1. Report Industry Investment Rating - The investment rating for treasury bonds is "oscillation" [5] 2. Core Viewpoints of the Report - This week (October 20 - 26), treasury bond futures fluctuated and declined. Next week, the main - line logic of the bond market remains unclear, affected by multiple factors such as market risk appetite, Sino - US trade negotiations, and tax payment periods, and is expected to oscillate slightly weaker. However, the adjustment of the bond market should be temporary. After entering November, there will be limited incremental policies, and the bond market should shift its focus to fundamentals, with a repair market emerging [1][2][14] 3. Summary by Directory 3.1 One - week Review and Views 3.1.1 This Week's Trend Review - Treasury bond futures fluctuated and declined this week. As of October 24, the settlement prices of the main contracts of 2 - year, 5 - year, 10 - year, and 30 - year treasury bond futures were 102.334, 105.615, 108.015, and 115.030 yuan respectively, down 0.044, 0.160, 0.250, and 0.700 yuan from last weekend [1][12] 3.1.2 Next Week's Viewpoint - The bond market is expected to oscillate slightly weaker next week. The adjustment is temporary, and there should be a repair market in November. Currently, opportunities for adjustment buying and band trading can be grasped. Attention should be paid to changes in market risk appetite, Sino - US trade negotiation results, and the impact of tax payment periods [14][16] 3.2 Weekly Observation of Interest - rate Bonds 3.2.1 Primary Market - This week, 107 interest - rate bonds were issued, with a total issuance volume of 107.6278 billion yuan and a net financing amount of 8.4691 billion yuan. The net financing of local government bonds and inter - bank certificates of deposit increased [24][25] 3.2.2 Secondary Market - Most treasury bond yields rose. As of October 24, the yields of 2 - year, 5 - year, 10 - year, and 30 - year treasury bonds were 1.49%, 1.62%, 1.85%, and 2.21% respectively. The spreads of 10Y - 1Y, 10Y - 5Y, and 30Y - 10Y all narrowed [29] 3.3 Treasury Bond Futures 3.3.1 Price, Trading Volume, and Open Interest - Treasury bond futures fluctuated and declined. The trading volumes of 2 - year, 5 - year, 10 - year, and 30 - year treasury bond futures this week were 28,761, 52,786, 79,022, and 138,621 lots respectively, down 858, 6,584, 17,299, and 5,756 lots from last week. The open interests were 76,489, 154,308, 264,330, and 179,114 lots respectively, with changes of +1,958, - 1,892, +4,151, and - 672 lots from last week [37][40] 3.3.2 Basis and IRR - This week, treasury bond futures adjusted slightly, with narrow - range oscillations in basis. IRR was generally lower than the certificate of deposit rate, and it was difficult to grasp positive arbitrage opportunities. Next week, there is still adjustment pressure, but the necessity of short - hedging is not high [43][44] 3.3.3 Inter - delivery and Inter - variety Spreads - As of October 24, the inter - delivery spreads of 2 - year, 5 - year, 10 - year, and 30 - year treasury bond futures contracts 2512 - 2603 were +0.080, +0.115, +0.330, and +0.290 yuan respectively. Currently, there are few trading opportunities for inter - delivery spread strategies [48] 3.4 Weekly Observation of the Funding Situation - This week, the central bank's open - market net injection was 19.81 billion yuan. As of October 25, R007, DR007, SHIBOR overnight, and SHIBOR 1 - week were 1.46%, 1.41%, 1.32%, and 1.41% respectively. The average daily trading volume of inter - bank pledged repurchase was 7.83 trillion yuan, less than last week [53][55][57] 3.5 Weekly Overseas Observation - The US dollar index strengthened slightly, and the 10Y US Treasury yield oscillated narrowly. As of October 24, the US dollar index rose 0.39% to 98.9417, and the 10Y US Treasury yield was 4.02%. The probability of a US interest - rate cut next week is relatively high [63] 3.6 Weekly Observation of High - frequency Inflation Data - This week, industrial product prices rose across the board, and agricultural product prices showed mixed trends. As of October 24, the Nanhua Industrial Product Index, Metal Index, and Energy and Chemical Index rose, while the prices of pork, 28 key vegetables, and 7 key fruits showed different changes [66] 3.7 Investment Recommendations - The market is expected to be weak next week, but the adjustment is temporary. It is recommended to seize the opportunity of adjustment buying [67]

Group 1 - The People's Bank of China (PBOC) conducted a 1.378 trillion yuan 7-day reverse repurchase operation at an interest rate of 1.40%, maintaining the previous rate, resulting in a net injection of 1.378 trillion yuan due to no reverse repos maturing on that day [1] - From September 28 to October 11, the central bank's reverse repo net withdrawal reached 1.3304 trillion yuan, with a significant operation of 1.1 trillion yuan 3-month reverse repos announced on October 9, contrasting with a net injection of 300 billion yuan for the month [1] - Despite the large-scale reverse repos maturing after the holiday, funding prices gradually returned to pre-quarter-end levels, with overnight funding rates dropping to 1.33%, down 21 basis points from before the holiday [1] Group 2 - The upcoming week (October 13-17) will see a decrease in reverse repo maturities to 1.021 trillion yuan, with significant amounts maturing on Thursday and Friday, and a total of 8 billion yuan 3-month reverse repos maturing on Tuesday [2] - Analysts expect the funding environment to remain loose, as the central bank's proactive measures and limited government bond net payments will help mitigate external disturbances [2] - The liquidity test in October is anticipated to be concentrated at the end of the month, with tax payment deadlines delayed to October 27, coinciding with the month-end liquidity pressure [3] Group 3 - The PBOC's liquidity injection tools have shifted towards longer-term MLF and reverse repos since the third quarter, reducing the necessity for frequent short-term operations [4] - Despite the increase in reverse repo maturities post-holiday, the central bank's consistent stance on liquidity provision suggests limited impact on the funding environment [4] - Analysts from Citic Securities believe that the liquidity gap in October may be weaker than seasonal trends, with the central bank's monetary policy remaining accommodative [3][4]

Group 1: Market Overview - The tax period has initiated, leading to a marginal tightening of liquidity, with R001 remaining stable at 1.35% for 10 consecutive trading days[1] - On August 15, the central bank switched to a net injection of CNY 116 billion, with R001 rising by 9 basis points to 1.44%[1][11] - The CNEX liquidity sentiment index increased to 50-54 on August 14, indicating a shift in market sentiment[1] Group 2: Future Outlook - Following the tax period, liquidity is expected to ease, with overnight rates likely returning to around OMO-5 basis points[2] - The government bond net payment decreased to CNY 2,641 billion, significantly lower than the previous week's CNY 4,604 billion[5][31] - The upcoming week (August 18-22) will see a total of CNY 9,318 billion maturing in the open market, including CNY 7,118 billion in reverse repos[3][20] Group 3: Interbank Market - The weighted issuance rate of interbank certificates of deposit rose slightly to 1.61%, up 1 basis point from the previous week[6][36] - The total issuance of interbank certificates of deposit was CNY 7,747 billion, with a net financing of -CNY 1,318 billion[6][44] - The average maturity of interbank certificates of deposit extended to 8.1 months, compared to 6.4 months the previous week[6][45]