1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints - The report is overall optimistic about the bond market, especially the 30-year Treasury bonds [5][12]. - The callback risk of the bond market from March to April is not high [5][12]. - The 10-year China Development Bank bonds are more promising than the 10-year Treasury bonds [5][13]. - The 30-year Treasury bonds are expected to have an excessive decline in interest rates if product accounts gradually participate in the allocation [5][14]. 3. Summary by Relevant Catalogs Event - Amid geopolitical disturbances recently, the stock market is weak while the bond market is strong. As of March 4, the yield to maturity of the active 10-year Treasury bond has declined to around 1.79% [11]. Comment Low Callback Risk from March to April - The February PMI is lower than market expectations and has declined month-on-month. In the short term, fundamentals have limited suppressing effects on the bond market [5][12]. - Market expectations for loose monetary policy have risen. Investors expect reserve - requirement ratio cuts and interest rate cuts during the Two Sessions. As of March 3, the capital lending volume of large banks has rebounded to 5.63 trillion yuan after the holiday. The short - term interest rate was strong on March 4, with the TS contract main - continuous rising 5% on a single day [5][12]. - Attention should be paid to potential geopolitical fluctuations and the historical stock - bond calendar effect from March to April [5][12]. Preference for 10 - year China Development Bank Bonds over 10 - year Treasury Bonds - The liquidity of 10 - year Treasury bonds is under test. On March 4, the trading volume of the active 10 - year Treasury bond 250022 was only 354 transactions, while that of the 10 - year China Development Bank bond 250220 reached 2484 transactions [5][13]. - The tax spread between 10 - year China Development Bank bonds and 10 - year Treasury bonds has been widening since 2025. If the liability side of public funds eases and the bearish bond market expectation weakens, the tax spread of various maturities is expected to compress [5][13]. Optimism about 30 - year Treasury Bonds - As of the end of February, public funds only held 315 billion yuan of the secondary - market position of the active bond 2500006, while large banks held 633 billion yuan. If product accounts gradually participate in the allocation of ultra - long bonds, the interest rate of this variety will decline excessively [5][14]. - Banks will gradually reduce their willingness to lend bonds around mid - to - late March to optimize first - quarter statement indicators. Currently, the net borrowing volume of securities firms in 30 - year Treasury bonds is at a new high, and the subsequent decline will drive short - covering forces [5][14].

Report Industry Investment Rating No relevant content provided. Core View of the Report - The current active bond has successfully switched to "25 Ultra - long Special Treasury Bond 06" ("Te 6"), and the spread between it and the previous active bond "25 Ultra - long Special Treasury Bond 02" ("Te 2") has fluctuated between 8 - 16bp and is now around 8bp. The spread may decline further, but the compression process may be long and the space is relatively limited [7][10]. - The compression of the spread is restricted by two factors: the rapid increase in the trading activity of "25 Coupon - bearing Treasury Bond 02" and the impact of value - added tax [21][22]. Summary According to the Directory 1. Bond Market Weekly View: Limited Spread Compression Space after Bond Switching - From the perspective of liquidity premium, the spread between the new and old bonds after the bond switch may widen temporarily but will eventually decline. The subsequent issuance of the new bond under the original code has a weak impact on the spread compression. Attention should be paid to the trading activity of "25 Coupon - bearing Treasury Bond 02" [7][20]. - Due to the difference in the start date of issuance and the value - added tax policy, there should be a certain tax spread between Te 6 and Te 2. The actual tax spread may be lower than the theoretical one. The spread compression is restricted by the activity of "25 Coupon - bearing Treasury Bond 02" and value - added tax [21][22]. 2. This Week's Focus in the Fixed - Income Market: Accelerated Issuance of Local Bonds 2.1 Attention to Domestic Economic Data - This week, China will release data such as October's social retail sales and industrial added value, and the US will release data like October's seasonally adjusted CPI, PPI, and the EIA monthly short - term energy outlook report. The Bank of Japan will release the summary of opinions of the Monetary Policy Meeting in October [23][24]. 2.2 This Week's Expected Interest - Rate Bond Issuance is 708.1 billion - The issuance scale of interest - rate bonds this week is expected to be 708.1 billion, including 293 billion of treasury bonds, 285.1 billion of local bonds, and about 130 billion of policy - bank bonds [24][25]. 3. Review and Outlook of Interest - Rate Bonds: The Bond Market Gave Back Some Gains 3.1 Net Withdrawal of 1.57 trillion in Open - Market Operations - At the beginning of the month, there was a large - scale maturity of reverse repurchases, and the overall net withdrawal was 1.57 trillion. The repurchase volume increased seasonally, and the funds rate fluctuated after falling to a low level [29][31]. - The issuance scale of certificates of deposit decreased, and the issuance was mainly in medium - term tenors. The issuance rates of different tenors showed differentiation [37]. 3.2 Bond Market Interest Rates Rose on the Whole - Last week, the bond market gave back some gains. Although the export data declined more than expected, the bond market interest rates rose mainly due to factors such as fund fluctuations and the rise of the equity market. The yields of 10Y treasury bonds and 10Y CDB active bonds increased by 1.4bp each, and the 5Y CDB bond had the largest increase of 5bp [7][49]. 4. High - Frequency Data: Commodity Prices Declined - On the production side, the operating rates were divided. The daily average crude steel output in late October decreased year - on - year. On the demand side, the year - on - year growth rates of passenger car wholesale and retail improved, while the year - on - year growth rate of commercial housing transaction area was still weak. The export index showed differentiation [55]. - In terms of prices, crude oil, copper, and aluminum prices declined, and coal prices were divided. The building materials price index decreased, and the prices of downstream vegetables and pork increased [56].