Report Information - Report Name: Treasury Bond Daily Report [1] - Date: April 1, 2026 [2] - Researchers: He Zhuoqiao, Huang Wenxin, Nie Jiayi [3] - Team: Macro Finance Team [4] Report Highlights 1. Investment Rating - No investment rating information provided. 2. Core Views - On March 31, due to the loose funds across the quarter, treasury bond futures closed slightly higher across the board. The yields of major term interest rate bonds in the inter - bank market declined comprehensively, with short - term yields rising by about 1bp, and the yield of the 10 - year treasury bond active bond 250022 rising by 0.9bp to 1.812% by 16:30. The funds were loose across the quarter, with a net reverse repurchase injection of 15 billion yuan in the open market. The overnight DR in the inter - bank market fell 3.84bp to around 1.27%, and the 7 - day fund rate fluctuated narrowly around 1.43%. The medium - and long - term funds loosened, and the 1 - year AAA certificate of deposit rate fell to around 1.48%. - Economic data from January to February were good, dampening market expectations of monetary easing. Coupled with the unclear situation in the Middle East, oil prices might remain at a high level for a long time, bringing imported inflation pressure and impacting the bond market. However, considering that the current inflation increase is mainly due to supply contraction rather than a significant increase in demand, the central bank's monetary policy is unlikely to change significantly. There may be opportunities to bet on market oversold conditions. In the short term, with economic data released and important policy information landed, market trading may focus on the capital side, policy deployment, and Sino - US relations. Attention should be paid to the possibility of reserve requirement ratio cuts and a resurgence of risk - aversion sentiment, and the short - term loose funds will provide strong support. [11][12] 3. Summary by Directory 3.1 Market Review and Operation Suggestions - **Market Performance**: Treasury bond futures closed slightly higher across the board due to loose funds across the quarter; the yields of major term interest rate bonds in the inter - bank market declined comprehensively, with short - term yields rising by about 1bp, and the 10 - year treasury bond yield changing slightly. The 10 - year treasury bond active bond 250022 yield rose 0.9bp to 1.812% by 16:30. The funds were loose across the quarter, with a net reverse repurchase injection of 15 billion yuan. The overnight DR in the inter - bank market fell 3.84bp to around 1.27%, the 7 - day fund rate fluctuated narrowly around 1.43%, and the 1 - year AAA certificate of deposit rate fell to around 1.48%. [8][9][10] - **Conclusion**: Economic data from January - February were good, dampening market easing expectations. With the unclear Middle East situation, high oil prices may bring imported inflation pressure and impact the bond market. But considering inflation is supply - driven, the central bank's policy may not change significantly. There may be opportunities in the oversold market. In the short term, the focus may shift to the capital side, policy, and Sino - US relations. Attention should be paid to RRR cuts and risk - aversion sentiment, and short - term loose funds will support. [11][12] 3.2 Industry News - The US State Department clarified the false report about Trump delaying his visit to China due to China's non - assistance in the Strait of Hormuz escort. The two sides are in communication about the visit. - The Fed will hold an interest - rate meeting after the US - Israeli air strikes on Iran. The strikes have caused oil price surges, affecting various assets. The Fed will discuss the impact of energy shocks on inflation and economic growth. Market expectations for a rate cut this year have dropped to once, and the war may strengthen the consensus that the Fed will keep rates unchanged. - China's economic data from January - February showed that fixed - asset investment increased 1.8% YoY (ex - real estate investment increased 5.2%), industrial added value increased 6.3% YoY, service production index increased 5.2% YoY, retail sales increased 2.8% YoY, real - estate development investment decreased 11.1%, new home sales area decreased 13.5%, new home sales volume decreased 20.2%, and the urban unemployment rate was 5.3%. The decline in new home prices in 70 large and medium - sized cities continued to narrow. [13][14] 3.3 Data Overview - **Treasury Bond Futures Market**: The report presents the trading data of treasury bond futures on March 31, including contract information such as the previous settlement price, opening price, closing price, settlement price, change, change rate, trading volume, open interest, and open interest change of various contracts. It also mentions data on the spread of main contract expirations, the spread between different - term main contracts (2 - year vs 30 - year, 10 - year, 5 - year; 5 - year vs 30 - year, 10 - year; 10 - year vs 30 - year), and the trend of main contracts. [6] - **Money Market**: The report includes the term structure change and trend of SHIBOR, the change of the weighted average interest rate of inter - bank pledged repurchase, and the change of the inter - bank deposit - based pledged repurchase rate. [30][34] - **Derivatives Market**: The report shows the fixed - rate curve (mean) of Shibor3M interest - rate swaps and FR007 interest - rate swaps. [36]

Core Viewpoint - The People's Bank of China (PBOC) emphasizes the need to promote stable economic growth and reasonable price recovery while addressing potential external risks from geopolitical tensions and trade conflicts [1] Group 1: Economic Outlook - The first quarter of 2026 has seen heightened geopolitical tensions, particularly between the U.S. and Iran, leading to concerns about external demand impacting China's economy [1] - Input inflation from commodities like crude oil poses challenges for China's price management [1] Group 2: Monetary Policy - Current monetary policy in China still has room for maneuver, with a focus on creating a conducive social financing environment to support stable economic growth [1] - Flexibility in monetary policy is deemed necessary due to uncertainties in the economic environment [1] Group 3: Policy Framework - The "14th Five-Year Plan" period aims to establish a scientifically sound and robust monetary policy system, balancing short-term and long-term goals, growth support, and risk prevention [1] - Emphasis on strengthening counter-cyclical and cross-cyclical adjustments to avoid excessive monetary policy tightening or loosening, ensuring stable macroeconomic operations [1]

Group 1: PMI Overview - March manufacturing PMI rebounded to 50.4%, up 1.4 percentage points from 49.0%[1] - Non-manufacturing PMI increased to 50.1%, up from 49.5%[1] - New orders in manufacturing rose 3.0 percentage points to 51.6%, surpassing production which increased 1.8 percentage points to 51.4%[1] Group 2: Demand and Supply Dynamics - The proportion of manufacturing firms reporting insufficient demand fell to 48.5%, a decrease of 6.6 percentage points, marking the first drop below 50% since July 2022[1] - Manufacturing export orders increased by 4.1 percentage points to 49.1%, indicating stronger demand[2] - The purchasing price index for major raw materials reached 63.9%, while factory gate prices rose to 55.4%[2] Group 3: Employment and Construction - Employment index in manufacturing rose 0.6 percentage points to 48.6%, with only four months since March 2023 showing a rebound exceeding 0.5 percentage points[3] - The construction business activity index increased by 1.1 percentage points to 49.3%, driven by infrastructure investment recovery[3] - New orders in construction rose 1.3 percentage points to 43.5%[3] Group 4: Price Trends - Manufacturing output prices increased by 4.8 percentage points to 55.4%, suggesting a potential PPI increase of nearly 1 percentage point[4] - Service sector prices rebounded to 50%, marking a return to the growth threshold after 29 months[4] - Construction prices rose by 1.7 percentage points to 49.3%, indicating upward pressure from raw material costs[4] Group 5: Economic Outlook - The overall economic performance in March indicates a recovery, with production rebounding more significantly than orders, reaching 50.5%[5] - The average PMI output for Q1 2026 was 49.9%, a slight decrease of 0.2 percentage points from Q4 2025, indicating ongoing economic challenges despite March's rebound[6] - The report suggests that fiscal and monetary policies may not need immediate adjustments given the current economic indicators[6]

Group 1: Manufacturing Sector Insights - The manufacturing PMI for March 2026 is 50.4%, an increase of 1.4 percentage points from the previous month, marking a return to the expansion zone after two months[7] - The new orders index and production index are at 51.6% and 51.4%, respectively, both above the critical point, indicating strong demand recovery[13] - Small and medium-sized enterprises' PMIs have significantly improved, with small enterprises at 49.0% (up 1.5 percentage points) and medium enterprises at 49.3% (up 4.5 percentage points) from the previous month[10] Group 2: Price and Cost Pressures - The main raw material purchase price index is at 63.9%, up 9.1 percentage points, while the factory price index is at 55.4%, up 4.8 percentage points, indicating rising input costs due to geopolitical tensions[16] - The procurement volume index has risen to 50.9%, reflecting increased purchasing activity driven by demand recovery[18] - The inventory indices for raw materials and finished products are at 47.7% and 46.7%, respectively, indicating a slowdown in inventory depletion[18] Group 3: Non-Manufacturing Sector Performance - The non-manufacturing business activity index is at 50.2%, up 0.5 percentage points, with significant internal differentiation in the service sector[20] - The construction business activity index is at 49.3%, up 1.1 percentage points, but still indicates a low level of activity, with new orders at 43.5%[23] - Consumer services sectors such as retail and hospitality are below the critical point, suggesting a need for policy support to boost consumer confidence[20] Group 4: Risks and Future Outlook - Rising raw material prices may squeeze profit margins for downstream enterprises, potentially suppressing future investment and production willingness[26] - The ongoing geopolitical tensions in the Middle East remain a critical variable, with sustained high oil prices likely to exacerbate cost pressures in downstream industries[26] - Real estate demand needs to be stimulated, and geopolitical risks could disrupt market stability[27]

1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints of the Report - On Tuesday, the futures prices of the container shipping index (European route) declined across the board. The main contract EC2606 closed down 6.74%, and the far - month contracts fell between 2 - 7%. The latest SCFIS European route settlement freight rate index was 1752.54, up 59.28 points from last week, a 3.5% increase. The Middle East situation has become tense again, increasing uncertainty risks. Oil prices remain above $110 per barrel, leading to high container transportation costs. The European route has maintained a detour pattern and is not affected by the potential blockade of the Mandeb Strait, causing the futures price increase to reverse. The 15 - week average quoted price is about $2400 for large containers, equivalent to about 1800 points. Shipping companies may try to hold up prices in April, but the increase is expected to be small due to the supply - demand pattern. The eurozone's January unemployment rate unexpectedly dropped to 6.1%, a record low, and inflation accelerated unexpectedly. The ECB kept interest rates unchanged as expected, but concerns about imported inflation have led to an increase in expectations of a tightening ECB policy. The market fully anticipates that the ECB will restart interest rate hikes in July. Overall, the geopolitical situation is undetermined, the detour expectation is gradually being realized, the fundamentals of the shipping industry have not changed, and the upward space in April is limited. Shipping companies' adjustment of freight rates has also decreased compared to before. It is recommended that investors be cautious, pay attention to the operation rhythm and risk control, and track shipping company quotes, cargo volume data, and the continuation of the US - Iran conflict [2] 3. Summary by Relevant Catalogs Futures Disk - EC main contract closing price was 1672.900, down 84.2; EC sub - main contract closing price was 2394.1, down 173.1. The spread between EC2604 - EC2606 was - 721.20, up 91.40; the spread between EC2604 - EC2608 was - 762.90, up 56.40. The EC contract basis was 79.64, up 46.80. The main contract position of EC was 5505, down 1524 [2] Spot Price - SCFIS (European route) (weekly) was 1752.54, up 59.28; SCFIS (US West route) (weekly) was 1826.77, unchanged; SCFI (composite index) (weekly) was 1263.40, up 119.82. CCFI (composite index) (weekly) was 1139.04, up 18.43; CCFI (European route) (weekly) was 1485.47, up 21.72. The Panama - type freight index (daily) was 2031.00, down 14.00; the Baltic Dry Bulk Index (daily) was 1756.00, down 14.00. The average charter price of Panama - type ships was unchanged; the average charter price of Cape - type ships was 22291.00, down 2304.00 [2] Industry News - US President Trump said that Iran has agreed to "most of the content" in the "15 - point cease - fire plan". The US is in serious consultations with Iran to end military operations in Iran. Trump threatened to destroy all of Iran's power plants, oil wells, Kharg Island, and possibly all desalination plants if an agreement cannot be reached in the short term. The White House Press Secretary said Trump hopes to reach an agreement with Iran by April 6 and intends to call on Arab countries to bear the costs of the US military operations against Iran. Iran stated that if its power facilities are attacked, it will cause a power outage in the entire region. Iran's President said that ending the war should be based on safeguarding national dignity, interests, and security. The Iranian Foreign Ministry spokesman said that Iran has not had any direct negotiations with the US so far and that the so - called "15 - point cease - fire plan" is "excessive and unreasonable". Iran will not participate in the war - related meeting led by Pakistan. Iran's First Vice - President warned Trump not to send troops to Kharg Island, saying that whether the US can withdraw troops will not be under its control. The Speaker of the Iranian Islamic Parliament said that it is a "major mistake" for the US and Israel to threaten Iran, and Iran will make any aggressor pay a price under the command of the Supreme Leader [2] Key Points of Attention - On April 1, there are a series of economic data releases, including France's March manufacturing PMI final value at 15:50, Germany's March manufacturing PMI final value at 15:55, the eurozone's March manufacturing PMI final value at 16:00, the UK's March manufacturing PMI final value at 16:30, the eurozone's February unemployment rate at 17:00, the US's March ADP employment number (in ten thousand people) at 20:15, the US's February retail sales monthly rate at 20:30, and the US's March ISM manufacturing PMI at 22:00 [2]

1. Report Industry Investment Rating No information provided in the given content. 2. Core Viewpoints of the Report - In Q1 2026, the bond market showed an oscillating trend driven by multiple factors such as the stock - bond seesaw, central bank operations, and geopolitics. The long - and short - end yields were significantly differentiated, with the yield curve becoming steeper. The credit bond yields fluctuated in the same direction as the treasury bond yields, and the yields of low - grade and medium - term credit bonds declined more significantly. The credit spreads of all grades generally narrowed, and the default risk decreased compared to previous years [8][36]. 3. Summary According to Relevant Catalogs 3.1 Valuation Curve: Yields First Declined and Then Rose - Most treasury bond yields of various tenors generally declined, while the yields of ultra - long - term treasury bonds increased. The yield curve showed a steepening feature. The credit bond yields also declined, with the yields of low - grade and medium - term credit bonds declining more significantly. The credit spreads of credit bonds of all tenors and ratings narrowed, and the narrowing amplitude of medium - and low - grade credit bonds was generally higher than that of high - grade ones [9]. - Specifically, as of March 27, 2026, the 1 - year treasury bond, 10 - year treasury bond, 10 - year policy - bank bond, and 30 - year treasury bond yields changed by -9BP, -3BP, -4BP, and 8BP respectively. The yields of 3 - year AAA, 3 - year AA+, 3 - year AA, and 3 - year AA - changed by -12BP, -16BP, -21BP, and -19BP respectively. The credit spreads of 3 - year AAA, 3 - year AA+, 3 - year AA, and 3 - year AA - narrowed by 6BP, 10BP, 15BP, and 13BP respectively [9]. 3.2 Treasury Bond Yields Oscillated and the Curve Became Steeper - The bond market in Q1 2026 presented an "oscillating and multi - factor intertwined" trend. The short - end yields were mainly affected by the loose capital market and oscillated downward, while the long - end yields were affected by equity fluctuations, risk - aversion sentiment, and inflation expectations and showed range - bound oscillations. The 1 - year and 10 - year treasury bond yields can be divided into five stages [10]. - Early January: After the New Year's Day holiday, the equity market soared, and bond market sentiment was under pressure. The 10 - year treasury bond yield rose above 1.90%, while the 1 - year treasury bond yield only rose slightly by about 2BP [11]. - From early January to before the Spring Festival: The regulatory authorities introduced equity "cooling" measures, and the central bank implemented a structural interest - rate cut. The bond market recovered, and the 10 - year treasury bond yield declined. The 1 - year treasury bond yield dropped below 1.25% under the expectation of loose liquidity [11]. - After the Spring Festival: The capital interest rate increased marginally, and the A - share market strengthened. The 10 - year treasury bond yield rose back above 1.80%, and the 1 - year treasury bond yield returned above 1.32% [11]. - From late February to early March: The military strike between Israel, the US, and Iran triggered risk - aversion sentiment, and the 10 - year treasury bond yield dropped below 1.78% [11]. - From early March to the end of March: The intensifying conflict between the US and Iran pushed up oil prices, and the long - end treasury bonds weakened under the expectation of imported inflation. The 10 - year treasury bond yield rose back to around 1.82%. The loose capital market drove the short - end yields to oscillate downward, and the yield curve became steeper [12]. 3.3 Credit Spreads: Credit Spreads of All Grades Generally Narrowed - In early January, affected by the soaring equity market and the pressure on bond market sentiment, the yields of credit bonds and treasury bonds rose simultaneously, but the increase in treasury bond yields was more obvious, leading to a rapid compression of credit spreads [15]. - From early January to the end of February, with the implementation of equity cooling measures and the central bank's structural interest - rate cut, the bond market recovered, and the decline in credit bond yields was greater than that of treasury bonds. The credit spreads of all grades narrowed slightly. At the end of February, affected by the increase in capital interest rates and the strengthening of the equity market, the spreads rebounded briefly [15]. - After early March, the intensifying US - Iran conflict pushed up oil prices and inflation expectations. The long - end treasury bond yields rose, the short - term bonds strengthened, and the yields of 3 - year - old credit bonds also declined. The credit spreads of 3 - year - old bonds of all grades fluctuated and narrowed with the market rhythm [15]. - Overall, in Q1 2026, the credit spreads of all grades generally showed a narrowing trend, with a brief rebound and then continued to narrow. The narrowing amplitude of short - end credit spreads was less than that of long - end spreads, and the narrowing amplitude of high - grade credit spreads was less than that of low - grade spreads [16]. 3.4 Risk of Implicit Rating Downgrade in the ChinaBond Market Increased - In Q1 2026, the amount of credit bonds with implicit rating downgrades in the ChinaBond market was 194 billion yuan, a significant increase compared with the same period last year. The total amount of credit bonds with implicit rating upgrades was 23.1 billion yuan, significantly lower than the same period last year [19]. - Among the above - mentioned upgraded and downgraded samples, the proportion of urban investment bonds in Q1 2026 was 29.3% and 0.5% respectively. Compared with the same period last year, the proportion of upgraded urban investment bonds increased, and the proportion of downgraded urban investment bonds decreased [19]. 3.5 Default: Default Risk Decreased and the Default Rate of Real - Estate Bonds Declined - In Q1 2026, there were no new first - time default issuers. According to the broad default standard, the default amount was 1.1 billion yuan, and the default rate was 0.002%. The annualized default rate decreased significantly compared with previous years [24]. - Structurally, the defaulting entities in Q1 2026 were still concentrated in real - estate bonds, and the defaulting real - estate enterprises were public enterprises. The default rate of real - estate bonds in Q1 was 0.1%, and the default scale and annualized default rate of real - estate bonds decreased significantly both quarter - on - quarter and year - on - year. The default rate of private enterprises in Q1 was 0%, and the annualized default rate continued to decline quarter - on - quarter [29]. 3.6 Recovery Rate Remained Low - In Q1 2026, the defaulted bonds recovered a principal of 1.07 billion yuan. The corresponding issuers included Sunac Real Estate, Greenland Holdings, and Country Garden, which self - compensated part of the interest or principal [32]. - From 2014 to the present, the defaulted bonds have paid a total principal of 144.7 billion yuan, and the payment rate of overdue principal is 13.7% [32]. 3.7 Summary - In Q1 2026, the bond market yields showed an oscillating trend of first declining and then rising, with significant differentiation between the long - and short - ends. The credit bond yields fluctuated in the same direction as the treasury bond yields, and the yields of low - grade and medium - and long - term credit bonds declined more significantly. The credit spreads of all grades generally narrowed, and the narrowing amplitude of medium - and low - grade credit spreads was higher than that of high - grade spreads, and the short - end narrowing amplitude was less than the long - end [36]. - The default risk further decreased compared with previous years, with no new first - time default issuers. The defaulting entities were still concentrated in real - estate bonds, and the default scale and annualized default rate of real - estate bonds decreased significantly both quarter - on - quarter and year - on - year. The amount of implicit rating downgrades in the ChinaBond market increased significantly year - on - year, and the amount of upgrades was significantly lower than the same period last year. The proportion of urban investment bonds in the upgraded samples increased, and the proportion in the downgraded samples decreased [37]. - In Q1 2026, the defaulted bonds recovered a principal of 1.07 billion yuan, and some issuers self - compensated part of the interest or principal. From 2014 to the present, the payment rate of overdue principal of defaulted bonds is 13.7% [37].

1. Report Industry Investment Rating No information provided in the given content. 2. Core Viewpoints of the Report - High - frequency economic data focuses on four aspects: production - end heat is differentiated with rising coke oven, blast furnace, and PX operating rates, and asphalt at a low level and declining, while tire operating rates remain stable; commercial housing transaction area rebounds, and the industrial land area decreases; price trends diverge, with prices of crude oil, coking coal, and non - ferrous metals rising, and agricultural product prices continuing the seasonal downward trend; residents' travel heat rebounds overall, with increases in subway passenger volume and domestic and international flight operations. Short - term concerns are on the impact of imported inflation on the price end and the real - estate recovery situation [2][31]. 3. Summary by Relevant Catalogs Production - Steel: In the week of March 27, the coke oven capacity utilization rate increased by 0.87pct, the blast furnace operating rate increased by 1.25pct, and the rebar production decreased by 5.46 tons [9]. - Petroleum asphalt: The operating rate decreased by 2.5pct compared with the previous week. On March 25, the operating rate of domestic petroleum asphalt plants was 19.3% [9]. - Chemical industry: The PX operating rate increased by 1.01pct compared with the previous week, and the PTA operating rate remained flat [9]. - Automobile tires: The all - steel tire operating rate increased by 0.03pct, and the semi - steel tire operating rate decreased by 0.01pct compared with the previous week [10]. Demand - Real estate: In the week of March 29, the commercial housing transaction in 30 large and medium - sized cities increased, the inventory - to - sales ratio of commercial housing in 10 large cities decreased, the land supply area in 100 large and medium - sized cities decreased, and the transaction premium rate of residential land in 100 large and medium - sized cities decreased [13]. - Movie box office: In the week of March 22, the total national movie box office revenue was 327 million yuan, a decrease of 45 million yuan compared with the previous week [13]. - Automobile sales: In the week of March 22, the daily average retail sales of national passenger car manufacturers increased by 6,293 vehicles, and the daily average wholesale sales increased by 4,809 vehicles compared with the previous week [17]. - Shipping freight rates: In the week of March 27, the Shanghai Containerized Freight Index (SCFI) increased by 119.82 points, the China Containerized Freight Index (CCFI) increased by 18.43 points, and the Baltic Dry Index (BDI) decreased by 25 points [20]. Prices - Energy: On March 27, the settlement price of Brent crude oil futures was 112.57 US dollars per barrel, with a weekly change of 0.34%; the settlement price of coking coal futures was 1,218 yuan per ton, with a weekly change of 4.82% [22]. - Metals: On March 27, the closing price of LME copper futures was 12,141 US dollars per ton, with a weekly change of 2.59%; the closing price of LME aluminum futures was 3,284.5 US dollars per ton, with a weekly change of 2.9%; the closing price of LME zinc futures was 3,106.5 US dollars per ton, with a weekly change of 1.65%; the settlement price of domestic rebar futures was 3,121 yuan per ton, with a weekly change of - 0.16% [23]. - Agricultural products: On March 27, the 200 - index of agricultural product wholesale prices decreased by 1.29% week - on - week. The weekly changes in the prices of pork, eggs, vegetables, and fruits were - 1.56%, 1.71%, - 1.85%, and 0.26% respectively [25]. Logistics - Subway passenger volume: On March 29, the seven - day moving average of Beijing's subway passenger volume increased by 61,700 person - times, with a weekly change of 0.61%; the seven - day moving average of Shanghai's subway passenger volume increased by 192,900 person - times, with a weekly change of 1.81% [27]. - Flight operations: On March 29, the seven - day moving average of domestic (excluding Hong Kong, Macao, and Taiwan) flight operations increased by 80.43 flights, with a weekly change of 0.61%; the seven - day moving average of domestic (Hong Kong, Macao, and Taiwan) flight operations increased by 11.29 flights, with a weekly change of 3.08%; the seven - day moving average of international flight operations increased by 0.71 flights, with a weekly change of 0.04% [29]. - Urban congestion: On March 29, the seven - day moving average of the peak congestion index in first - tier cities was 1.7, a decrease of 0.04 compared with the previous week, with a weekly change of - 2.21% [29].

Report Industry Investment Rating No relevant content provided. Core View of the Report - After the outbreak of the US-Iran war, external uncertainties have increased. The impact of energy supply contraction on domestic industrial production and external demand may gradually emerge, challenging the recovery narrative of domestic "re - inflation" driven by strong external demand. The supply of government bonds from the "Two Sessions" not exceeding expectations and the decline in the profit - making effect of the equity market are relatively favorable for the bond market. [3][104] - In the short term, the probability of the central bank increasing "loose - money" policies is low, and the market capital price is difficult to decline further. The long - end of the bond market may have more opportunities, while the short - end may face adjustment pressure after the quarter - end if the capital market remains stable. [3][106] Summary by Directory Market Review - In March, the bond market was volatile. With the market capital price running at a low level, the performance of the short - and medium - term bonds was better than that of the long - term bonds. Compared with spot bonds, the valuation of the bond futures market was mostly low in the second half of March. As of March 30, the monthly increases of the main contracts of TS, TF, T, and TL were +0.09%, +0.10%, +0.00%, and - 0.46% respectively; the IRRs of the main contracts of TS, TF, T, and TL were approximately 1.0708%, 1.0955%, 1.1937%, and 0.9081% respectively. [2] Market Logic 1. External Demand Supports the Fundamentals, and Geopolitical Tensions Increase Uncertainties - In January - February, China's economic data was better than expected, with a significant year - on - year increase in foreign trade. The total import and export amount increased by 21.0% year - on - year, with imports up 19.8% and exports up 21.8%, and the trade surplus reached $213.618 billion. High - value - added products such as integrated circuits, automobiles, and ships had a large increase in exports, and some labor - intensive products also rebounded. [7] - Supported by external demand, the added value of industrial enterprises above a designated size increased by 6.3% year - on - year in January - February, and the added value of high - tech manufacturing increased by 13.1% year - on - year. The service industry production index increased by 5.2% year - on - year. [7] - In terms of domestic demand, fixed - asset investment increased by 1.8% year - on - year in January - February, with manufacturing and infrastructure investment increasing by 3.1% and 11.4% respectively. The decline in real estate development investment narrowed to - 11.1%. Social consumer goods retail sales increased by 2.8% year - on - year, with catering revenue increasing by 4.8% year - on - year. [8] - After the US - Iran war, although the Middle East energy supply disruption had a certain negative impact on domestic industrial production, it was generally controllable. Leading indicators showed that external demand remained resilient, but the growth rate of port cargo and container throughput in March decreased compared with January - February, indicating that the support of external demand may weaken marginally. [14][25] - In terms of domestic demand, the real estate market in March was okay, but the year - on - year sales volume was similar to last year, and the second - hand housing price index continued to decline. The year - on - year decline in passenger car sales narrowed but remained negative. [32] 2. Price Indicators Continue to Rise, and Concerns about Imported Inflation Intensify - In February, domestic inflation data exceeded expectations. CPI and core CPI increased by 1.3% and 1.8% year - on - year respectively, and PPI increased by 0.4% month - on - month. The rise in precious metal prices and the recovery of residents' travel willingness contributed to the increase in core CPI, and the high - tech industry's prosperity drove up the PPI. [38] - With the increase in geopolitical tensions, the prices of precious metals and non - ferrous metals have fallen, and the rise in fuel prices may have a negative impact on residents' travel. The impact of imported factors on domestic core inflation remains to be seen. [39] - If energy price increases do not lead to core inflation or even slow down core inflation, the central bank may cut policy rates, but the rate cut will be relatively restrained. If energy prices are transmitted to core inflation, it will restrict the central bank's "loose - money" policy. [48] 3. Corporate Financing Demand Increases, and Households Continue to "Shrink Their Balance Sheets" - In February, the year - on - year growth rate of domestic loan balances was 6.0%, and the year - on - year growth rate of social financing stock was 8.2%. The financing demand of the corporate sector improved, with significant year - on - year increases in medium - and long - term loans and non - standard financing. The household sector continued to "shrink its balance sheet", and the credit supply in March may be average. [52] - In terms of money supply, M2 increased by 9.0% year - on - year in February, and M1 increased by 5.9% year - on - year. The increase in M1 may be related to the improvement of export - oriented enterprises' operations and their strong willingness to settle foreign exchange. The increase in non - bank financial institution deposits may be due to the "deposit transfer" phenomenon during the peak period of residents' fixed - deposit maturity. [58] 4. The Capital Market is Stable and Loose, and the Probability of Policy Intensification is Low - In March, the central bank reduced the medium - and long - term liquidity supply, with a net withdrawal of 25 billion yuan. However, the capital market remained balanced and loose. The weighted average interest rates of inter - bank pledged repurchase were low and fluctuated narrowly. The issuance interest rate of inter - bank certificates of deposit declined. [67] - The current monetary policy remains supportive and moderately loose, which is friendly to the bond market, especially the short - and medium - term bonds. However, due to the possible transmission of energy prices to core inflation, the probability of the central bank increasing "loose - money" policies in the short term is low, and the downward space for capital prices is limited. [67] 5. Bond Supply Does Not Exceed Expectations, and Market Risk Appetite Fluctuates - The government bond supply announced during the "Two Sessions" was slightly lower than expected, which alleviated the market's excessive concerns about ultra - long - term bond supply. [77][78] - At the beginning of the year, the regulatory attitude towards the equity market changed, and after the geopolitical factors fermented, the upward momentum of the domestic equity market weakened. The decline in the profit - making effect of the stock market may lead to some funds flowing back to the bond market. [82] 6. Bond Futures Valuation is Low, and Long - End Spreads are High - Since mid - March, the valuation of bond futures has been mostly low, especially for the TL contract, mainly due to the cautious sentiment in the bond market caused by better - than - expected fundamental data and geopolitical uncertainties. [88] - In the spot bond market, the cautious sentiment at the long - end has widened the spread between new and old 30 - year bonds and steepened the long - end yield curve. The conditions for compressing the long - end spreads are gradually accumulating. [94][96] Future Outlook and Investment Strategies - In April, geopolitical events may still affect the trend of major asset classes. For unilateral operations, investors can consider buying T and TL contracts at low prices. For arbitrage, after partially taking profits on the short position of the 30Y - 7Y term spread (TL - 3T), it is recommended to hold an appropriate position. In addition, investors can consider long - TL and short - 30Y active bond operations. [106]

Performance Overview - Southeast Asia ETF rose by 0.90% over the two-week period from March 14 to March 27, 2026, outperforming Japan, Latin America, Africa, the UK, China, India, and the US[3] - The Southeast Asia Technology ETF declined by 3.19%, underperforming the broader Southeast Asia ETF by 4.09 percentage points[3] Country-Specific Performance - iShares MSCI Indonesia ETF fell by 0.84%, underperforming by 1.74 percentage points, influenced by external energy cost shocks and domestic fiscal consolidation efforts[4] - iShares MSCI Singapore ETF increased by 1.66%, outperforming by 0.76 percentage points, supported by government energy subsidy measures despite external inflation pressures[4] - iShares MSCI Thailand ETF gained 1.27%, outperforming by 0.37 percentage points, with stable market conditions bolstered by clear government policies[4] - iShares MSCI Malaysia ETF decreased by 0.73%, underperforming by 1.63 percentage points, primarily due to surging diesel prices impacting costs[4] - Global X MSCI Vietnam ETF dropped by 0.70%, underperforming by 1.60 percentage points, as the market reacted negatively to the global energy crisis despite government relief measures[4] Market Liquidity - Trading volumes for Southeast Asia ETFs decreased significantly, with Global X FTSE Southeast Asia ETF trading volume down by 48.2% to 315,000 shares[15] - iShares MSCI Singapore ETF saw a trading volume decline of 40.2% to 9.381 million shares, while iShares MSCI Thailand ETF experienced a 65.9% drop to 896,000 shares[15] Risk Factors - Macroeconomic volatility risks in Southeast Asia due to external demand weakness and policy easing uncertainties[5] - Geopolitical risks affecting regional supply chains and increasing instability[5]

Summary of Key Points from Conference Call Records Industry Overview - The conference call discusses the impact of geopolitical tensions, particularly in the Middle East, on global asset allocation and market dynamics, emphasizing a shift from growth-driven to safety-driven investment strategies [2][3]. Core Insights and Arguments - **Asset Allocation Shift**: The main theme for 2026 asset allocation is expected to return to risk assets, particularly stocks and commodities, despite current pressures on risk assets due to geopolitical tensions [2][3]. - **Domestic Market Dynamics**: The domestic market is experiencing a "double kill" in stocks and bonds, with traditional stock-bond dynamics failing. The PPI and CPI divergence indicates rising input inflation pressure, suggesting a potential upward shift in interest rates in 2026 [1][2]. - **U.S. Treasury Bonds**: The expected central yield for 10-year U.S. Treasury bonds is projected to remain above 4%, with weakened safe-haven attributes due to increased volatility and risk correlation with risk assets [3][12]. - **A-Share Market Strategy**: The A-share market is focusing on scarce resources like coal and oil, with a medium to long-term value proposition as the ERP is near a ten-year average. Short-term strategies should focus on low-valuation sectors such as non-bank financials and essential consumption [4][5]. - **Global Market Differentiation**: Stock market performance will vary based on resource control and energy dependency. Countries with strong resource control, like China, show resilience, while those reliant on energy imports, like Europe and Korea, face significant risks [6][9]. Important but Overlooked Content - **AI and Market Potential**: The emergence of AI-driven payment systems is expected to create a trillion-dollar market, with high certainty in infrastructure layers and significant flexibility in application layers [1][12]. - **Investment Risks in Korea**: The Korean market faces dual pressures from high oil prices and currency depreciation, leading to potential EPS downgrades and capital outflows, despite previous strong performance [8][10][11]. - **Gold and Oil Investment Strategies**: For gold, a volatility trading approach is recommended rather than a straightforward long position. For oil, caution is advised due to potential high volatility driven by supply-side factors [13]. This summary encapsulates the critical insights and strategic recommendations from the conference call, highlighting the evolving landscape of global markets amid geopolitical tensions and economic shifts.