1. Report Industry Investment Rating No information provided in the given content. 2. Core Viewpoints of the Report - Last week, the bond market strengthened with fluctuations. Credit bonds experienced a recovery after a sharp decline, with most major - term varieties rising more than interest - rate bonds. However, some weakly - qualified urban investment bonds had a "catch - up decline" [2][9]. - The ultra - long - term credit bonds also warmed up, with the second - tier perpetual (Er Yong) ultra - long bonds rising more, while the ultra - long urban investment bonds rising relatively less [2][10]. - The Er Yong bonds continued to show the characteristic of a "volatility amplifier", and the 3 - year and above terms had higher increases than general credit and ultra - long - term credit bonds of the same terms [3][15]. - The recovery last week was mainly led by allocation - oriented institutions such as wealth management and insurance funds. Public funds and other trading desks participated less actively [4][23]. - The growth rate of the scale of credit bond ETF - like products, the main driving factor of the previous "independent bull" market of credit bonds, slowed down last week [4][26]. - Currently, the strategy should focus on liquidity. There are still some opportunities in 3 - 5 - year bank secondary capital bonds, and there are also good opportunities in 1 - 3 - year low - quality urban investment bond sinking + riding [4][28]. 3. Summary by Relevant Catalogs 3.1 Credit Repair Rhythm - **Bond Market Trend**: Last week, the bond market was affected by the "anti - involution" policy expectation and the "see - saw" effect of the equity and commodity markets in the first half of the week, and then stabilized in the second half. However, the sudden rumor of tax policy changes on Friday caused fluctuations at the end of the session. Interest - rate bonds showed a "V - shaped" trend with yields oscillating downward. Credit bonds strengthened in tandem with interest - rate bonds, and most of them recovered more, but some weakly - qualified urban investment bonds had a "catch - up decline" [2][9]. - **Yield Changes**: From July 28 to August 1, 2025, the yields of 1Y, 2Y, 3Y, 4Y, and 5Y treasury bonds decreased by 1.01BP, 0.97BP, 3.26BP, 3.87BP, and 3.62BP respectively. The yields of the same - term AAA medium - term notes decreased by 4.14BP, 4.96BP, 2.98BP, 5.69BP, and 3.44BP respectively. The yields of AA+ medium - term notes decreased by 4.03BP, 4.96BP, 2.98BP, 5.69BP, and 2.44BP respectively. The yields of 2Y - 5Y AA - urban investment bonds increased by 3.56BP, 1.99BP, 3.80BP, and 3.09BP respectively [9][11]. - **Ultra - long - term Credit Bonds**: The ultra - long - term credit bonds warmed up, with most of their increases exceeding those of the same - term interest - rate bonds. The yields of AAA/AA+ 10Y medium - term notes decreased by 4.00BP and 6.00BP respectively. The yields of AAA/AA+ 10Y urban investment bonds decreased by 2.06BP and 0.06BP respectively. The yield of AAA - 10Y bank secondary capital bonds decreased by 5.49BP, while the 10Y treasury bond yield only decreased by 2.65BP [10]. - **Curve Shape**: The steepness of all - grade 1 - 2 years and low - grade 2 - 3 years was the highest, basically the same as at the end of May. Taking the yield term structure diagrams of AA+ medium - term notes and AA urban investment bonds as examples, the slopes of the 1 - 2 - year, 2 - 3 - year, and 3 - 5 - year intervals of AA+ medium - term notes were 0.0965, 0.0679, and 0.0705 respectively; those of AA urban investment bonds were 0.1265, 0.0969, and 0.0677 respectively [12]. - **Historical Quantiles**: After the sharp decline, the credit repair rhythm was moderate. The short - duration repair amplitude was large, and the high - grade 3Y - 5Y still had some cost - effectiveness. From July 28 to August 1, 2025, the valuation maturity yields of 1Y - AAA, 3Y - AAA, 5Y - AAA, 1Y - AA+, 3Y - AA+, 5Y - AA+, 1Y - AA, and 3Y - AA ChinaBond medium - and short - term notes were at the 9.06%, 22.41%, 20.90%, 5.79%, 8.81%, 13.60%, 4.03%, and 12.59% levels since 2024 respectively. The historical quantiles of credit spreads were 8.22%, 27.58%, 26.79%, 5.83%, 15.64%, 24.66%, 5.03%, and 29.97% respectively, and the protection cushion for 3Y - 5Y was strengthened [13]. 3.2 Er Yong Bonds - **Market Performance**: The Er Yong bonds strengthened and continued to show the characteristic of a "volatility amplifier". The increases of 3 - year and above terms exceeded those of general credit and ultra - long - term credit bonds of the same terms. The 1 - year - within and 7 - year - and - above parts of the curve were relatively flat, and the 2 - 6 - year curve was the steepest. The yields of 1 - 5 - year, 7 - year, and 10 - year AAA - bank secondary capital bonds decreased by 5.48BP, 7.26BP, 7.78BP, 6.03BP, 6.43BP, 4.39BP, and 5.49BP respectively [3][15]. - **Active Trading**: The trading sentiment was enthusiastic throughout the week, and the Er Yong bonds were the most active variety. From July 28 to August 1, the low - valuation trading ratios of Er Yong bonds were 100.00%, 0.00%, 100.00%, 100.00%, and 100.00% respectively; the average trading durations were 6.84 years, 0.53 years, 7.03 years, 7.25 years, and 4.39 years respectively. The discount trading amplitudes of Er Yong bonds were small, with only one discount trading amplitude exceeding 3BP. The low - valuation trading amplitudes were generally high, with 52.5% of the low - valuation trading amplitudes between 3BP - 5BP [3][17]. 3.3 Ultra - long - term Credit Bonds - **Selling Willingness**: Institutions' willingness to sell ultra - long - term credit bonds was average. Although there was a recovery last week, the selling pressure was not weak in terms of the discount trading amplitude. From July 28 to August 1, the discount trading ratios of ultra - long - term credit bonds were 20.00%, 100.00%, 47.50%, 7.50%, and 10.00% respectively. The discount amplitudes were not small, and there were also transactions with a discount of more than 4BP. About 44% of the discount trading amplitudes exceeded 3BP [3][18]. - **Buying Willingness**: The market's willingness to buy ultra - long - term credit bonds was also strong. Other highly - active trades were mainly some short - term real - estate and financial flawed individual bonds. From July 28 to August 1, the low - valuation trading ratios of ultra - long - term credit bonds were 97.50%, 0.00%, 57.50%, 90.00%, and 60.00% respectively. During the market recovery last week, institutions' buying willingness was strong, and about 55% of the low - valuation trading amplitudes were above 3BP [20][23]. 3.4 Institutional Behavior - **Dominant Institutions**: The recovery last week was mainly led by allocation - oriented institutions such as wealth management and insurance funds. Public funds and other trading desks participated less actively. Funds and other trading desks reduced their holdings of credit bonds during the sharp decline in the bond market the week before last. With the bond market recovery last week, they turned from net sellers to net buyers of general credit bonds, but the overall increase in positions was small [4][23]. - **Wealth Management and Insurance**: Banks' wealth management and insurance institutions bought on dips after the sharp decline in the bond market. Banks' wealth management's buying intensity of general credit bonds and ultra - long - term credit bonds has increased for three consecutive weeks. In terms of market scale, the month - on - month increase in June and July was in the order of hundreds of billions of yuan [4][23]. - **Credit Bond ETFs**: The growth rate of the scale of credit bond ETF - like products, the main driving factor of the previous "independent bull" market of credit bonds, slowed down last week. Specifically, the week - on - week scale of credit benchmark - making ETF products has slowed down since the second week of July, and the week - on - week change has turned negative in the last two weeks. The week - on - week scale of science and technology innovation ETF products has also slowed down significantly in the last two weeks. In addition, the trading activity of the underlying bonds of ETF products has also decreased significantly, especially for the underlying bonds of science and technology innovation bonds, with about 60% of the underlying bonds falling more than non - underlying bonds [26].