1. Report Industry Investment Rating No information provided regarding the industry investment rating in the document. 2. Core Viewpoints of the Report - Despite increased external disturbances such as tax - period outflows and government bond net payments, the current liquidity remains loose, which may be due to cash inflows and fiscal expenditure. The central bank's attitude of maintaining a wait - and - see stance and downplaying the expectation of interest rate cuts also contributes to the loose liquidity environment. The probability of the central bank's systematic tightening is limited, especially at the end of the quarter, but potential fluctuations in the capital market after the quarter - end need to be monitored [5][50][53]. - The net payment of government bonds will increase next week, and there are multiple external disturbances. However, considering the central bank's strong willingness to maintain stable liquidity, the loose liquidity pattern is expected to continue [11][77][81]. - Forecasts for government bond issuance and net financing in March and the second quarter of 2026 are provided. It is estimated that the net financing of government bonds in March will be 1.07 trillion, and the cumulative net financing in the first quarter will be about 3.67 trillion. The cumulative net financing in the second quarter is expected to be about 3.6 trillion, slightly lower than the same period in 2025 [7][10][72]. 3. Summary According to the Directory 3.1 Money Market 3.1.1 This Week's Capital Review - The central bank's OMO had a net injection of 6.58 billion yuan this week. Despite tax - period outflows and over 30 billion yuan in government bond net payments, the capital remained loose. DR001 stayed at 1.32% for 5 consecutive days, and R007 dropped below 1.5% [3][16]. - The trading volume of pledged repurchase fluctuated within a narrow range, with the daily average trading volume decreasing by 0.2 trillion yuan to 8.37 trillion yuan compared to last week. The overall scale of pledged repurchase remained around 12 trillion yuan, slightly lower than last week. The net lending of large - scale banks decreased, while that of small and medium - sized banks increased. The net lending of non - banks had limited changes, with insurance and wealth management lending increasing, and other products and money market funds lending decreasing. The net borrowing of non - banks first decreased and then increased, generally lower than last week. The capital gap index also fluctuated within a narrow range, remaining at a relatively low level [4][25]. - The progress of cross - quarter capital in mid - to - early March was slow, and the gap compared to previous years widened after 14 - day funds could cross the quarter. As of the 20th, the cross - quarter progress of inter - bank institutions reached the lowest level in recent years; the cross - month progress of the exchange market was only slightly higher than that in 2022; the cross - month progress of the entire market was at a low of 7.0%, 3.9 percentage points lower than the historical average [31]. - The loose capital may be due to cash inflows and fiscal expenditure. The excess reserve ratio in February rose to 1.2%, and the broad fiscal deficit exceeded expectations by 15 billion yuan, leading to a larger - than - expected decrease in government deposits. Even if there is a net withdrawal of 50 billion yuan from OMO and MLF in March, the excess reserve ratio is still expected to reach 1.4% [5][42]. - The stability of DR001 at 1.32% for 6 trading days around the tax period may be related to the central bank's stability - maintenance. The central bank downplayed the expectation of interest rate cuts but maintained a loose environment to avoid potential impacts on the bond market [50][53]. 3.1.2 Next Week's Capital Outlook - This week, the net payment of government bonds was 30.63 billion yuan. Next week, the issuance of 7 - year treasury bonds will be 17.5 billion yuan, and assuming the 91 - day discounted treasury bonds are the same as the previous value, the total treasury bond issuance will be about 21.5 billion yuan. Thirteen regions will issue local bonds with a total scale of 30.86 billion yuan. Considering the 36 billion yuan of treasury bonds issued this Friday will be paid next week, the net payment of government bonds will rise to 60.64 billion yuan [54]. - The 7 - day reverse repurchase maturity scale will rise to 24.23 billion yuan next week, and there will be 45 billion yuan of MLF maturing on Wednesday. The net payment of government bonds will increase, mainly concentrated on Monday and Wednesday. Wednesday is also the reserve payment day. The online issuance of the new stock of Longyuan Co., Ltd. on the Beijing Stock Exchange is expected to have a certain impact on the exchange capital price from Monday to Tuesday. However, considering the central bank's strong willingness to maintain stable liquidity, the loose liquidity pattern is expected to continue [77][81]. 3.2 Inter - bank Certificates of Deposit - This week, the 1 - year Shibor rate decreased by 2.1 BP to 1.555% compared to March 13th. The secondary rate of 1 - year AAA - rated inter - bank certificates of deposit decreased by 1.75 BP to 1.515% [82]. - The issuance scale of inter - bank certificates of deposit decreased while the maturity scale increased. The net financing of state - owned banks, joint - stock banks, city commercial banks, and rural commercial banks was - 31.44 billion yuan, - 8.87 billion yuan, - 3.31 billion yuan, and 0.34 billion yuan respectively. The issuance proportion of 1 - year certificates of deposit decreased by 6 percentage points to 35%. Next week, the maturity scale of certificates of deposit will be about 69.93 billion yuan, a decrease of 47.39 billion yuan compared to this week [83]. - The issuance success rates of state - owned banks and joint - stock banks decreased, while those of city commercial banks and rural commercial banks increased, and all banks were around the average level in recent years. The issuance spread of 1 - year certificates of deposit between city commercial banks and joint - stock banks widened [87]. - The relative supply - demand strength index of certificates of deposit increased overall, with the willingness of money market funds to increase holdings in both the primary and secondary markets significantly enhanced. The demand from funds and wealth management products was relatively stable. The index increased by 6.3 percentage points to 29.1% throughout the week, in line with the seasonal pattern of recovery in March. Except for the 1 - month supply - demand index, the supply - demand indices of other maturities increased [98]. 3.3 Bill Market This week, bill interest rates decreased slightly. As of March 20th, the 3 - month and 6 - month bill interest rates of national - owned and joint - stock banks decreased by 5 BP and 6 BP respectively to 1.43% and 1.17% compared to March 13th [103]. 3.4 Bond Trading Sentiment Tracking - This week, the interest rate curve continued to steepen, and the spread of Tier 2 and perpetual bonds slightly narrowed. Large - scale banks generally tended to increase bond holdings, but their willingness to increase treasury bond holdings declined, especially for 10 - year treasury bonds. Their willingness to increase holdings of 1 - 3 - year and 7 - year treasury bonds and 7 - year policy - financial bonds increased, and their willingness to reduce holdings of Tier 2 and perpetual bonds and 1 - 3 - year policy - financial bonds decreased [105]. - The overall willingness of trading - type institutions to reduce bond holdings decreased. Securities companies' willingness to reduce holdings decreased, fund companies tended to increase holdings, and other institutions and products' willingness to increase holdings increased [105]. - The overall willingness of allocation - type institutions to increase bond holdings significantly decreased. Small and medium - sized banks tended to reduce holdings, and the willingness of insurance companies and wealth management products to increase holdings decreased [105].

1. Report Industry Investment Rating No relevant content provided in the report. 2. Core Viewpoints of the Report - The February excess reserve ratio rose 0.1 pct to 1.2% compared to January, in line with expectations. The government deposit decreased by 616.5 billion yuan in February, more than expected, partly due to additional local treasury cash fixed - term deposits. The 3 - month excess reserve ratio is expected to reach 1.4%, up 0.2 pct from February, and the overall pattern of abundant liquidity is likely to continue [3][4][11]. - The year - on - year growth rate of M2 in February was 9.0%, the same as in January, slightly lower than expected. It is expected to decline further in March due to the reduced pull of bank net lending on M2 [5][22]. - In February, deposits flowed from small and medium - sized banks to large banks. However, this trend may reverse in March, which may be the reason for the recent increase in the allocation power of small and medium - sized banks [5][26]. 3. Summary by Relevant Catalogs 2.1 2 - month excess reserve ratio回升至1.2%, cash return and fiscal expenditure are expected to support the 3 - month excess reserve - The February excess reserve ratio rose 0.1 pct to 1.2% compared to January. The government deposit decreased by 616.5 billion yuan, more than expected, affected by additional local treasury cash fixed - term deposits. The remaining part needs to wait for fiscal data to determine whether it is due to increased fiscal spending or accelerated use of replacement bonds [3][11]. - The cash leakage in February was lower than expected, but the non - financial institution deposits of the central bank increased, which may reflect the rise of payment institution reserves during the Spring Festival, and the two effects basically offset each other [3][11]. - Although the decline in credit and the increase in non - bank deposits in February reduced the consumption of reserve requirements, the central bank's claims on other financial companies decreased by only 30 billion yuan, which may be due to the decline in the central bank's re - loans to margin trading companies, dragging down liquidity [3][11]. - Other items such as the central bank's claims on other depository companies and foreign exchange holdings were in line with expectations. It is expected that in March, the cash return will reach 1.02 trillion yuan, the government deposit will decrease by 830 billion yuan, and the excess reserve ratio is expected to reach 1.4%, up 0.2 pct from February [4][18]. 2.2 2 - month M2 is slightly lower than expected, and it is expected to decline further in March - The year - on - year growth rate of M2 in February was 9.0%, the same as in January, slightly lower than the expected 9.2%. Although fiscal deposits and equity and other investments contributed 0.2 pct more to M2 than expected, factors such as weak consumer demand, improved non - bank sentiment affecting bond investment, and the stability of the RMB exchange rate restricting the expansion of foreign net assets led to a shortfall of about 800 billion yuan compared to expectations. Considering the increase in the base of bank net lending, the growth rate of M2 is expected to decline in March [5][22]. 2.3 2 - month deposits flowed to large banks, pay attention to the reversal in March - After excluding non - bank deposits, in February, the deposits of large banks increased by about 47 billion yuan month - on - month, while those of small and medium - sized banks decreased by about 39 billion yuan, showing a trend of deposits flowing from small and medium - sized banks to large banks, which is also reflected in the structural changes of reserve deposits [5][26]. - The central bank's policy tools were more inclined to small and medium - sized banks in February, relieving their liability pressure. The abundant liquidity of large banks supported the expansion of their bond investment scale, while the growth rate of small and medium - sized banks declined. The credit growth rates of both large and small and medium - sized banks declined, indicating weak demand [26]. - Historically, large - bank deposits usually rise rapidly before the Spring Festival, and small and medium - sized bank deposits increase after the Spring Festival. This pattern may continue in March, which may be the reason for the recent increase in the allocation power of small and medium - sized banks [26].

Group 1: Liquidity Overview - In February, the central bank injected a total of 829.5 billion yuan into the market through open market operations, indicating a slight decrease compared to the previous month[2] - The excess reserve ratio rose to 1.3% in February due to a reduction in fiscal deposits and continued liquidity injection by the central bank[2][20] - The liquidity environment remains ample, with expectations for the excess reserve ratio to increase to 1.4% in March[2][44] Group 2: Market Indicators - February saw a divergence in money market indicators, with interbank repo rates remaining stable while exchange repo rates increased slightly[5][44] - The average interbank repo rates for February were 1.40% and 1.55% for overnight and 7-day repos, respectively, showing minimal change[6] - The one-year and three-month bond yields showed a spread of -3 basis points for AAA short-term financing bonds, indicating a slight downward trend in short-term rates[6] Group 3: Forecast and Risks - For March, the central bank is expected to conduct a small net withdrawal of liquidity, with a projected net withdrawal of 200 billion yuan[41] - Seasonal factors are anticipated to lead to a decrease in M0 by approximately 2,000 billion yuan in March, impacting liquidity[22] - Risks include potential policy changes, weaker-than-expected economic growth, and adjustments in U.S. Federal Reserve policies[45]

Group 1 - The report indicates that the government deposits increased significantly in January, reaching a historical high of 6.5 trillion, which was higher than expected, contributing to a decrease in the excess reserve ratio to 1.1% [3][16][24] - The report forecasts that the broad fiscal deficit in February may reach 1.28 trillion, which is among the highest levels for the same period in previous years, with government deposits expected to decline by approximately 390 billion [4][24][33] - The report highlights that the central bank's monetary policy remains supportive, with net liquidity injections through various tools, including MLF and reverse repos, totaling 9 trillion in February, which has helped maintain a stable funding environment [5][43][44] Group 2 - The report anticipates that in March, the broad fiscal deficit could be at its highest level for the year, with government deposits expected to decrease by about 830 billion, which may provide liquidity support [7][57][72] - It is projected that the issuance of currency in March will decrease by approximately 1.16 trillion, primarily due to the timing of the Spring Festival, which will impact liquidity positively [7][57][72] - The report notes that the demand for credit is expected to remain weak, with March's credit issuance estimated at around 3.20 trillion, reflecting a year-on-year decrease [7][73][75]

1. Report Industry Investment Rating There is no information provided in the report regarding the industry investment rating. 2. Core Viewpoints of the Report - The pressure on cross - Spring Festival funds is controllable. The overall liquidity in February is expected to remain stable, with the risk of significant fluctuations being under control, although attention should be paid to the capital arrangements of institutions in the last week before the festival and potential capital disturbances [4][71]. - In January, the central bank actively adjusted monetary policy tools. It cut the interest rates of various structural monetary policy tools, and there is still room for reserve requirement ratio cuts and interest rate cuts this year. The central bank also increased the scale of bond purchases to maintain liquidity [3][52]. 3. Summary According to the Directory 3.1 1 - Month Review of the Capital Market and Liquidity 3.1.1 Capital Market Review - In January 2026, the overnight capital fluctuated in a slightly wider range compared to the previous month, showing an oscillatory upward trend with a fluctuation range of 0.18%. The 7D capital fluctuated in a narrower range and basically remained stable around 1.5%. There was no inversion between overnight and 7D funds [10]. - At the beginning of the month, the central bank significantly withdrew cross - year funds, and the capital operation was generally stable and loose. In the middle of the month, due to the maturity of the 6M reverse repurchase and the freezing of funds for new stock subscriptions on the Beijing Stock Exchange, there was a brief friction in the capital market. Later, with the net injection of funds, the liquidity gradually stabilized. Towards the end of the month, the pressure on capital increase was relatively controllable [2][11]. - The capital stratification pressure in January was at a seasonally low level. The spread between R007 and DR007 decreased, and the spread between GC007 and DR007 also compressed, both at seasonally low levels [16]. - The volatility of overnight and 7D funds was at a seasonally low level, and the daily average trading volume of inter - bank pledged repurchase increased slightly compared to the previous month [23][24]. - Banks' net lending scale remained relatively high, and the net lending scale of money market funds first increased and then decreased [30]. 3.1.2 Liquidity Review - **Liquidity Aggregate**: In January, the base money increased by 1.6 billion yuan. The government deposit consumed about 1.1 trillion yuan of the base money, the central bank's net injection was 1.19 trillion yuan, and the foreign exchange funds continued to be slightly withdrawn by 7 billion yuan. After considering factors such as reserve freezing, cash withdrawal, and changes in non - financial institution deposits, the excess reserve at the end of the month decreased by about 692 billion yuan, and the excess reserve ratio was about 1.3%, which was seasonally high. The narrow - sense excess reserve level after deducting reverse repurchases was about 0.7%, close to the seasonal level [33]. - **Open - Market Operations**: In January, the central bank slightly withdrew short - term reverse repurchases in the open market, with a net injection of - 3.22 billion yuan. The MLF was injected with 90 billion yuan and 20 billion yuan matured, with a balance of 6.95 trillion yuan. The 3M and 6M outright reverse repurchases had a net injection of 30 billion yuan in total. The central bank also increased its net purchase of national debt by 10 billion yuan and carried out operations such as treasury time deposits and PSL [39][44]. 3.2 1 - Month Monetary Policy Tracking - In January 2026, the central bank cut the interest rates of various structural monetary policy tools by 25bp. There is still room for reserve requirement ratio cuts and interest rate cuts this year, as the exchange rate and net interest margin constraints have eased [3][52]. - The central bank continued its liquidity - caring approach, injecting 1 trillion yuan of medium - term liquidity through MLF and outright reverse repurchases. In January, the central bank increased its bond - buying scale to 10 billion yuan [3][52]. - The central bank may further create tools to provide liquidity support for non - bank institutions, and may refer to the SRF and some phased tools. It also promotes the interconnection of financial markets and supports the construction of the offshore RMB market [55]. 3.3 2 - Month Gap Prediction 3.3.1 Rigid Gap - In February, as it is a month with relatively less deposit growth, the increase in general deposits will consume about 3.45 billion yuan of excess reserves. The MLF maturity is 30 billion yuan, and the outright reverse repurchase maturity is 1.2 trillion yuan (70 billion yuan for 3M and 50 billion yuan for 6M), with 80 billion yuan of the 3M outright reverse repurchase being renewed [58]. 3.3.2 Exogenous Shocks - Due to the late Spring Festival this year, cash withdrawal and non - financial institution deposits will slightly consume excess reserves in February. The "currency issuance" item may consume about 1.2 trillion yuan of excess reserves, and non - financial institution deposits may consume about 9.65 billion yuan [62]. 3.3.3 Fiscal Factors - The government deposit may consume about 44.34 billion yuan of liquidity in February. Considering factors such as bond payment, tax revenue, and fiscal expenditure, the government bond issuance is relatively large this month [67]. 3.3.4 Comprehensive Judgment - The overall capital gap pressure in February is similar to that in January, mainly coming from the pressure of cash withdrawal before the Spring Festival and government bond payment. However, considering the current liquidity status of the banking system and the central bank's operation idea of maintaining sufficient liquidity, the cross - year funds are expected to remain stable, and the risk of significant fluctuations is controllable [70][71]. - Since January, the central bank has actively operated monetary policy tools, with an incremental injection of 1 trillion yuan through MLF and 6M outright reverse repurchases, and an increase in the bond - buying scale to 10 billion yuan. The 14D reverse repurchase was launched earlier before the Spring Festival, and the cross - Spring Festival pressure is controllable. However, the progress of cross - Spring Festival funds in the inter - bank market is relatively slow, and attention should be paid to the capital arrangements of institutions in the last week before the festival and potential capital disturbances [5][73].

Group 1 - The report indicates that the excess reserve ratio in December increased by 0.4 percentage points to 1.6%, which is relatively low for year-end months and below the expected 0.3 percentage points, primarily due to a lower-than-expected decline in government deposits [1][13][17] - In December, government deposits decreased by approximately 1 trillion, which is lower than the previously expected 2 trillion, reaching a historical high of 5 trillion [1][13][17] - The report highlights that the general public budget revenue and expenditure did not meet the annual budget targets, with the expenditure completion rate being the lowest in recent years, leading to a significant fiscal deficit of 2.66 trillion in December, exceeding expectations by about 500 billion [2][16][17] Group 2 - The report forecasts that the broad fiscal surplus for January is expected to be around 410 billion, which is at a neutral level compared to previous years, with government deposits anticipated to increase by approximately 1.25 trillion, potentially impacting liquidity [2][26][35] - In January, the monetary issuance is projected to increase by about 600 billion, with the reserve requirement ratio expected to rise by approximately 350 billion, indicating a tightening effect on liquidity [2][26][35] - The report notes that the funding rates in January have marginally increased compared to December, but the overall liquidity remains loose, with the average DR001 rate reaching 1.34%, higher than December's 1.28% [3][43][45] Group 3 - The report suggests that the fiscal deficit in February may reach the highest level for the same period in previous years, with government deposits expected to decrease by about 370 billion [7][35] - It is anticipated that the monetary issuance in February will remain high, with an expected increase of around 900 billion, influenced by the timing of the Chinese New Year [7][35] - The report indicates that the central bank's monetary policy has subtly shifted, focusing on guiding reasonable growth in financial totals rather than excessively loosening financial conditions [8][35]

Group 1 - The liquidity situation in February is expected to be better than in January, with MLF and reverse repos maturing decreasing from 1.9 trillion to 1.5 trillion yuan, and net financing of government bonds estimated at around 1.2 trillion yuan [9][15] - The issuance of local government bonds is significantly front-loaded in February, with an expected issuance of 906.7 billion yuan in the first week, and net financing of 720.9 billion yuan, including 579.7 billion yuan in local bonds [15][45] - By February 8, the cumulative issuance of local bonds is expected to reach 1.443 trillion yuan, with 778.7 billion yuan of ultra-long local bonds issued, accounting for 54% of the total [15][45] Group 2 - The local bond issuance plan for Q1 2026 totals 2.6549 trillion yuan, with monthly plans of 809 billion, 884.9 billion, and 960.9 billion yuan for January, February, and March respectively [15][49] - There is a strong willingness among regions to maintain a lower limit for bonds with maturities under 10 years, reflecting considerations for fiscal cost control, while there is less intervention for ultra-long bonds [16][46] - In January 2026, insurance companies had a net purchase of local bonds amounting to 135.4 billion yuan, compared to 120.6 billion yuan in the same period last year [16][46]

Report Industry Investment Rating No information provided regarding the report industry investment rating. Core Viewpoints - Despite large tax outflows in January and limited central bank injections, the funds remained loose. The influence of factors such as residents' foreign exchange settlement on the funds is likely limited, and the changes in exogenous disturbances and central bank injections can roughly explain the fluctuations in funds [5][37]. - Historically, there have been cases where funds remained loose under low excess reserve ratios. The central bank can maintain loose funds through open market operations or guiding bank lending. The current funds situation does not require excessive concern [42]. - Next week, the funds will face significant exogenous disturbances, especially a concentrated impact on Monday. However, considering the central bank's clear attitude of protecting the funds, it is expected that the funds rate will not continue to rise significantly compared to this week [11][68]. Summary by Relevant Catalog 1. Money Market 1.1 This Week's Funds Review - This week, the OMO had a net injection of 22.95 billion yuan. On Friday, there was a 150 - billion - yuan treasury cash deposit due, and the central bank conducted a 900 - billion - yuan 1 - year MLF operation, exceeding the monthly maturity by 700 billion yuan. After the MLF operation, DR001 fell back below 1.4% [3][18]. - The trading volume of pledged repurchase decreased slightly, and the overall scale fluctuated downward. The net lending of large - scale banks declined, while that of non - bank institutions' rigid lending first decreased and then increased [4][26]. - The cross - month progress of inter - bank institutions in January was slow, and the exchange - market cross - month progress was at the lowest level in the same period in recent years [32]. 1.2 Next Week's Funds Outlook - Next week, government bond net payment is expected to rise to 515 billion yuan, with 7 - day reverse repurchase maturities totaling 1181 billion yuan and 200 billion yuan of MLF maturing on Monday. The 26th is the reserve payment day [11][45][68]. - In January 2026, the government bond issuance scale was 2.08 trillion yuan, with a net financing scale of 1.18 trillion yuan, lower than expected. It is estimated that the government bond issuance scales in February and March will be 2.12 trillion and 2.63 trillion yuan respectively, with net financing scales of 1.36 trillion and 1.13 trillion yuan [56][62]. 2. Inter - bank Certificates of Deposit - This week, the 1Y Shibor rate declined by 0.6BP, and the 1 - year AAA - rated inter - bank certificate of deposit secondary rate declined by 3.0BP [69]. - The issuance scale of inter - bank certificates of deposit increased while the maturity scale decreased, with a net repayment scale of 9.06 billion yuan, a decrease of 19.04 billion yuan from last week. The issuance success rates of various banks increased, and the issuance spread between city commercial banks and joint - stock banks for 1Y certificates of deposit widened [74][75]. - The willingness of money market funds to reduce holdings of certificates of deposit in the secondary market continued to rise, while the willingness of other institutions to increase holdings in the primary market decreased. The relative strength index of certificates of deposit continued to decline seasonally [85]. 3. Bill Market This week, bill rates fluctuated within a narrow range. The 3 - month bill rate of state - owned and joint - stock banks increased by 2BP to 1.45%, and the 6 - month bill rate remained unchanged at 1.13% [93]. 4. Bond Trading Sentiment Tracking - Last week, the bond market recovered, the interest rate curve steeply declined, and the credit spreads of 3 - 7Y bonds were compressed across the board. Large banks tended to reduce their bond holdings overall [13][96]. - Trading - type institutions generally tended to increase their bond holdings, while the willingness of allocation - type institutions to increase their bond holdings decreased significantly [96].

Group 1 - The report indicates that the liquidity environment may face pressure due to the upcoming expiration of nearly 1 trillion yuan in pledged reverse repos, accelerated government bond issuance, and tax payment deadlines around January 20, which is a significant tax month [6][9][12] - The central bank has stated it will continue to increase liquidity injection and flexibly use various tools in open market operations to maintain ample liquidity, aiming to guide overnight rates close to the policy rate level of 1.40% [6][9][12] - The report highlights that local government bond issuance plans for January to March 2026 total 21,180 billion yuan, with 8,145 billion yuan planned for January, 4,424 billion yuan for February, and 8,611 billion yuan for March [14][37] Group 2 - The report notes that local bond supply has been notably slow, attributed to the delayed timing of local legislative sessions, which affects the actual issuance of new bonds [14][37] - As of January 18, 2026, local government bonds issued totaled 4,241 billion yuan, with 2,458 billion yuan in ultra-long bonds, accounting for 58% of the total, and 1,799 billion yuan in debt-restructuring bonds, accounting for 42% [14][37] - The report suggests that the current market conditions may lead to a focus on market-oriented issuance for ultra-long bonds, particularly in regions like Xinjiang, where the bidding spread is set significantly higher than secondary market spreads [41][43]

1. Report Industry Investment Rating No information provided in the document. 2. Core Viewpoints of the Report - The marginal tightening of funds this week may be due to the misalignment between exogenous disturbances and central bank injections. Despite the low excess reserve ratio in December and the large - scale net withdrawal of OMO in the first week of January, the funds remained relatively loose, possibly because of the abundant non - bank liquidity. Although the central bank did not announce a reserve requirement ratio cut this week, it is likely to take measures to maintain liquidity. A rate cut condition is maturing, and a reserve requirement ratio cut is likely to be implemented in March. It is expected that the DR001 central value in January will be around 1.3% - 1.35% [4][29][45]. - Next week, the reverse repurchase maturity scale will rise significantly, the government bond payment pressure will increase, and the tax - period capital demand will further increase. However, considering the central bank's intention to guide the overnight interest rate to run near the policy interest rate, the probability of a significant tightening of the capital market is limited [67]. 3. Summary According to the Directory 3.1 Money Market 3.1.1 This Week's Capital Market Review - OMO had a net injection of 81.28 billion yuan this week. The 6 - month repurchase expired on Tuesday, and the central bank over - renewed 30 billion yuan on Thursday. After the large - scale net withdrawal of OMO and government bond payments after the New Year, the inter - bank water level dropped significantly. The government bond payments were mainly concentrated on Monday, and the repurchase renewal was delayed, causing the funds to tighten marginally in the first half of the week. After the repurchase was implemented on Thursday, the funds gradually loosened, and the DR001 fell to 1.32% on Friday [3][16]. - The trading volume of pledged repurchase decreased in the middle of the week and recovered in the second half. The average daily trading volume increased by 1.12 trillion yuan to 8.62 trillion yuan compared with last week. The overall scale of pledged repurchase decreased first and then increased, but it was still below 13 trillion yuan on Friday. The net lending of large - scale banks and small - and medium - sized banks decreased first and then increased. The net lending of non - bank institutions increased first and then decreased, and the net borrowing maintained a shock. The capital gap index rose to - 363.9 billion on Wednesday and then gradually fell to - 762 billion on Friday, slightly higher than last week but still below the neutral level [3][23]. - The marginal tightening of funds may be due to the misalignment between exogenous disturbances and central bank injections. The decline in government deposits in December was only 1 trillion yuan, resulting in an excess reserve ratio of only 1.6%, lower than expected. The large - scale net withdrawal of OMO in the first week of January and government bond payments may have reduced the excess reserve ratio to 0.9%. The government bond payment and repurchase expiration at the beginning of this week, combined with equity market fluctuations and new stock subscriptions on the Beijing Stock Exchange, led to a temporary increase in DR001, but the central bank's attitude did not change, and the funds loosened again after the repurchase on Thursday [4][29][35]. 3.1.2 Next Week's Capital Outlook - This week, the actual net payment of government bonds was - 4.85 billion yuan. Next week, the payment scale of government bonds is expected to be about 20 billion yuan, and the local bond issuance scale of 5 regions is 231.6 billion yuan. Due to the decrease in the maturity volume, the overall net payment scale of government bonds will rise to 246.5 billion yuan [46]. - As of now, 11 regions have issued local bonds worth 424.1 billion yuan in January. The issuance of new general bonds, new special bonds, and refinancing bonds is 21.6 billion yuan, 174.6 billion yuan, and 227.9 billion yuan respectively, with replacement bonds worth 170.4 billion yuan. The overall issuance of local bonds in January is roughly in line with the plan. It is expected that the government bond issuance scale in January, February, and March 2026 will be 2.12 trillion yuan, 1.81 trillion yuan, and 2.77 trillion yuan respectively, and the net financing scale will be 1.22 trillion yuan, 1.05 trillion yuan, and 1.26 trillion yuan respectively. The cumulative net financing scale of government bonds in the first quarter may be lower than that in the same period of 2025 [55][62]. - Next week, the 7 - day reverse repurchase maturity scale will increase significantly, the government bond payment pressure will increase, and the tax - period capital demand will further increase. Although the new stock subscription on the Beijing Stock Exchange may have a certain impact on the exchange capital price, it is generally controllable. Considering the central bank's attitude, the probability of a significant tightening of the capital market is limited [67]. 3.2 Inter - Bank Certificates of Deposit - The 1 - year Shibor rate rose 0.4 BP to 1.65% compared with January 9. The secondary rate of 1 - year AAA - rated inter - bank certificates of deposit fell 0.8 BP to 1.63% compared with last week [71]. - This week, the increase in the issuance scale of inter - bank certificates of deposit was less than the maturity scale, with a net repayment of 28.04 billion yuan, an increase of 12.27 billion yuan compared with last week. The net financing scale of state - owned banks, joint - stock banks, city commercial banks, and rural commercial banks was - 14.03 billion yuan, - 20.43 billion yuan, 5.97 billion yuan, and - 0.07 billion yuan respectively. The 1 - year certificates of deposit were still the largest issuance variety, but the issuance proportion decreased by 15 percentage points to 30% compared with last week [74]. - The issuance success rates of inter - bank certificates of deposit of state - owned banks, joint - stock banks, city commercial banks, and rural commercial banks all increased compared with last week. Except for the relatively low issuance success rate of joint - stock banks, the issuance success rates of other banks were close to the average level in recent years. The issuance spread of 1 - year certificates of deposit between city commercial banks and joint - stock banks narrowed [75][78]. - The new - caliber relative supply - demand strength index of certificates of deposit dropped to 28.7%, a decrease of 13.6 percentage points compared with last week, mainly due to the decreased willingness of money market funds to increase their holdings of certificates of deposit, especially the increased willingness to reduce holdings in the secondary market. However, this decline is seasonal, and the current index is roughly the same as in previous years [86][89]. 3.3 Bill Market This week, the bill interest rate declined overall. As of January 16, the 3 - month and 6 - month bill interest rates of state - owned and joint - stock banks decreased by 7 BP and 9 BP respectively compared with January 9, to 1.43% and 1.13% [94][96]. 3.4 Bond Trading Sentiment Tracking - This week, the sentiment of interest - rate bonds was strong, and the yields declined slightly overall, while the credit was generally stable [99]. - Large - scale banks tended to increase their bond holdings overall, with an increased willingness to hold inter - bank certificates of deposit, 1 - 3 - year and 10 - year policy financial bonds, and a decreased willingness to hold short - term commercial paper. However, they tended to reduce their holdings of 1 - 3 - year treasury bonds and 5 - year policy financial bonds [99]. - The overall willingness of trading - type institutions to reduce bond holdings decreased. Among them, the willingness of securities companies, other institutions, and products to reduce holdings decreased, while fund companies tended to increase their holdings [99]. - The overall willingness of allocation - type institutions to increase bond holdings decreased significantly. Among them, the willingness of small - and medium - sized banks to increase holdings decreased significantly, while the willingness of insurance companies and wealth management products to increase holdings increased [99].