Group 1 - The core viewpoint of the report emphasizes that identifying performance turning points is crucial for the market to emerge from the bottom-seeking phase, with market bottoms typically appearing 1-2 quarters ahead of performance turning points [4] - The report highlights that while the Plinger synchronous indicators are essential, they should be analyzed in conjunction with leading indicators to improve the accuracy of economic bottom assessments [4][5] - The report indicates that the key to breaking out of the bottom-seeking phase lies in the sustainability of M1 recovery, with household medium and long-term loans being a more critical indicator [4][5] Group 2 - The report notes that in July, the manufacturing PMI fell to 49.3%, remaining in the contraction zone, indicating a slight decline in macroeconomic conditions [6][7] - It mentions that the social financing scale increased by 1.16 trillion yuan in July, which is 389.3 billion yuan more than the same period last year, with a slight recovery in new government bonds but a negative turn in new RMB loans [12][22] - The report states that M1 and M2 both showed year-on-year increases in July, with M1 at +5.6% and M2 at +8.8%, reflecting a rebound in excess liquidity [9][12] Group 3 - The report discusses that the decline in household medium and long-term loans is significant, with July showing a year-on-year decrease of 9.68%, compared to the previous value of -1.32% [15][16] - It highlights that the DR007 rate fell to an average of 1.52% in July, indicating a stabilization of liquidity prices, which is a necessary condition for the market to find a bottom [18][19] - The report concludes that the overall economic environment is characterized by a recovery in leading indicators, while synchronous and lagging indicators are showing slight declines, suggesting a complex market outlook [22][23]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report - The 50 - year treasury bond has performed well recently, with the spread between 50 - year and 30 - year treasury bonds continuously narrowing. The current 50 - 30 year treasury bond spread is at a neutral level, with limited room for further compression and limited adjustment pressure [1][4]. 3. Summary by Related Contents 3.1 Performance of 50 - year Treasury Bonds - The 50 - year treasury bond has become an increasingly important trading variety in the low - coupon period. The spread between 50 - year and 30 - year treasury bonds decreased from 15.6bps on June 16th to 8.4bps on July 4th, a cumulative decrease of 7.2bps, and is now below the 2023 average. The current stock of 50 - year treasury bonds has reached 1.3 trillion, making it a significant investment variety [1][7]. 3.2 Factors Affecting the 50 - 30 Year Treasury Bond Spread - **Fundamentals**: Fundamental indicators such as PMI, CPI, and PPI have no significant correlation with the 50 - 30 year treasury bond spread in recent years, indicating that fundamentals have little explanatory power for this spread, which mainly reflects asset attribute differences [1][10]. - **Turnover Rate**: Since 2023, the turnover rate of ultra - long bonds has increased significantly. In June this year, the monthly turnover rate of 50 - year treasury bonds reached 7.5%, exceeding that of 30 - year treasury bonds. There is a certain correlation between the difference in turnover rates of 50 - year and 30 - year treasury bonds and the 50 - 30 year treasury bond spread. As the liquidity of 50 - year treasury bonds improves, the liquidity premium decreases, leading to a trend compression of the spread [2][12]. - **Stock Market Risk Preference**: The risk preference reflected by the stock market has a certain positive correlation with the 50 - 30 year treasury bond spread. Historically, the spread between 50 - year and 30 - year treasury bonds has a certain positive correlation with the Wind All - A Index, suggesting that 30 - year treasury bonds can better represent market risk preference. However, it remains to be seen whether this relationship will change as the liquidity of 50 - year treasury bonds improves [2][16]. - **Funding Price and Bond Supply**: There is a certain negative correlation between the 50 - 30 year treasury bond spread and R007, indicating that the funding price has an impact on the curve slope, but the overall correlation is not significant. The net financing of 50 - year and 30 - year treasury bonds and their difference have a weak correlation with the 50 - 30 year treasury bond spread, but they have had a strong impact on the spread since last year [3][18]. 3.3 Quantitative Pricing Model - A quantitative pricing model was constructed using the monthly average of R007, the monthly net financing difference between 50 - year and 30 - year treasury bonds, the monthly average turnover rate difference between 30 - year and 50 - year treasury bonds, and the Wind All - A Index as explanatory variables to explain the 50 - 30 year treasury bond spread. The regression results show that the model has relatively strong explanatory power, and all four variables can strongly explain the ultra - long bond term spread [3][20]. 3.4 Current Situation and Outlook of the 50 - 30 Year Treasury Bond Spread - The June fitting value of the 50 - 30 year treasury bond spread was 4.9bp, slightly lower than the current 8.4bps. Assuming that the turnover rates of 50 - year and 30 - year treasury bonds are at the average of the past two months, R007 is at 1.5%, the stock index remains at the current level, and net financing is calculated according to the bond issuance plan, the fitting value of the 50 - 30 year treasury bond spread in the next few months will be around 7.4bps, close to the current spread. Therefore, the current 50 - 30 year spread is at a neutral level, with limited room for further compression and limited adjustment risk in a context of continuous liquidity easing and active trading of 50 - year treasury bonds [4][23].

Report Industry Investment Rating No relevant content provided. Core View of the Report - Leverage can be more aggressive, and positions can be heavier. The certainty of loose funds allows for a more active leverage strategy, and a heavier position can increase bargaining chips in subsequent market games [2][3][17]. - The growth of financing is mainly from the government sector, and the gap between deposit and loan growth rates is still being repaired. The risk of the bank's liability side has been significantly alleviated, reducing the risk of liquidity tightening [2][9]. - The two operations of the repurchase agreement mainly aim to reduce uncertainty, and the change in the scale of medium - and long - term liquidity injection this month may be small [2][11]. - The downward breakthrough of the overnight price center is related to the recovery of the large banks' lending capacity, and the downward trend of the capital price center has not reached its end [2][13]. - Seasonal fluctuations in capital prices will still exist. In the first and middle of July, capital prices may continue the downward trend, and the capital market may return to a stable and loose state [3][15]. Summary by Directory 1 Leverage can be more aggressive - **Previous Views Summary** - There is a possibility that the capital market will be more loosely liquid than expected. There is a chance that the capital price center will be below 1.4%. - The reasonable pricing center for the NCD of state - owned and joint - stock banks after the decline of capital prices in the future may be 1.6%. Currently, 1.7% is too high, and it has obvious allocation value, but it is difficult for the CD interest rate to decline significantly in June. - The main line of the bond market is the downward repair of liability costs and the return repair of position losses, which requires time. After the interest rate reaches a relatively low level, trading often fluctuates between "anticipating the market" and "falling behind" [8]. - **Financing and Credit Situation** - In May, credit growth was still weak. Corporate sector credit increased less year - on - year, and the long - term credit of the household sector showed a stable trend. Corporate sector bond financing increased slightly year - on - year, possibly related to the opening of the bond technology board. Government bonds increased by 236.7 billion year - on - year, and the growth of financing still relied on the government sector [9]. - **Function of Repurchase Agreement Operations** - The two operations of the repurchase agreement this month totaled an injection of 1.4 trillion, but considering the possible 1.2 trillion maturity in the same month, the net injection scale for the whole month is not large. The MLF and the repurchase agreement are currently in a relatively balanced state, and the space for large - scale incremental injection is decreasing. These two operations should be considered comprehensively [11]. - **Factors Affecting Capital Price Center** - The downward breakthrough of the overnight price center is related to the recovery of the large banks' lending capacity. After April, the liability risk problem of large banks has been significantly alleviated. The performance of the capital market in the past two weeks has verified that the large banks' lending capacity has recovered, and the downward trend of the capital price center has not ended [13]. - **Seasonal Fluctuations of Capital Prices** - In mid - June, there is the impact of the tax period, and in late June, the cross - quarter factor will dominate the trend of capital prices. Near the end of the month, fiscal funds may be released to supplement liquidity. In July, the tax period is relatively large, and the fluctuation of the capital market may increase. Before that, in early and mid - July, capital prices may continue the downward trend, and the capital market may return to a stable and loose state [3][15]. - **Bond Market Strategy** - Recently, the short - end and long - end of the bond market still have downward space, but the long - end space is still limited. The 1 - year treasury bond has returned to the recent low, and it is not difficult for it to break through downward. The downward range of short - end treasury bond interest rates can be larger than that of other short - end varieties, which may bring some changes to the flat treasury bond yield curve. Therefore, the leverage strategy can be more aggressive, and a heavier position can increase bargaining chips in subsequent market games [3][17].

Core Insights - The report emphasizes that identifying the performance turning point is crucial for the market to move out of the bottom-seeking phase, with market bottoms typically leading performance turning points by 1-2 quarters [2] - The report highlights the importance of combining leading indicators with coincident indicators for better economic bottom assessments, as relying solely on coincident indicators may lead to delayed confirmations [2] - The key to breaking out of the bottom-seeking phase lies in the sustainability of M1 recovery, with household medium and long-term loans being a more critical indicator [2] Economic Indicators - The April manufacturing PMI significantly dropped to 49%, indicating a contraction for the first time since February, down from 50.5% [4] - M1 showed a slight year-on-year decline, while M2 increased, and the total social financing stock rose year-on-year, indicating a rebound in excess liquidity [7] - The total social financing increment in April was 1.16 trillion yuan, which is 12.243 billion yuan more than the same period last year, with a slight recovery in new government bonds but a negative year-on-year change in new RMB loans [9] Leading Indicators - The report notes that M2 leads M1, which in turn leads the stock market bottom, with M2 showing a year-on-year increase of 8% in April, up from 7% [7] - The social financing pulse increased to 26.16% in April, up from 25.41%, with new government bonds showing a slight recovery while new RMB loans turned negative [9] - The report indicates that the decline in household medium and long-term loans is closely related to the real estate sales cycle, with April showing a year-on-year decrease of 12.97% for household medium and long-term loans [12] Monetary Policy and Market Sentiment - The report discusses that the narrowing of the decline in household and corporate loans is essential for market recovery, with the April average DR007 rate marginally dropping to 1.73% [15] - The central bank's recent decision to lower the reserve requirement ratio and policy interest rates is aimed at stabilizing the market [15] - The report mentions that the recovery in social financing and M2, along with improved export performance, reflects a resilient Chinese economy despite the macroeconomic downturn [18]

Core Viewpoint - The bond market is experiencing fluctuations with a potential strengthening trend in credit bonds as leverage levels may gradually recover due to low funding costs [1][7]. Market Performance - On May 7, the bond market showed weakness, with government bond futures closing down across the board. The 30-year main contract fell by 0.62%, while the 10-year main contract decreased by 0.19% [2]. - The yield on the 10-year government bond increased by 1.25 basis points to 1.7075%, and the 30-year government bond yield rose by 2.7 basis points to 1.89% [2]. Funding Conditions - The central bank conducted a reverse repurchase operation of 1,955 billion yuan at a rate of 1.50%, resulting in a net withdrawal of 3,353 billion yuan for the day [5]. - The Shibor rates for overnight and 7-day terms decreased by 4.5 basis points and 4.6 basis points, respectively, indicating a continued easing of funding conditions [5]. Institutional Insights - Huatai Fixed Income suggests that the bond market may see increased volatility in May and June, with a higher probability of interest rates breaking lower [7]. - Guosheng Fixed Income anticipates a gradual recovery in market leverage, with credit bonds likely to strengthen from the short end [7]. - Huachuang Securities emphasizes the importance of the trend in secondary market repurchase rates, predicting a narrowing of the yield curve as funding rates approach 1.4% [7].

Group 1: Investment Ratings - Short - term bullish on Treasury bonds [3] - The stock index is expected to oscillate with a slight upward trend [1] Group 2: Core Views Stock Index - The EU plans to expand counter - measures; if negotiations fail, it will impose tariffs on $100 billion worth of US goods. Meetings between US and Canadian leaders have different stances. High - level China - US economic and trade talks and the 10th China - France High - level Economic and Financial Dialogue will be held. The spokesman of the Ministry of Commerce answered questions about the China - US economic and trade talks. Relevant departments will introduce "a package of financial policies to support market stability and expectations". With multiple positive factors, the stock index may oscillate with a slight upward trend [1] Treasury Bonds - The impact of the stock - bond seesaw on the bond market is not significant. The core factor restricting the decline of yields is the capital price. Although the overall capital situation is balanced, the central bank's actions in April and after the holiday show the restraint of the capital market. The "relatively high" capital interest rate is the biggest obstacle to the decline of current yields [2] Group 3: Market Review Stock Index - The main contract futures of CSI 300 rose 1.13%, the main contract futures of SSE 50 rose 0.67%, the main contract futures of CSI 500 rose 1.99%, and the main contract futures of CSI 1000 rose 2.39% [4] Treasury Bonds - The 10 - year main contract fell 0.01%, the 5 - year main contract fell 0.04%, the 30 - year main contract rose 0.11%, and the 2 - year main contract fell 0.06% [6] Group 4: Technical Analysis Stock Index - The KDJ indicator shows that the broader market will oscillate with a slight upward trend [5] Treasury Bonds - The KDJ indicator shows that the T main contract will oscillate with a slight upward trend [7] Group 5: Strategy Suggestions Stock Index - Oscillatory operation [2] Treasury Bonds - Short - term bullish [3] Group 6: Futures Data | Date | Futures Variety | Closing Price (yuan/piece) | Change Rate (%) | Trading Volume (lots) | Open Interest (lots) | | --- | --- | --- | --- | --- | --- | | 2025/05/06 | CSI 300 Continuous | 3766.20 | 1.13 | 47831 | 138953 | | 2025/05/06 | SSE 50 Continuous | 2629.60 | 0.67 | 25377 | 44285 | | 2025/05/06 | CSI 500 Continuous | 5622.00 | 1.99 | 43200 | 97319 | | 2025/05/06 | CSI 1000 Continuous | 5953.20 | 2.39 | 107389 | 160100 | | 2025/05/06 | 10 - year Treasury Bond Continuous | 109.04 | - 0.01 | 49555 | 189565 | | 2025/05/06 | 5 - year Treasury Bond Continuous | 106.06 | - 0.04 | 46541 | 155595 | | 2025/05/06 | 30 - year Treasury Bond Continuous | 120.97 | 0.11 | 61695 | 102169 | | 2025/05/06 | 2 - year Treasury Bond Continuous | 102.31 | - 0.06 | 28361 | 93460 | [9]