Report Industry Investment Rating - No relevant information provided Core Viewpoints - TACO expectations are rising, and most Treasury bond futures closed higher. The bond market is oscillating between stable growth and easing expectations, and short - term attention should be paid to policy signals at the end of the month [1][3] - The economy still shows a pattern of "strong supply and weak demand", and the foundation for the recovery of real estate and consumption is not yet solid. The financial data is neutral to positive for the bond market, but inflation expectations may disrupt short - term sentiment [2] Summary by Directory 1. Interest Rate Pricing Tracking Indicators - **Price Indicators**: China's CPI (monthly) has a 1.00% month - on - month increase and a 1.30% year - on - year increase; China's PPI (monthly) has a 0.40% month - on - month increase and a - 0.90% year - on - year decrease [9] - **Monthly Economic Indicators**: The social financing scale is 451.40 trillion yuan, with a month - on - month increase of 2.29 trillion yuan (+0.51%); M2 year - on - year is 9.00%, with no change; the manufacturing PMI is 49.00%, with a month - on - month decrease of 0.30% (-0.61%) [10] - **Daily Economic Indicators**: The US dollar index is 99.21, with a day - on - day increase of 0.09 (+0.09%); the US dollar against the offshore RMB is 6.8928, with a day - on - day decrease of 0.002 (-0.02%); SHIBOR 7 - day is 1.42, with a day - on - day decrease of 0.01 (-0.35%); DR007 is 1.41, with a day - on - day decrease of 0.01 (-1.00%); R007 is 1.55, with a day - on - day decrease of 0.01 (-0.55%); the 3 - month inter - bank certificate of deposit (AAA) is 1.46, with a day - on - day decrease of 0.01 (-0.34%); the AA - AAA credit spread (1Y) is 0.09, with a day - on - day decrease of 0.00 (-0.34%) [11] 2. Overview of Treasury Bonds and Treasury Bond Futures Market - The report provides multiple charts including the closing price trend, price change rate, precipitation funds trend, position ratio, net position ratio (top 20), and long - short position ratio (top 20) of Treasury bond futures main contracts [13][14][20] 3. Overview of the Money Market Fundamentals - The report presents charts on the spread between China Development Bank bonds and Treasury bonds, Treasury bond issuance, Shibor interest rate trend, inter - bank certificate of deposit (AAA) maturity yield trend, inter - bank pledged repo transaction statistics, and local bond issuance [27][28][26] 4. Spread Overview - The report shows charts on the inter - period spread trend of Treasury bond futures and the term spread of spot bonds and cross - variety spreads of futures, such as (4*TS - T), (2*TS - TF), (2*TF - T), (3*T - TL), and (2*TS - 3*TF + T) [41][34][36] 5. Two - year Treasury Bond Futures - The report includes charts on the implied interest rate and Treasury bond maturity yield of the two - year Treasury bond futures main contract, the IRR of the TS main contract and the funds rate, and the three - year basis trend and net basis trend of the TS main contract [43][44] 6. Five - year Treasury Bond Futures - The report provides charts on the implied interest rate and Treasury bond maturity yield of the five - year Treasury bond futures main contract, the IRR of the TF main contract and the funds rate, and the three - year basis trend and net basis trend of the TF main contract [46][60] 7. Ten - year Treasury Bond Futures - The report offers charts on the implied yield and Treasury bond maturity yield of the ten - year Treasury bond futures main contract, the IRR of the T main contract and the funds rate, and the three - year basis trend and net basis trend of the T main contract [55][59] 8. Thirty - year Treasury Bond Futures - The report shows charts on the implied yield and Treasury bond maturity yield of the thirty - year Treasury bond futures main contract, the IRR of the TL main contract and the funds rate, and the three - year basis trend and two - year net basis trend of the TL main contract [63][68] Strategies - **Unilateral Strategy**: Repo rates are falling, and Treasury bond futures prices are oscillating [4] - **Arbitrage Strategy**: Pay attention to the decline of the 2606 basis [4] - **Hedging Strategy**: There is medium - term adjustment pressure, and short - sellers can use far - month contracts for appropriate hedging [4]

1. Report Industry Investment Rating - There is no information about the report industry investment rating in the provided content. 2. Core Viewpoints of the Report - The report analyzes the key points of government bonds in 2026 based on the Government Work Report and the Budget Report, including maintaining a narrow - deficit ratio of 4%, a slight increase in the broad - deficit scale, changes in special treasury bonds, stable new special bond quotas, and suggestions for making good use of government bonds [3][4]. 3. Summary by Relevant Catalogs 3.1 Narrow - deficit ratio remains at 4%, broad - deficit slightly rises to 13.89 trillion to ensure necessary expenditure - **Narrow - deficit ratio stability and central tilt**: The narrow - deficit ratio remains at 4%, and the deficit scale reaches 5.89 trillion, an increase of 2300 billion from the previous year. The deficit increase is all in the central government, with the central deficit scale and proportion reaching a record high, which helps optimize the debt structure of the central and local governments [4][6][7]. - **Broad - deficit increase and rate decline**: The broad - deficit scale reaches 13.89 trillion, a slight increase of 300 billion from the previous year, and the broad - deficit rate drops by 0.5 percentage points to 9.4%. It is estimated that the explicit leverage ratio of the government sector will rise by about 6.1 percentage points to 74.7% by the end of the year [10]. 3.2 Special treasury bonds of 1.6 trillion, a decrease of 0.2 trillion year - on - year, focusing more on quality and efficiency - **Ultra - long - term special treasury bonds**: The issuance scale of ultra - long - term special treasury bonds remains at 1.3 trillion, which may drive GDP growth by about 3.24 percentage points. The funds are used for consumer goods replacement, large - scale equipment renewal, "two important" construction, etc. [14][15]. - **300 billion for state - owned commercial banks**: 300 billion is used to support state - owned large - scale commercial banks to supplement capital, a decrease of 200 billion from the previous year, which may bring about 2.3 trillion in new credit [18]. 3.3 New special bond quota of 4.4 trillion remains unchanged, improving negative list management and self - review and self - issuance pilot - **New special bond quota and investment leverage**: The new special bond quota remains at 4.4 trillion, which may leverage 6 trillion in infrastructure investment. It helps to fill the capital gap in infrastructure and leaves room for future development [20][21]. - **Increasing and listing project - construction quota**: The scale of special bonds for project construction may increase by 400 billion to about 3.6 trillion. The investment areas focus on "investing in people", including people's livelihood, new infrastructure, traditional infrastructure, and real estate [23]. - **Improving management and pilot**: Improve the "negative list" management and "self - review and self - issuance" pilot to enhance the efficiency of special bond funds and play a greater role in leveraging government investment [24][25]. 3.4 Suggestions for making good use of government bonds - **Front - loaded efforts**: Speed up the issuance and use of government bonds. In January - February 2026, the issuance of national and local government bonds increased year - on - year, and the issuance of new special bonds was ahead of schedule [27]. - **Synergistic efforts**: Strengthen the coordination between fiscal and monetary policies. There may be 1 interest rate cut and 1 - 2 (targeted) reserve requirement ratio cuts this year. Optimize and innovate structural monetary policy tools and issue 800 billion in new policy - based financial tools [30]. - **Effective management**: Improve the whole - process and whole - cycle management, including establishing a government asset - liability table, standardizing information disclosure, optimizing debt monitoring indicators, and improving the debt - repayment guarantee mechanism [33].

Economic Growth - The GDP growth target for 2026 is set at 4.5% to 5%, reflecting a pragmatic policy approach and considering both internal and external pressures on the economy [4][5] - The adjustment in the growth target aims to balance quality and reasonable growth, laying a foundation for high-quality economic development [5] Fiscal Policy - The proposed deficit rate for 2026 is around 4%, with a deficit scale of 5.89 trillion yuan, an increase of 230 billion yuan from the previous year [7] - Public budget expenditure is expected to reach 30 trillion yuan for the first time, with a focus on optimizing expenditure structure to support consumption and improve living standards [9][10] Tax and Financial Reforms - The government plans to advance tax and financial system reforms, including increasing the proportion of state-owned capital returns and enhancing local tax systems [12] - The emphasis on zero-based budgeting aims to optimize fund allocation and improve the efficiency of fiscal spending [12] Employment and Income - The urban survey unemployment rate target is set at around 5.5%, reflecting the need for policies to stabilize employment amid structural pressures [18] - The government aims to synchronize resident income growth with economic growth, emphasizing measures to increase income for low-income groups and improve social security systems [20][22] Environmental Goals - The target for reducing carbon dioxide emissions per unit of GDP is set at around 3.8%, aligning with the goal of achieving carbon peak by 2030 [26][27] - The shift from energy consumption control to carbon emission control reflects the need for a more precise approach to managing carbon emissions [27][28] State-Owned Enterprise Reforms - The government plans to implement a systematic approach to deepen state-owned enterprise reforms, focusing on optimizing the layout of state-owned capital and structural adjustments [29][30] - The emphasis on improving the modern enterprise system aims to enhance corporate governance and promote market-oriented reforms [31] Open Economy - The government intends to further expand high-level opening-up, focusing on service sector liberalization and enhancing international cooperation [35][36] - The approach aims to balance reform depth with security, promoting a competitive and fair business environment [36] Agricultural and Rural Development - The government is set to promote agricultural insurance development and enhance comprehensive disaster prevention capabilities in agriculture [59] - Policies will focus on improving rural elderly care services and implementing long-term care insurance systems to address the challenges of an aging population [45][47] Capital Market Stability - Measures to stabilize the stock market include comprehensive policies to enhance market confidence and promote active trading [54] - The government aims to improve the mechanism for long-term capital entering the market, ensuring a stable and healthy capital market [63] Innovation and Technology - The government plans to cultivate emerging and future industries, encouraging state-owned enterprises to lead in opening application scenarios for new technologies [69][70] - Support for artificial intelligence and open-source community development is expected to drive innovation and commercialization in various sectors [75]

Core Viewpoint - The government aims to maintain a stable yet progressive fiscal policy, with a focus on enhancing macroeconomic governance and increasing the efficiency of fiscal spending, particularly in supporting consumption, investment in human resources, and ensuring public welfare [1][2]. Fiscal Policy and Budget - The proposed fiscal deficit rate for the year is around 4%, with a deficit scale of 5.89 trillion yuan, an increase of 230 billion yuan from the previous year [1][3]. - General public budget expenditure is set to reach 30 trillion yuan for the first time, marking an increase of approximately 1.27 trillion yuan from last year [1]. - The issuance of special bonds is planned at 1.3 trillion yuan to support key construction projects and capital replenishment for state-owned commercial banks [1][2]. Local Government Bonds - The scale of local government special bonds is proposed at 4.4 trillion yuan, maintaining a historically high level, which reflects a commitment to active fiscal policy [2][3]. - The consistency in the issuance of local government bonds indicates a stable approach to enhancing local financial capacity and autonomy [3]. Economic Implications - Maintaining a nominal deficit rate of around 4% suggests a strategy to keep the central government's leverage stable while allowing room for future policy adjustments in response to economic fluctuations [3]. - The increase in the overall deficit scale, despite maintaining the same percentage, indicates a growing economic base, with the total deficit reaching 5.89 trillion yuan [3]. Debt Management and Efficiency - The government emphasizes improving the efficiency of fiscal spending rather than merely increasing the quantity of funds, as evidenced by the focus on resolving issues related to accounts receivable in industrial enterprises [3][4]. - The issuance of local bonds is expected to align with changes in local government financing costs and market capacity, suggesting a continuation of a moderately loose monetary policy [4].

Core Points - The government work report presented by Premier Li Qiang at the Fourth Session of the 14th National People's Congress emphasizes the continuation of a more proactive fiscal policy, with a proposed deficit rate of around 4% for the year [1] - The planned deficit scale is set at 5.89 trillion yuan, which represents an increase of 230 billion yuan compared to the previous year [1] - General public budget expenditure is expected to reach 30 trillion yuan for the first time, marking an increase of approximately 1.27 trillion yuan from the previous year [1] - The issuance of ultra-long-term special bonds is proposed at 1.3 trillion yuan to continuously support "two重" construction and "two新" work [1]

Group 1 - The government plans to continue implementing a moderately loose monetary policy [1] - The fiscal policy will be more proactive, with a proposed deficit rate of around 4% for 2026, and a deficit scale of 5.89 trillion yuan, an increase of 230 billion yuan from the previous year [2] - The general public budget expenditure is set to reach 30 trillion yuan for the first time, an increase of approximately 1.27 trillion yuan from the previous year [2] Group 2 - The government intends to issue long-term special bonds amounting to 1.3 trillion yuan to support "two heavy" constructions and "two new" initiatives [2]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - In 2026, the government bond supply in January showed a return to front - loaded efforts, with increased issuance volume and a longer - term structure. The incremental supply mainly came from local bonds. The overall supply pressure in the first quarter remained high, with front - loaded rhythm and longer duration characteristics. The core of the phased impact was the increase in supply concentration and the rise in the proportion of ultra - long - term bonds. Although the primary market enthusiasm for bonds has limited recovery, the carrying capacity is temporarily stable, and the issuance and carrying environment will improve with the return of potential allocation forces. Attention should be paid to the micro - situation's impact on primary pricing and secondary sentiment in the short term, and the demand change trend of the term structure under the normal state of high supply in the medium term [2][4][30]. 3. Summary According to the Directory 1. January Government Bond Supply: Return of Front - Loaded Efforts and Longer Issuance Terms - **Scale and Rhythm**: In January 2026, the government bond issuance volume increased significantly compared to the same period last year, with a front - loaded trend. The total net financing was about 115.619 billion yuan, of which local bond net financing was about 72.944 billion yuan, contributing most of the incremental supply. Compared with the average level from 2020 to 2024, the net financing in January 2026 was slightly higher [9]. - **Term Structure**: In January 2026, the supply of treasury bonds showed an overall increase in all terms, with the medium - and long - term becoming the main increment. The proportion of 30 - year treasury bonds in the total issuance continued to decline. For local bonds, the issuance scale increased significantly year - on - year, the proportion of ultra - long - term bonds remained stable, and the weighted term increased from 16.4 years to 17.7 years, indicating that the market carrying pressure was more concentrated on 30 - year ultra - long - term varieties [10][12]. - **Issuance Tendering**: In January 2026, the issuance of local bonds remained stable, but the intensity of capital participation declined. The overall multiple of local bond issuance tenders decreased, and the issuance relied more on passive funds. The spread between local bonds and treasury bonds converged, indicating that the supply - demand relationship of local ultra - long - term bonds remained relatively stable [13][15]. 2. Outlook for the First Quarter: The Duration Pressure on the Supply Side Needs to be Re - balanced - **Issuance Plan**: In 2026, the total government bond supply will remain high. The net financing of treasury bonds in the first quarter is expected to be in the range of 50 - 150 billion yuan, and the net financing of local bonds is expected to be 245 - 247 billion yuan per quarter. The issuance intensity of treasury bonds is adjusted through single - period scale, and attention should be paid to the planned scale of the 2 - year treasury bond issued on February 4. The expected issuance scale of local bonds from January to March is about 244 billion yuan, with a front - high and back - low net financing characteristic. The subsequent local bonds may continue the high - duration issuance feature, and the demand side will be under continuous pressure [16][18]. - **Institutional Demand**: The equity allocation of insurance funds has a phased squeezing effect on the ultra - long - term, but there is marginal repair space. The allocation of insurance funds to ultra - long - term local bonds has strong seasonality, and the buying intensity usually recovers gradually during the year. The expansion of the insurance liability side provides a basis for subsequent bond allocation. The potential expansion space of the insurance side can support the subsequent ultra - long - term supply [20][23]. - **Spread Comparison**: Since January 2026, the pricing of ultra - long - term local bonds has shown the characteristics of spread convergence and stable repair of issuance interest rates. The deviation between the issuance interest rate and the secondary market yield of 30 - year local bonds has narrowed, and the spread between local bonds and treasury bonds has fallen back to the historical average range, indicating that the supply - demand relationship is gradually re - balanced [26]. - **Policy Tone**: The 2026 fiscal policy continues to be more proactive, with high - intensity in total amount, more focused in structure, stronger efficiency orientation, and parallel debt reduction and development. Attention should be paid to the implementation rhythm and structure of fiscal incremental arrangements and the subsequent issuance plan [27].

Core Viewpoint - The Chinese government is implementing a more proactive fiscal policy for 2025, with a deficit rate set at around 4%, an increase of 1 percentage point from the previous year, aimed at promoting sustainable economic and social development [1] Group 1: Fiscal Policy Measures - The deficit rate for 2025 is planned at approximately 4%, which is a 1 percentage point increase compared to the previous year [1] - The new government debt scale is set at 11.86 trillion yuan, an increase of 2.9 trillion yuan from the previous year, significantly exceeding the average levels of recent years [1] - A special government bond issuance of 500 billion yuan is planned to supplement the core tier one capital of large state-owned commercial banks, enhancing the banking sector's ability to support the real economy [1] Group 2: Local Government Support - A limit of 500 billion yuan is arranged for local government debt to enhance their overall financial capacity and expand effective investment [1] - Despite the increase in deficit and government bond scale for 2025, China's government debt ratio remains low compared to the average levels of G20 countries [1]

Core Viewpoint - The Chinese government is increasing its fiscal deficit and government debt to promote high-quality economic and social development, with a projected deficit rate of around 4% for 2025, which is an increase of 1 percentage point from the previous year [1] Fiscal Policy - The Ministry of Finance announced a new government debt scale of 11.86 trillion yuan, which is an increase of 2.9 trillion yuan compared to the previous year [1] - The current fiscal measures are significantly higher than the average levels seen in recent years [1] International Comparison - Despite the increase in deficit and government bond scale, China's government debt ratio remains low compared to the average level of G20 countries [1]

Core Viewpoint - The Chinese government will continue to implement a more proactive fiscal policy in 2026, focusing on increasing total expenditure, optimizing structure, improving efficiency, and enhancing momentum [1][4]. Fiscal Policy Overview - The fiscal deficit, total debt scale, and total expenditure will maintain necessary levels in 2026, ensuring that overall expenditure increases and key areas are strongly supported [1][3]. - The fiscal deficit rate for 2025 is set at around 4%, an increase of 1 percentage point from the previous year, with new government debt reaching 11.86 trillion yuan, an increase of 2.9 trillion yuan compared to the previous year [3][4]. Strategic Focus Areas - The fiscal policy will play a crucial role in boosting consumption and expanding effective investment [4]. - The 2025 National Fiscal Work Conference emphasized the need to expand the fiscal expenditure pool and ensure necessary expenditure while optimizing the expenditure structure and enhancing support for key areas [4]. Investment Direction - The fiscal expenditure structure will continue to be optimized, with a focus on supporting major national strategies and directing more resources towards people's livelihoods and key sectors [5]. - Government bond funds will prioritize improving people's livelihoods, expanding domestic demand, and enhancing future growth, particularly in areas such as urban renewal and manufacturing upgrades [5]. Expected Fiscal Metrics - The expected fiscal deficit for the current year is approximately 5.9 trillion yuan, an increase of about 200 billion yuan from the previous year, primarily borne by the central government [5]. - The issuance of special long-term government bonds is projected to be 1.5 trillion yuan, an increase of 200 billion yuan from the previous year, to support key projects [5].