1. Report Industry Investment Rating There is no information about the industry investment rating in the provided content. 2. Core Viewpoints of the Report - The general deficit scale in 2026 has a limited increase. The supply of interest - rate bonds is not the core contradiction in the bond market, and it is difficult to change the long - term interest rate's oscillating pattern. However, it is beneficial for short - term bond varieties that closely follow the capital market [6][9]. - Although the overall deficit and the corresponding net supply of government bonds have a limited increase, it is difficult to bring much positive impact on bond market interest rates, especially long - term interest rates. The positive impact on the bond market, especially long - term interest rates, is relatively limited after the deficit scale is announced [6][10]. - Under the current deficit level, the supply pressure in the first half of the year is weak, and the resulting capital pressure is controllable, which is beneficial for short - term varieties. The supply peak is expected to be in the third quarter [6][11]. 3. Summary by Relevant Catalogs 3.1 Bond Market Weekly Viewpoint - The general deficit scale in 2026 has a limited increase. The supply of interest - rate bonds is not the core contradiction in the bond market, and it is difficult to change the long - term interest rate's oscillating pattern, but it is beneficial for short - term varieties [6][9]. - In 2026, the deficit rate and the new quota of special bonds are the same as last year, and the scale of special treasury bonds has a slight decline. The general deficit scale has an extremely limited increase. The general deficit scale is 11.89 trillion yuan, only 30 billion yuan more than last year, and the increase is the lowest since 2023, significantly lower than the average increase of 1.6 trillion yuan in the past three years. The net supply of government bonds is expected to be around 13.89 trillion yuan, with an increase of 30 billion yuan compared to 2025 [6][10]. - The supply pressure in the first half of the year is weak, and the capital pressure is controllable, which is beneficial for short - term varieties. The net financing in the first and second quarters is expected to be 3.53 trillion and 3.47 trillion yuan respectively, with changes of - 570.9 billion and - 222.8 billion yuan compared to the same period last year. The supply peak is expected to be in the third quarter, with the net financing of government bonds expected to be around 4.3 trillion yuan, an increase of about 530 billion yuan compared to the same period last year [6][11]. 3.2 This Week's Focus in the Fixed - Income Market - This week, China will release February CPI, PPI, and January - February export data. The United States will release February CPI and other data [15][16]. - The issuance of interest - rate bonds this week is expected to be around 757.5 billion yuan, at a high level compared to the same period [16]. - Treasury bonds: 2 coupon - bearing general treasury bonds with maturities of 1 and 2 years and scales of 175 billion and 155 billion yuan respectively; 1 general ultra - long - term treasury bond with a maturity of 50 years and a scale of 32 billion yuan; 1 discount treasury bond with a maturity of 91 days; 2 savings treasury bonds with maturities of 3 and 5 years. The total issuance scale is expected to be 442 billion yuan [18]. - Local bonds: 35 local bonds are planned to be issued, with a scale of 135.5 billion yuan, including 5 new general bonds (19.4 billion yuan), 10 new special bonds (17.7 billion yuan), 8 refinancing general bonds (55.3 billion yuan), and 12 refinancing special bonds (43.2 billion yuan) [18]. - Policy - financial bonds: The issuance scale is expected to be around 180 billion yuan [18]. 3.3 Review and Outlook of Interest - Rate Bonds 3.3.1 Last Week's Reverse Repurchase Delivery Fell to a Low Level - Last week, the net reverse repurchase withdrawal was 1.0944 trillion yuan. After the Spring Festival, the reverse repurchase delivery returned to a low level, with a total of 161.6 billion yuan. Considering the 1.256 trillion yuan due, the net withdrawal was about 1 trillion yuan [22][24]. - The capital market volume increased and the price decreased. The repurchase trading volume recovered after the Spring Festival, with the highest reaching 9.2 trillion yuan during the week, and the weekly average rose to 8.8 trillion yuan. The overnight proportion's weekly average rose to 91%. The capital price mostly declined. DR001 fluctuated around 1.3% and rose to 1.32% on Friday; DR007 gradually fell to around 1.41% compared to the previous week [24]. - The issuance of certificates of deposit increased, the proportion of long - term certificates of deposit increased significantly, and the price broke through downward. From March 2nd to March 8th, the issuance scale was 717.2 billion yuan (an increase of 263.3 billion yuan compared to the previous week), the maturity scale was 588 billion yuan (a decrease of 78.8 billion yuan compared to the previous week), and the net financing was 129.2 billion yuan (an increase of 342 billion yuan compared to the previous week) [30]. 3.3.2 The Decline of Short - and Medium - Term Interest Rates was Relatively Large - After the geopolitical conflict last week, the market's risk - aversion sentiment was strong, the stock market adjusted, and the bond market strengthened. In the second half of the week, the Two Sessions' report was basically in line with expectations. Although the bond market's expectation of further monetary easing was disappointed, the central bank stated that future easing operations were still expected. And the limited increase in the deficit strengthened the expectation of capital loosening, which was beneficial for the bond market, and bond market interest rates mostly declined [39]. - Finally, the 10 - year treasury bond and the active state - owned development bond changed by - 0.2bp and - 1.4bp respectively compared to last week, reaching 1.79% and 1.92%. In terms of yields, the 1 - year, 3 - year, 5 - year, 7 - year, and 10 - year ChinaBond treasury bond yields changed by - 3.1bp, - 1.5bp, - 0.8bp, - 0.5bp, and 0.6bp respectively compared to the previous week, reaching 1.29%, 1.36%, 1.53%, 1.66%, and 1.78%. The yields of interest - rate bonds of various maturities mostly declined, and the 1 - year state - owned development bond yield declined the most, about 6.4bp [39]. 3.4 High - Frequency Data - Production end: Most of the operating rates increased. The blast furnace operating rate decreased from 80.2% to 77.7%, the semi - steel tire operating rate increased from 34.56% to 74%, the PTA operating rate increased from 73.7% to 79.5%, and the asphalt operating rate increased from 21.4% to 23.3%. The year - on - year decline in the average daily crude steel output in late February was still large, with a reading of - 12.9% [46]. - Demand end: The year - on - year growth rates of passenger car manufacturers' wholesale and retail sales were at a high level. In the week of February 8th, the year - on - year change in passenger car manufacturers' wholesale was 46%, and the year - on - year change in retail was 54%. In the week of March 1st, the land transaction area in 100 large - and medium - sized cities recovered to 8.18 million square meters but was still lower than the same period, and the commercial housing sales area in 30 large - and medium - sized cities increased to around 1.42 million square meters, also significantly lower than the same period. In terms of export indices, the SCFI and CCFI composite indices changed by 11.7% and 0.9% respectively [46]. - Price end: The crude oil price soared. The upstream Brent futures crude oil price and WTI futures crude oil price changed by 27.9% and 35.6% respectively; the copper and aluminum prices diverged, with LME copper and LME aluminum changing by - 4.7% and 7.2% respectively; the coal price diverged, the thermal coal active contract futures settlement price was the same as last week, and the coking coal active contract futures settlement price changed by 2.3%. In the middle - stream, the building materials composite price index was basically flat, the cement index changed by - 0.3%, and the glass index changed by 2.4%. The output of rebar increased, the inventory accumulation speed was fast, and the current inventory was 6.38 million tons, and the futures price changed by 0.7%. In the downstream consumption end, the prices of vegetables, fruits, and pork changed by - 2.9%, 1%, and - 3% respectively [47].

Group 1 - The central economic work conference proposed to continue implementing a more proactive fiscal policy in 2026, maintaining necessary expenditure intensity and a deficit scale close to 6 trillion yuan [1][2] - The expected scale of new special bonds in 2026 is projected to reach 5 trillion yuan, with an emphasis on optimizing the government bond tool mix and enhancing the effectiveness of transfer payments [2][4] - Analysts suggest that the fiscal situation in 2026 will likely remain under pressure, but the role of fiscal policy as a foundation for national governance necessitates continued proactive measures to stimulate demand and support consumption [2][3] Group 2 - The expected deficit rate for 2026 is projected to be no less than 4%, with the total new debt scale anticipated to increase to 15 trillion yuan [4][5] - The increase in new special bonds is expected to support infrastructure investment and address local government financial difficulties, with a potential rise in the issuance of long-term special bonds [5][6] - The central government is likely to increase transfer payments to local governments, exceeding 10 trillion yuan, to alleviate fiscal challenges and stimulate local economic development [2][3] Group 3 - The conference emphasized the importance of addressing local fiscal difficulties and improving the local tax system, with potential reforms in consumption tax expected to accelerate in 2026 [7] - Analysts foresee three main directions for fiscal reform in 2026: shifting consumption tax collection to local levels, optimizing the sharing ratio of shared taxes, and merging various local additional taxes into a single local additional tax [7][8] - The proposed reforms aim to incentivize local governments to cultivate tax sources and improve the consumption environment, thereby enhancing the overall supply-demand relationship [7][8]

Core Viewpoint - The article discusses President Trump's pressure on the Federal Reserve to lower interest rates, aiming to align monetary policy with his fiscal priorities, which could lead to inflation and economic stagnation in the long run [2][4]. Group 1: Trump's Objectives - Trump's push for lower interest rates is intended to facilitate financing for the recently passed tax cuts, breaking the traditional link between budget deficits and interest rates [4][5]. - The article warns that this "fiscal dominance" approach is historically associated with economic crises in emerging markets, potentially leading to a dangerous combination of inflation and stagnation [4][5]. Group 2: Economic Indicators and Market Reactions - Despite a projected budget deficit increase to $3 trillion over the next decade, the yield on the 10-year U.S. Treasury bond has decreased from 4.55% in May to 4.35% recently, indicating market expectations of future rate cuts [6]. - Treasury Secretary Mnuchin emphasized that the government will act according to Trump's wishes regarding the Federal Reserve's leadership and criticized current Fed Chair Powell for not lowering rates promptly [8]. Group 3: Federal Reserve's Position - The Federal Reserve has maintained its interest rate policy, with the target range set at 4.25% to 4.5%, while the two-year Treasury yield has fallen to around 3.88%, suggesting a disconnect in market signals [8]. - The upcoming Federal Reserve meeting on July 10 is anticipated to provide insights into their monetary policy stance, especially in light of strong employment data [9].

Core Viewpoint - The U.S. Treasury Secretary emphasizes that tariffs and budget are interconnected, suggesting a holistic approach to fiscal policy [1] Summary by Relevant Categories Fiscal Outlook - It is believed that the deficit size will be lower in 2025 compared to the previous year [1] - By 2028, the ratio of U.S. debt to GDP is expected to stabilize [1] Political Sentiment - There is sympathy towards deficit hawks, indicating a recognition of concerns regarding fiscal responsibility [1]