Investment Rating - Industry Rating: Outperform the market (maintained rating) [4] Core Insights - The report emphasizes the dual attributes of bills, highlighting their role as effective indicators for assessing credit conditions due to their high-frequency data updates [1][2] - Bill rates are influenced by both funding and credit attributes, with the funding environment primarily determining the central rate of bills, while credit attributes can dominate at critical times [2][3] - The report identifies five dimensions to observe bill rates' credit attributes, including seasonal trends, supply-demand imbalances, arbitrage behaviors, policy-driven shifts, and yield curve expectations [3] Summary by Sections 1. Bill Quantity and Price Indicator System - Bill rates are categorized into direct discount rates, transfer discount rates, and re-discount rates, with transfer discount rates becoming the pricing center as marketization progresses [11][12] - The main sources for publicly available bill quantity indicators are the central bank and the Shanghai Bill Exchange, reflecting the financial system's support for the real economy [19][20] 2. Determinants of Bill Rates - Dual Funding and Credit Attributes - Bills possess funding attributes as short-term financial assets, closely linked to banks' transfer discount and repurchase operations [31][32] - The credit attributes of bills are rooted in their classification as credit assets, influencing banks' credit structure and lending practices [34][35] 3. Relationship Between Bill Rates and Money Market Rates - Bill rates generally move in tandem with repo rates and certificate of deposit rates, but can diverge under certain conditions [3][10] - The report discusses the implications of monetary policy on bill rates, noting that a tightening of the funding environment leads to higher bill rates [46][50] 4. Observing Credit Attributes of Bill Rates - Seasonal patterns in bill rates are noted, with higher rates at the beginning of the year and lower rates towards the end, reflecting seasonal credit disbursement trends [3][50] - The occurrence of "zero-rate" scenarios is highlighted, where supply-demand imbalances can lead to significant drops in bill rates [3][26] 5. Regulatory Policies Impacting Bill Quantity and Price - New regulations are pushing bills back to their payment settlement attributes, which may alleviate seasonal fluctuations in quantity and price [5][34] - The report discusses the impact of capital regulations on the supply-demand dynamics of bills, indicating a potential easing of conflicts in the bill market [34][36]