-term loans, which are seen as a substitute for bills [6][7] - The People's Bank of China has increased open market operations to maintain liquidity, with a net injection of 158.5 billion yuan on July 30 [7][8]

Report Title - Fund Selling, Rural Commercial Banks Buying - Tracking of Liquidity and Institutional Behavior [1] Report Date - July 28, 2025 [1] Report Industry Investment Rating - Not provided Core Viewpoints - This week (July 21 - July 25), the money market rates generally increased, the average daily net lending of large banks increased, and funds reduced leverage. The maturity of certificates of deposit increased, and the yields of certificates of deposit at all tenors decreased. In the cash bond market, rural commercial banks were the main buyers, mainly increasing their holdings of 7 - 10Y interest - rate bonds; funds were the main sellers, mainly reducing their holdings of 7 - 10Y interest - rate bonds; insurance companies increased their holdings of ultra - long - term interest - rate bonds, and large banks bought 1 - 3Y interest - rate bonds [3] Summary by Directory 1. Money and Funding Situation - **Open Market Operations**: A total of 1726.8 billion yuan of reverse repurchases matured this week. The central bank conducted reverse repurchase operations of 170.7 billion, 214.8 billion, 150.5 billion, 331 billion, and 789.3 billion yuan from Monday to Friday, respectively, with a total investment of 1656.3 billion yuan. On Friday, 200 billion yuan of MLF matured and 400 billion yuan was invested, resulting in a net liquidity injection of 129.5 billion yuan for the whole week [7][10] - **Funding Rates**: As of July 25, R001, R007, DR001, and DR007 were 1.55%, 1.69%, 1.52%, and 1.65% respectively, with changes of 6.41BP, 18.65BP, 6.08BP, and 14.56BP compared to July 18, and were at the 24%, 13%, 22%, and 9% historical percentiles respectively [7][13] - **Net Funding Flows of Main Institutions**: The net borrowing of the main funding providers (large commercial/policy banks and joint - stock banks) was 448.6 billion yuan for the whole week, an increase of 61.8 billion yuan compared to the previous week. The net borrowing of fund companies and securities companies was - 270.5 billion and - 162.7 billion yuan respectively, with the net borrowing of fund companies decreasing by 309.6 billion yuan and that of securities companies decreasing by 155.1 billion yuan compared to the previous week [7][17] - **Repo Market**: The trading volume of pledged repurchase increased, with an average daily trading volume of 7.7 trillion yuan and a maximum single - day trading volume of 8.04 trillion yuan, a 6.27% increase compared to the previous week's average. The proportion of overnight repurchase transactions decreased, with an average daily proportion of 88.5% and a maximum single - day proportion of 90.3%, a decrease of 0.04 percentage points compared to the previous week's average [7] - **Leverage Ratio**: As of July 25, the leverage ratios of banks, securities firms, insurance companies, and broad - based funds were 103.3%, 186.5%, 127.4%, and 104.9% respectively, with changes of - 0.12BP, - 15.49BP, 1.12BP, and - 0.53BP compared to July 18, and were at the 16%, 0%, 62%, and 23% historical percentiles respectively [7][26] 2. Certificates of Deposit and Bills - **Issuance and Financing of Certificates of Deposit**: The issuance scale of certificates of deposit decreased this week, with a total issuance of 515.69 billion yuan, a decrease of 429.19 billion yuan compared to the previous week. The net financing was - 560.79 billion yuan, a decrease of 702.86 billion yuan compared to the previous week [7][30] - **Maturity of Certificates of Deposit**: The maturity volume of certificates of deposit increased this week, with a total maturity of 1076.48 billion yuan, an increase of 273.67 billion yuan compared to the previous week. Next week (July 28 - August 1), 376.74 billion yuan of certificates of deposit will mature [7][30][36] - **Interest Rates of Certificates of Deposit**: The issuance interest rates of certificates of deposit of all banks and at all tenors increased. As of July 25, the one - year issuance interest rates of joint - stock banks, state - owned banks, city commercial banks, and rural commercial banks increased by 4.17BP, 1BP, 0.17BP, and 1BP respectively compared to July 18. The issuance interest rates of 1M, 3M, and 6M certificates of deposit increased by 0.59BP, 2.15BP, and 4.86BP respectively compared to July 18 [39] - **Shibor Rates**: The Shibor rates increased this week. As of July 25, the overnight, 1 - week, 2 - week, 1M, and 3M Shibor rates increased by 5.8BP, 12.6BP, 16.8BP, 0.9BP, and 0.4BP respectively compared to July 18 [42] - **Yields of Certificates of Deposit at Maturity**: The yields of certificates of deposit at maturity generally increased. As of July 25, the 1M, 3M, 6M, 9M, and 1Y yields of AAA - rated ChinaBond commercial bank certificates of deposit increased by 4.01BP, 4.69BP, 6.16BP, 5.06BP, and 5.75BP respectively compared to July 18 [44] - **Bill Interest Rates**: The bill interest rates decreased. As of July 25, the 3M direct discount rate, 3M transfer discount rate, 6M direct discount rate, and 6M transfer discount rate of national - owned shares decreased by 5BP, 13BP, 8BP, and 9BP respectively compared to July 18 [7][47] 3. Tracking of Institutional Behavior - **Cash Bond Trading**: Rural commercial banks were the main buyers in the cash bond market this week, with a net purchase of 261.7 billion yuan, an increase compared to the previous week. Funds were the main sellers, with a net sale of 358.7 billion yuan, also an increase compared to the previous week. Wealth management products had a net purchase of 107.6 billion yuan [7][49] - **Portfolio Adjustments of Funds**: Funds reduced their holdings of cash bonds by 358.7 billion yuan, including a reduction of 236.1 billion yuan in interest - rate bonds, 22.6 billion yuan in credit bonds, 61.2 billion yuan in other (including Tier - 2 and perpetual bonds), and 39.1 billion yuan in certificates of deposit. In terms of tenor, they mainly reduced their holdings of 7 - 10 - year interest - rate bonds and 1 - 5 - year credit bonds [7][49] - **Portfolio Adjustments of Wealth Management Products**: Wealth management products increased their holdings of cash bonds by 107.6 billion yuan, including an increase of 26.6 billion yuan in interest - rate bonds, 15.3 billion yuan in credit bonds, 15.3 billion yuan in other (including Tier - 2 and perpetual bonds), and 50.5 billion yuan in certificates of deposit. In terms of tenor, they mainly increased their holdings of interest - rate bonds and credit bonds with a tenor of less than 1 year [49] - **Portfolio Adjustments of Rural Financial Institutions**: Rural financial institutions increased their holdings of cash bonds by 261.7 billion yuan, including an increase of 271.1 billion yuan in interest - rate bonds, 4.5 billion yuan in credit bonds, 36.6 billion yuan in other (including Tier - 2 and perpetual bonds), and a reduction of 50.8 billion yuan in certificates of deposit. In terms of tenor, they mainly increased their holdings of 7 - 10 - year interest - rate bonds and 3 - 5 - year credit bonds [49] - **Portfolio Adjustments of Insurance Companies**: Insurance companies increased their holdings of cash bonds by 115.9 billion yuan, including an increase of 66.3 billion yuan in interest - rate bonds, 12.6 billion yuan in credit bonds, 8 billion yuan in other (including Tier - 2 and perpetual bonds), and 29.1 billion yuan in certificates of deposit. In terms of tenor, they mainly increased their holdings of 20 - 30 - year interest - rate bonds and 7 - 10 - year credit bonds [50]

Core Viewpoint - The article discusses the recent trends in the bill discounting market, highlighting the decline in 6M bill discount rates and the implications of interest rate inversion between short-term and long-term bills, indicating banks' strategic positioning for future credit needs [1][2][5]. Group 1: Interest Rate Trends - As of July 18, the 6M national bank bill discount rate fell to 0.81%, marking a significant drop of over 20 basis points since the beginning of July [1]. - The 1M and 3M bill discount rates have remained stable, fluctuating between 1.20% and 1.22% [1][5]. - The volatility of the 6M bill discount rate has decreased significantly in 2023, with fluctuations limited to a few dozen basis points compared to over 150 basis points in previous years [5]. Group 2: Market Dynamics - The inversion of interest rates between short-term and long-term bills may be attributed to banks' proactive measures to secure bill assets in anticipation of credit demand in January [2][6]. - The demand for cross-year bills has increased, with major banks actively purchasing 1-month maturity bills, leading to a gradual decline in their prices [7]. Group 3: Credit Demand and Bill Financing - Despite a lack of significant improvement in overall credit demand, the behavior of bill financing has weakened, with a reported decrease of 464 billion yuan in bill financing during the first half of the year [8][9]. - The trend indicates a shift in banks' strategies, with a notable increase in short-term loans, suggesting a change in the credit structure [9][10]. Group 4: Predictive Value of Bill Rates - The traditional correlation between bill rates and credit demand has weakened, as evidenced by instances where rising bill rates did not align with expected credit growth [10]. - The article notes that the relationship between bill rates and actual credit issuance has diverged, indicating that bill rates may no longer serve as reliable indicators of future credit trends [10].

Report Industry Investment Rating There is no information provided regarding the report industry investment rating. Core Viewpoints - The growth rate of social financing may face pressure in the second half of the year. If there is no additional budget, government bonds will shift from year - on - year increase in the first half to year - on - year decrease in the second half, and non - government bond social financing has been weak due to high real interest rates [2][3][20]. - The low - base effect supports the continued significant rebound of M1 growth rate, and the rebound of social financing growth rate drives the rebound of M2 growth rate. Attention should be paid to the subsequent changes in fiscal deposits [3][4]. - The current stock market rise requires a low - interest - rate environment, and the impact on the bond market from capital flow is limited. The bond market has limited adjustment space, and it is a better allocation opportunity after adjustment. It is expected that bond yields will decline again, and a long - duration position and a dumbbell - shaped allocation are recommended [5][21]. Summary by Related Content Credit Situation - In June, new credit was 2.24 trillion yuan, a year - on - year increase of 110 billion yuan. Corporate short - term credit demand increased, while the improvement of household credit demand was still limited. Corporate medium - and long - term loans and short - term loans increased year - on - year, and bill financing decreased year - on - year. Household medium - and long - term and short - term loans also increased year - on - year, but high - frequency data showed weak real - estate sales [1][8]. Social Financing Situation - In June, new social financing was 4.1993 trillion yuan, a year - on - year increase of 0.9008 trillion yuan, and the year - on - year growth rate of social financing stock was 8.9%, 0.2 percentage points higher than the previous month. Government bonds were still the main support item. However, if there is no additional budget, subsequent bond supply will decrease year - on - year, and social financing growth rate may decline [2][13]. - In the first half of this year, the increase in social financing mainly came from government bonds. The annual budget increment of government bonds is 13.86 trillion yuan. After deducting the issued part in the first half, the net financing scale in the second half is expected to be about 6.1 trillion yuan, compared with about 8 trillion yuan in the same period last year [3][20]. M1 and M2 Situation - In June, the new - caliber M1 increased by 4.6% year - on - year, a rebound of 2.3 percentage points from May, mainly due to the low - base effect last year [3][15]. - In June, M2 increased by 8.3% year - on - year, a rebound of 0.4 percentage points from the previous month. The increase in social financing growth rate promoted the rebound of M2 growth rate. With the slowdown of government bond issuance in the second half, fiscal deposits may decrease year - on - year, increasing the capital supply in the market [4][18]. Stock and Bond Market Situation - The recent rise in the stock market is mainly driven by valuation recovery and requires a low - interest - rate environment. The impact of the stock market on the bond market's capital is limited. The bond market has limited adjustment space, and it is expected that bond yields will decline again. A long - duration position and a dumbbell - shaped allocation are recommended, with the 10 - year Treasury bond yield expected to fall to 1.4% - 1.5% [5][21].