Monetary Market Overview - The central bank's OMO net injection this week was CNY 13,652 billion, with CNY 2,200 billion in treasury cash deposits maturing[3] - The average daily transaction volume of pledged repos decreased by CNY 1 trillion to CNY 7.1 trillion, with overall pledged repo volume lower than last week[3] - The new caliber funding gap rose to -640 on Tuesday but fell to -4,625 by Friday, remaining above last week's -5,511[3] Market Reactions and Trends - A-share market strength and the freezing of funds for new listings on the Beijing Stock Exchange have been suggested as factors influencing market adjustments[3] - The average DR001 rate for August was 1.32%, indicating that the central bank may tolerate increased funding volatility in the latter half of the month[3] - Government bond net payments this week totaled CNY 2,948 billion, with next week's treasury payment scale expected to be CNY 2,370 billion[3] Future Projections - The forecast for September includes CNY 12,900 billion in treasury issuance and a net financing of CNY 5,300 billion[4] - The overall government bond issuance scale for August was CNY 2.33 trillion, with a net financing scale of CNY 1.33 trillion, slightly lower than previous expectations[4] - Next week, the government bond net payment scale is projected to decrease to CNY 2,114 billion[4]

Group 1 - The People's Bank of China (PBOC) has increased liquidity support through significant reverse repo operations to maintain reasonable liquidity in the banking system [1][2] - On October 23, the PBOC conducted a 7-day reverse repo operation of 808 billion yuan, resulting in a net injection of 702 billion yuan [1] - The PBOC's actions are in response to a tightening of the funding environment due to factors such as tax payment deadlines and government bond issuance [2] Group 2 - Analysts note that the recent tightening of the funding environment is influenced by the issuance of local special refinancing bonds, with a total net financing of 943.8 billion yuan reported by October 20 [2] - The expected net financing scale of government bonds in October is projected to reach 1.25 trillion yuan, an increase of 295.1 billion yuan compared to September [2] - The impact of tax payment deadlines on the funding environment is expected to ease after October 23, as historical trends indicate that funding rates typically peak before tax deadlines [2] Group 3 - The market outlook suggests that funding pressures may persist, but the PBOC is likely to continue increasing reverse repo operations to stabilize the funding environment [2][3] - With the peak supply period for government bonds passing, a significant decrease in net issuance is anticipated for November and December [3] - Overall, both fiscal and monetary policies are expected to remain supportive, with the PBOC utilizing various tools to ensure adequate liquidity for economic recovery [3]

Report Summary 1. Investment Rating No investment rating for the industry is provided in the report. 2. Core View This week, Treasury bond futures closed down across the board, influenced by multiple factors such as the increasing expectation of fiscal expansion, the continuous seesaw effect between stocks and bonds, and fluctuations in the capital market. Although the bond market faces short - term adjustment pressure, long - term fundamental support remains, and there may be opportunities for a rebound after the market correction [1][2][3]. 3. Section Summaries Market Analysis - **Macroeconomic Conditions**: On May 20, the central bank cut the LPR, and major state - owned and some joint - stock banks lowered deposit rates. In July, the LPR remained stable. Sino - US economic and trade talks are scheduled from July 27 - 30. In the first half of 2025, the national fiscal operation was generally stable, with increased expenditure and optimized revenue - expenditure structure. General public budget revenue was 11.56 trillion yuan, a slight 0.3% year - on - year decrease, while expenditure was 14.13 trillion yuan, a 3.4% year - on - year increase. Government - funded budget expenditure increased by 30% year - on - year. The CPI in June increased by 0.1% year - on - year [1]. - **Funding Conditions**: On July 25, 2025, the central bank conducted 789.3 billion yuan of 7 - day reverse repurchase operations at a fixed rate of 1.4%. The main term repurchase rates (1D, 7D, 14D) were 1.52%, 1.65%, and 1.67% respectively, and the repurchase rates have recently risen [2]. - **Market Conditions**: On July 25, 2025, the closing prices of TS, TF, T, and TL were 102.31 yuan, 105.57 yuan, 108.18 yuan, and 117.95 yuan respectively. Their weekly price changes were - 0.11%, - 0.36%, - 0.53%, and - 1.68% respectively. The average net basis spreads of TS, TF, T, and TL were 0.02 yuan, 0.11 yuan, 0.10 yuan, and 0.80 yuan respectively [2]. Strategy - **Single - side Trading**: With the rising repurchase rates and the fluctuating prices of Treasury bond futures, the 2509 contract is neutral. - **Arbitrage**: Pay attention to the widening of the basis spread. - **Hedging**: As there is medium - term adjustment pressure, short - position holders can use far - month contracts for appropriate hedging [3].