1. Report Industry Investment Rating There is no information about the report industry investment rating in the provided content. 2. Core Viewpoints of the Report - The fiscal data from January to February 2026 shows that non - tax revenue turned positive year - on - year, and fiscal expenditure was front - loaded, which supported the unexpected growth of economic data to some extent [4][5]. - The government will continue to implement a more proactive fiscal policy in 2026, mainly reflected in ensuring fiscal expenditure, optimizing the combination of government bond tools, improving the efficiency of transfer payment funds, optimizing the expenditure structure, and strengthening fiscal - financial coordination [5]. - It is expected that the target range of the 10 - year treasury bond is 2 - 3%, with a central value of 2.5% [7]. 3. Summary by Relevant Catalogs 3.1 1 - 2 Month Fiscal Data Concerns - Tax revenue increased by 0.1% year - on - year, and the growth rate decreased by 0.7 pct compared with the previous value. The better - than - expected import and export data in January and February may be the main reason for the year - on - year growth of tax revenue. The securities transaction stamp duty increased by 110.0% year - on - year. Non - tax revenue increased by 3.4% year - on - year, turning from negative to positive, driven by local governments' continuous activation of state - owned assets [4]. - Government fund revenue decreased by 16.0% year - on - year in January and February. Land transfer revenue decreased by 25.2% year - on - year, further dragging down government fund revenue. The decline of land transfer revenue directly led to the contraction of overall fund revenue, and the ebb of land finance may continue to drag down government fund revenue [4]. 3.2 General Public Budget - **Income**: From January to February, general public budget income increased by 0.7% year - on - year. Central income decreased by 1.7% year - on - year, and local income increased by 2.6% year - on - year. Tax revenues such as domestic value - added tax, import - link value - added tax and consumption tax, etc., increased compared with December 2025. Non - tax revenue turned positive, with a year - on - year increase of 3.4% [6]. - **Expenditure**: From January to February, general public budget expenditure increased by 3.6% year - on - year. Central expenditure increased by 4.5% year - on - year, and local expenditure increased by 3.5% year - on - year. The year - on - year growth rate of fiscal expenditure rebounded compared with December [6]. 3.3 Governmental Fund Budget - **Income**: From January to February, government fund income decreased by 16.0% year - on - year. Central income increased by 6.7% year - on - year, and local income decreased by 19.2% year - on - year. Land transfer income decreased by 25.2% year - on - year [7]. - **Expenditure**: From January to February, government fund expenditure increased by 16.0% year - on - year. Central expenditure increased by 8.0% year - on - year, and local expenditure increased by 16.3% year - on - year. Land transfer expenditure decreased by 1.9% year - on - year. The growth rate of government fund expenditure in January and February increased compared with the previous value [7]. 3.4 Bond Market Views - **Fundamentals**: The falsification of the under - expected economic recovery, combined with the possible broad credit and broad fiscal policies at the beginning of 2026, will accelerate the cyclical recovery [7]. - **Broad money**: If there are broad monetary policies (such as reserve requirement ratio cuts, interest rate cuts, bond purchases, etc.), similar to 2025, yields may decline briefly and then rise [7]. - **Inflation**: It is expected that inflation will pick up, and attention should be paid to whether the month - on - month PPI can remain positive [7]. - **Funding rate**: If the month - on - month inflation continues to rise, there is a possibility of tightening funds, and the yields of short - term bonds will also start to rise [7]. - **Real estate**: Real estate is not the main means of stabilizing growth this time. Similar to the situation in the United States after 2008, real estate is a lagging indicator. Real estate may bottom out after the recovery of various economic indicators and the rise of the stock market [7]. - **Bonds**: It is expected that the target range of the 10 - year treasury bond is 2 - 3%, with a central value of 2.5% [7].

Core Insights - The report emphasizes the financial impact of rising inflation, particularly due to the recent increase in oil prices, which is expected to have a more significant effect on the price system compared to previous instances, such as during the 2022 Russia-Ukraine conflict [21][22] - The current economic cycle is positioned differently than in 2022, with signs indicating a potential recovery in corporate inventory and an increase in long-term loans, suggesting a shift towards a demand cycle [21][22] - The report predicts that long-term bond rates will likely break through their upper resistance levels as nominal economic recovery continues, with structural monetary policy adjustments being a key focus for the central bank [3][23] Financial Implications - The report outlines three main financial implications: 1. Long-term bond rates are expected to rise, with the ten-year government bond yield likely to break its current range [3][23] 2. A decrease in market risk appetite may lead to a shift from liquidity-driven asset valuation to profit-driven valuation, potentially resulting in a challenging period for financial assets [3][23] 3. The ongoing geopolitical tensions in the Middle East may drive capital flows towards safer assets, including RMB-denominated assets, depending on the pace of financial infrastructure opening [3][23] Banking Sector Adjustments - The banking sector is advised to adjust its mindset regarding the interest rate down cycle, preparing for a scenario where interest rates and funding costs may no longer decline [4][24] - Large banks should focus on reducing the duration of loans and increasing the acquisition of settlement deposits, while smaller banks need to extend the duration of liabilities to mitigate potential impacts from cyclical shifts [4][24] Market Performance - During the observation period from March 9 to March 13, 2026, the banking sector overall increased by 1.5%, outperforming the broader market [19][56] - The report notes that the A-share banking sector showed a positive performance, while H-share banks lagged behind, indicating a divergence in market performance [19][56] Profit Forecasts - The report indicates that profit growth expectations for banks in 2025 remain largely unchanged, with minor adjustments noted for specific banks [20][56]

Macro Insights - February CPI year-on-year growth rebounded to 1.3%, significantly up from January's 0.2%, influenced by the later timing of the Spring Festival [4] - Core CPI accelerated, with a month-on-month increase of 0.7% and a year-on-year growth of 1.8%, the highest since the pandemic began [5] - PPI continued its upward trend month-on-month, increasing by 0.4%, while the year-on-year decline narrowed to 0.9% [5][6] Non-Ferrous Metals Industry - The U.S. non-farm payrolls unexpectedly decreased by 92,000 jobs in February, leading traders to increase bets on a potential interest rate cut by the Federal Reserve [9] - The manufacturing PMI for February was reported at 49.0%, indicating a slight decline in manufacturing activity compared to the previous month [8] - The domestic tungsten market saw a significant price increase, with black tungsten concentrate prices surpassing 900,000 CNY per ton, marking a 100.11% increase since the beginning of the year [10] North Exchange Market - The average daily trading volume on the North Exchange reached 23.69 billion CNY, a 28.8% increase week-on-week, indicating a recovery in market activity [12] - The North Exchange 50 index fell by 7.14%, with notable fluctuations in individual stocks, highlighting the market's volatility [12] Investment Recommendations - The report suggests focusing on high-quality stocks with stable cash flows and continuous R&D investment, while avoiding speculative stocks without performance support [14] - It emphasizes a gradual investment strategy aligned with policy catalysts, particularly in high-end manufacturing, domestic substitution, and aerospace sectors [14]

1. Report Industry Investment Rating - There is no information provided in the content about the report industry investment rating. 2. Core Viewpoints of the Report - The current domestic macro - environment in China is generally favorable, serving as the core support for risk assets in Q1. Overseas, the focus is on the Walsh trade, US tariff developments, and Middle East geopolitical tensions. It is recommended to moderately increase risk appetite and enhance offensive positioning within a balanced framework [7][8][9]. 3. Summary According to Relevant Catalogs 3.1 February Review of Major Assets - Global major asset classes in February shifted towards "structural divergence". In the equity market, A - shares outperformed overall with style differences, mid - cap and small - to - mid cap segments led, while large - cap indices lagged. Hong Kong stocks were weak, tech sector retreats were notable. Developed markets in overseas equities diverged, emerging markets performed better. In the bond market, rate - sensitive assets were stable. In the foreign exchange market, the US dollar strengthened, pressuring non - dollar currencies. In the commodity market, it was overall weak but with structural features [14][15][18]. 3.2 Market Focus: The Unfolding of the "Walsh Trade" - The market's perception of Kevin Walsh's trading legacy has evolved. The "Walsh Trade" was initially characterized by a bull flattening of the yield curve. The key contention is the feasibility of "rate cuts + QT". If QT triggers a liquidity crisis, it may invalidate Walsh's policy framework. His policy mix is more supportive of growth - oriented equities but may pressure long - dated bonds [22][24][25]. 3.3 Macro Environment Outlook 3.3.1 Overseas Macro - Global manufacturing PMI edged up in January to 50.9. US macro data in January showed signs of a "Goldilocks" scenario with inflation softening, unemployment rate declining, and employment data improving. Q4 GDP missed expectations but the effects of rate cuts may be materializing. Tariff developments added market uncertainty, and the legal effect of a court decision on tariffs may take effect from mid - March to early April [26][30][33]. 3.3.2 Chinese Domestic Macro - The domestic macroeconomic outlook will remain generally supportive in Q1, with favorable investment environment for risk assets. Policy expectations for a strong start to the 15th Five - Year Plan and anticipated inflation rebound are the core themes, and economic structural transformation and upgrading are long - term drivers [36]. 3.4 Outlook for Major Assets 3.4.1 Stock Index - In March, the domestic equity market is likely to continue its volatile yet upward movement. Policy acceleration, recovering inflation, and economic structural transformation are the driving factors. It is recommended to overweight IC [39]. 3.4.2 Commodities - **Precious Metals**: In March, geopolitical trading and tariff adjustments will drive the market. Precious metals may trend higher with gold receiving stronger impetus from geopolitical factors [44]. - **Non - Ferrous Metals**: Geopolitical factors may support non - ferrous metals. Prices may be volatile but biased higher. Copper, aluminum, and tin may see price centers shift upward [50]. - **Ferrous Metals**: In March, there will be a tug - of - war between inventory trends and policy expectations. Ferrous metals are expected to trade in wide ranges, and iron ore faces significant downside pressure [54]. - **Energy & Chemicals**: Oil prices will enter a validation phase for geopolitical supply disruption concerns. Chemical products have limited downside and merit attention [59]. 3.4.3 Bonds - In March, short - duration bonds are likely to outperform medium - to long - duration bonds, and overall asset payoff is modest. Future rate - cut space appears limited [64]. 3.5 Strategic Asset Allocation Recommendations - In March, moderately increase risk appetite and adopt a more aggressive posture on a balanced allocation framework. Overweight mid - cap style in domestic equity indices (focus on IC), have a neutral stance on government bonds with a standard long position in the short end (focus on TS), overweight non - ferrous metals, have a standard long in the chemical chain, and a standard short in ferrous metals. Overweight gold futures and have a standard position in silver futures [68][69][70].

Report Industry Investment Rating - Not mentioned in the provided content Core Viewpoints of the Report - The A-share market showed a strong performance after the Spring Festival, with the Wind All A index rising by 2.34% in February, approaching the high in late January. The overseas market also had a small increase during the Spring Festival, and the risk preference of the A-share market rebounded significantly [3]. - A-share technology themes currently have a premium compared to US stocks. The valuation of A-share hot themes is relatively high, and the dynamic PE of the CSI 500 index exceeds twice the standard deviation of the past 5 years. The A-share technology index represented by the STAR 50 has recently returned to last year's high, while the overseas China-themed technology index reached its peak in October 2025 and then declined [3]. - Inflation recovery may be the trading focus in the second half of the year. The PPI data has stabilized for four consecutive months, and the market is starting to discuss the trading logic of inflation recovery. Although the systematic opportunities in pro - cyclical industries need time to be verified, a trading window may appear in the second half of the year [3]. Summary According to the Directory 1. Monthly Data Tracking - **Index Performance**: In February, the Wind All A index fluctuated upwards with a monthly increase of 2.34% and an average daily trading volume of 2.31 trillion yuan. The CSI 1000 rose by 3.71%, the CSI 500 by 3.44%, the SSE 50 fell by 0.88%, and the SSE 300 rose by 0.09% [7]. - **Index Valuation**: The valuation of the CSI 500 index is relatively high, with its dynamic PE exceeding twice the standard deviation of the past 5 years [3]. - **Sector Rotation**: In February, sector rotation was obvious, and technology themes remained the main line [14]. - **Financing and Volatility**: The margin trading balance decreased by 48.5 billion yuan in February and increased by 77.4 billion yuan after the Spring Festival, indicating a significant recovery in risk preference. The implied volatility of the index dropped significantly, with 1000IV falling from 25.44% to 23.18%, 300IV from 19.49% to 15.83%, and 50IV from 19.19% to 15.45% [25]. - **Fund Issuance**: In the week before the Spring Festival, the issuance of equity funds and hybrid funds both increased. In February, new equity funds were established with 20.6 billion yuan, and new hybrid funds with 24.9 billion yuan, significantly higher than in the fourth quarter of 2025 [28]. - **Net Short Position**: At the end of February, the net short position of each index decreased slightly [29]. - **Exchange Rate**: The US dollar index fluctuated weakly, and the RMB appreciated by more than 2% since the beginning of the year. The spot exchange rate of the US dollar against the RMB closed at 6.84%. The 1 - year swap of the US dollar against the RMB did not rise synchronously and remained around - 1300. The central bank lowered the forward foreign exchange purchase risk reserve ratio from 20% to 2% on February 26, which is conducive to releasing forward foreign exchange purchase demand and balancing forward exchange rate expectations [32]. - **A - share Technology Index Premium**: A - share technology themes have been anchored to US stocks in the past year. The A - share technology index represented by the STAR 50 has recently returned to last year's high, while the overseas China - themed technology index reached its peak in October 2025 and then declined. The overall performance of Chinese technology giants has been weaker than that of the top 7 US companies since October 2025 [35]. 2. 2025 Third - Quarter Report Overview - **Revenue and Profit**: The cumulative year - on - year revenue of the entire A - share market excluding finance in Q3 was 0.74%. The cumulative year - on - year net profit was 1.89%, higher than 0.83% in Q2 but lower than 3.45% in Q1. The cumulative year - on - year profit of industrial enterprises above a designated size was 3.2%, reaching a high for the year [91][94]. - **Profit Share**: The profit share of the financial sector is still relatively high, with banks accounting for 33% and non - banks for 13%, totaling 46% [97]. - **Technology Theme Profit**: The technology theme has entered the profit realization period [98]. - **ROE**: ROE is still in the bottom - oscillating range [101]. - **ROE DuPont Analysis**: The report conducts a DuPont analysis of ROE, including indicators such as operating net profit margin, gross profit margin, asset turnover, and equity multiplier [104]. - **Index Financial Indicators**: All major indicators of each index closed up. After the adjustment of index components in December, the financial indicators of each index changed slightly [107][109].

Report Industry Investment Rating - The investment rating for government bonds is "oscillation" [4] Core Viewpoints of the Report - The bond market is expected to oscillate before the Two Sessions. The real - estate stabilization policies in Shanghai are a limited negative for the bond market. The market's expectation of policy strength during the Two Sessions has slightly increased, but the probability of further large - scale policy stimulus is low, and geopolitical conflicts have led to continuous risk - aversion sentiment [2][11]. - After the Two Sessions, attention should be paid to the supply pressure of government bonds and the trend of the equity market. In the long run, inflation recovery and technological progress are the main trading themes for various assets this year, and the bond market remains a weak asset with adjustment risks [2][12][13]. - In terms of strategies, a unilateral strategy should be cautious about bond market adjustment risks; a short - hedging strategy is recommended; and in the long term, the spread of 3T - TL should be widened [2][14][15]. Summary by Directory 1. One - Week Review and Views 1.1 This Week's Trend Review - From February 23 to March 1, government bond futures declined slightly. On Tuesday, the LPR quote remained stable, the stock market rose as expected, and government bond futures outperformed spot bonds. On Wednesday, Shanghai introduced real - estate relaxation policies, the stock market continued to rise, and some bond market institutions took profits, causing government bond futures to decline. On Thursday, with a quiet market and strong profit - taking willingness, government bond futures continued to decline. On Friday, the bond market sentiment improved, and most government bond futures contracts rose. As of February 27, the settlement prices of the 06 contracts of 2 - year, 5 - year, 10 - year, and 30 - year government bond futures were 102.448, 105.985, 108.390, and 112.120 yuan respectively, down 0.042, 0.120, 0.125, and 0.750 yuan from the previous weekend [1][10]. 1.2 Next Week's View - The bond market is expected to oscillate before the Two Sessions. The real - estate policies in Shanghai are a limited negative for the bond market. The market's expectation of policy strength during the Two Sessions has slightly increased, but the deficit rate is likely to remain at 4%, and the probability of further large - scale policy stimulus is low. Geopolitical conflicts have led to continuous risk - aversion sentiment. After the Two Sessions, attention should be paid to the supply pressure of government bonds and the trend of the equity market. In the long run, the bond market is a weak asset with adjustment risks [2][11][12]. 2. Weekly Observation of Interest - Rate Bonds 2.1 Primary Market - This week, 46 interest - rate bonds were issued, with a total issuance of 787.42 billion yuan and a net financing of 368.289 billion yuan, an increase of 787.42 billion yuan and 551.673 billion yuan respectively from last week. 27 local government bonds were issued, with a total issuance of 256.42 billion yuan and a net financing of 190.429 billion yuan, an increase of 256.42 billion yuan and 211.813 billion yuan respectively from last week. 298 inter - bank certificates of deposit were issued, with a total issuance of 460.37 billion yuan and a net financing of - 206.29 billion yuan, an increase of 460.37 billion yuan and a decrease of 130.85 billion yuan respectively from last week [18]. 2.2 Secondary Market - Government bond yields rose. As of February 27, the yields of 2 - year, 5 - year, 10 - year, and 30 - year government bonds were 1.36%, 1.55%, 1.82%, and 2.29% respectively, up 0.45, 1.04, 2.32, and 4.60 basis points from the previous weekend. The spreads of 10Y - 1Y, 10Y - 5Y, and 30Y - 10Y widened by 2.03, 1.28, and 2.28 basis points respectively [24]. 3. Government Bond Futures 3.1 Price, Trading Volume, and Open Interest - Government bond futures declined slightly. As of February 27, the settlement prices of the 06 contracts of 2 - year, 5 - year, 10 - year, and 30 - year government bond futures were 102.448, 105.985, 108.390, and 112.120 yuan respectively, down 0.042, 0.120, 0.125, and 0.750 yuan from the previous weekend. The trading volumes of 2 - year, 5 - year, 10 - year, and 30 - year government bond futures this week were 52,831, 98,584, 173,293, and 128,349 lots respectively, with changes of - 769, - 10,029, + 29,223, and + 17,974 lots from last week. The open interests were 71,309, 186,444, 324,967, and 174,690 lots respectively, with changes of - 2,129, - 9, - 18,953, and - 11,948 lots from last week [31][34]. 3.2 Basis and IRR - The basis of TL widened, while the basis of T, TF, and TS oscillated narrowly. There are no obvious arbitrage opportunities at present. In the short term, risks such as policy stimulus and increased government bond supply should be watched out for. In the long run, the bond market still faces adjustment pressure, and a short - hedging strategy is recommended [38]. 3.3 Inter - delivery and Inter - variety Spreads - As of February 27, the inter - delivery spreads of the 2603 - 2606 contracts of 2 - year, 5 - year, 10 - year, and 30 - year government bond futures were + 0.002, - 0.095, + 0.040, and - 0.250 yuan respectively, with changes of + 0.058, + 0.030, + 0.080, and - 0.110 yuan from the previous weekend. This week, long - position holders led the roll - over first, followed by short - position holders [43]. 4. Weekly Observation of the Funding Situation - This week, the central bank conducted 1.641 trillion yuan of 7 - day reverse repurchase operations. With 2.2524 trillion yuan of 7 - day reverse repurchases and 300 billion yuan of 1 - year MLF maturing, the net withdrawal was 911.4 billion yuan. As of February 27, R007, DR007, SHIBOR overnight, and SHIBOR 1 - week were 1.36%, 1.34%, 1.36%, and 1.47% respectively, up 7.37, 5.46, 8.70, and 4.40 basis points from the previous weekend. The average daily trading volume of inter - bank pledged repurchase was 7.79 trillion yuan, 1.06 trillion yuan more than last week, and the overnight proportion was 74.44%, lower than last week [46][48]. 5. Weekly Overseas Observation - The US dollar index declined slightly, and the yield of 10 - year US Treasury bonds decreased. As of February 27, the US dollar index fell 0.10% to 97.6443 compared with February 20, and the yield of 10 - year US Treasury bonds was 3.97%, down 11 basis points from February 20. The yield spread between Chinese and US 10 - year government bonds was inverted by 215.1 basis points. Due to some dovish statements from Fed officials, the expectation of interest - rate cuts increased, and the US dollar index weakened slightly. Concerns about AI impact led to an adjustment in US technology stocks and a decline in US Treasury bond yields [51]. 6. Weekly Observation of High - Frequency Inflation Data - Industrial product prices rose this week. As of February 27, the Southern China Industrial Product Index, Metal Index, and Energy and Chemical Index were 3,694.04, 7,225.54, and 1,603.56 points respectively, up 88.95, 214.49, and 33.59 points from the previous weekend. Agricultural product prices fell. As of February 27, the prices of pork, 28 key vegetables, and 7 key fruits were 17.70, 5.30, and 7.91 yuan per kilogram respectively, down 0.51, 0.28, and 0.15 yuan per kilogram from the previous weekend [54]. 7. Investment Suggestions - The bond market is currently oscillating, but risks of future adjustments should be watched out for [55]

Inflation Data Overview - In January 2026, the Consumer Price Index (CPI) increased by 0.2% month-on-month and year-on-year, while the core CPI (excluding food and energy) rose by 0.8% year-on-year[4] - The Producer Price Index (PPI) saw a month-on-month increase of 0.4% but a year-on-year decrease of 1.4%[4] Seasonal Effects and Consumer Demand - The January CPI year-on-year drop to 0.2% was influenced by the late timing of the Spring Festival, which typically weakens food price increases[4] - Historical data suggests that seasonal disturbances like this are often corrected in February, indicating potential recovery in CPI[5] Core CPI and Consumer Recovery - The core CPI's month-on-month increase of 0.3% marks a six-month high, reflecting improving consumer demand supported by effective consumption policies[4] - Price increases in household goods and services, such as travel and entertainment, indicate a robust recovery in service consumption[4] PPI Trends and Influences - The PPI's year-on-year decline narrowed to -1.4%, with a month-on-month increase of 0.4%, both reaching their highest values since October 2023[4] - Factors contributing to PPI recovery include the "anti-involution" policy and international commodity price increases[4] Risks and Future Outlook - Potential risks include policy measures falling short of expectations, unexpected changes in the domestic economy, and fluctuations in exports[4]

Report Industry Investment Ratings - Not provided in the content Core Views of the Report - The labor market's downward pressure is increasing, and the US dollar is expected to weaken in the short term [2][16] - The US stock market is expected to maintain high - level fluctuations, and the bond market has upward momentum but also faces adjustment pressure [20][22] - Most commodities show different trends, with some in a weak or strong oscillation state, and the prices of some are affected by supply and demand, policies, and geopolitical factors [25][34][53] Summary by Relevant Catalogs 1. Financial News and Comments 1.1 Macro Strategy (Gold) - Gold prices oscillated and closed higher, benefiting from the sharp decline of the US dollar index and the existence of certain risk - aversion sentiment. The market's expectation of a March interest - rate cut is about 20%. It is expected that the overall trend of precious metals will be oscillatory before the Spring Festival. It is recommended to reduce positions [12][13] 1.2 Macro Strategy (Foreign Exchange Futures - US Dollar Index) - Hasset stated that employment data will decline, and the downward pressure on the labor market is increasing. The US dollar is expected to weaken in the short term [14][16][17] 1.3 Macro Strategy (US Stock Index Futures) - Google plans to raise about $20 billion through issuing US dollar bonds. The short - term situation of the US stock market is a mix of long and short factors, and it is expected to maintain high - level oscillations [19][20] 1.4 Macro Strategy (Treasury Bond Futures) - The central bank conducted 113 billion yuan of 7 - day reverse repurchase operations, with a net investment of 38 billion yuan on the day. The bond market has upward momentum, but the probability of an interest - rate cut in the short term is low. It is recommended to pay attention to short - selling opportunities after the upward momentum weakens [21][22][23] 2. Commodity News and Comments 2.1 Black Metals (Rebar/Hot - Rolled Coil) - Steel prices continue the weak oscillation pattern. Before the Spring Festival, the fundamental pressure increases, and the price is under pressure. It is recommended to treat steel prices with an oscillatory mindset and pay attention to risks with a light position before the festival [25][26] 2.2 Black Metals (Steam Coal) - The price of steam coal at Beigang is relatively stable. The Indonesian policy has some impact, but the coal price is seasonally strong, with the policy mainly strengthening the bottom and the upward elasticity being limited [27][28][29] 2.3 Black Metals (Iron Ore) - Iron ore prices are still weak and oscillatory. The iron - making process is moderately resuming production, and it is necessary to wait for the order situation in March after the Spring Festival [30] 2.4 Agricultural Products (Soybean Oil/Rapeseed Oil/Palm Oil) - The palm oil inventory has increased. Before the release of the MPOB report, the market is in a wait - and - see state. It is necessary to pay attention to the impact of MPOB data and control positions to avoid risks [31] 2.5 Agricultural Products (Soybean Meal) - Private exporters sold 264,000 tons of soybeans to China. The CBOT soybeans are oscillating strongly, but the soybean meal inventory in oil mills has reached a record high for the same period. It is expected that the futures price will maintain an oscillation, and the soybean meal will be weaker than the external market [32][33][34] 2.6 Non - ferrous Metals (Lithium Carbonate) - The fundamentals of lithium carbonate are improving in reality, but the futures market is greatly affected by macro - sentiment and capital flow. After the Spring Festival, it is expected that the supply and demand will both increase, and the price center may rise significantly. It is recommended to take a bullish approach and pay attention to buying opportunities at low prices [37][38][39] 2.7 Non - ferrous Metals (Copper) - The macro - negative sentiment is gradually digested by the market, but the short - term fundamentals limit the price increase. It is expected that the price will oscillate widely in the short term, and it is recommended to wait and see [42][43] 2.8 Non - ferrous Metals (Lead) - The lead market is in a situation of weak supply and demand. The price is oscillating, and the decline space is limited. It is recommended to wait and see in the short term and pay attention to mid - term long - position opportunities [44][45] 2.9 Non - ferrous Metals (Zinc) - The zinc market is oscillating. The zinc ore production expectation may change. Before the Spring Festival, the operation difficulty is high. It is recommended to use call options instead for unilateral operations and wait and see for arbitrage [47][48] 2.10 Non - ferrous Metals (Tin) - The semiconductor industry's revenue is expected to reach $1 trillion in 2026. The supply of tin is expected to ease, but there are still uncertainties. The demand is weak. It is expected that the price will oscillate widely [49][51][52] 2.11 Energy Chemicals (Crude Oil) - Venezuela's oil production has rebounded. The oil price is oscillating upward, and the risk premium is expected to support the oil price. It is necessary to pay attention to the follow - up negotiations between the US and Iran [53][54] 2.12 Energy Chemicals (Liquefied Petroleum Gas - LPG) - Due to the geopolitical situation in Iran, the LPG price is expected to oscillate strongly [55][56] 2.13 Energy Chemicals (Asphalt) - The asphalt inventory has increased, and the market trading atmosphere is weak. The demand has basically stagnated. It is necessary to pay attention to the changes in the geopolitical situation [56][57] 2.14 Energy Chemicals (Urea) - The supply of urea is relatively abundant, and the demand fluctuation is not obvious. Before and after the Spring Festival, the urea price may oscillate and adjust. It is not recommended to continue to allocate more at the current price [59][60] 2.15 Energy Chemicals (Styrene) - The pure benzene inventory in East China ports has increased. The styrene market is entering the supply elasticity test stage. The current bullish trading of the styrene futures has temporarily ended. It is recommended to reduce the risk exposure before the festival [61][62] 2.16 Shipping Index (Container Freight Rate) - Affected by the Spring Festival and geopolitical factors, the container freight rate is expected to oscillate strongly in the short term. It is recommended to wait and see [63][64]

Economic Growth and Investment - The GDP growth for the year 2025 is projected at 5.0%, achieving the annual economic growth target, characterized by a "high first, low second" structure and stronger external demand compared to internal demand [2] - In December 2025, industrial production accelerated, particularly in new momentum sectors such as pharmaceuticals, specialized equipment, and computer communications [2] - Fixed asset investment continued to decline throughout 2025, recording negative growth, but is expected to rebound in 2026 due to new policy financial tools and increased special bond investments [2] Consumer and Price Trends - In December, the Consumer Price Index (CPI) rose by 0.8%, reaching the highest level since March 2023, primarily driven by increased food prices [3] - The Producer Price Index (PPI) also turned positive, supported by improved supply-demand order from "anti-involution" policies and rising commodity prices [3] - Retail sales growth slowed to a new low for 2023, but service consumption showed improvement, indicating a potential bottoming out of certain consumer goods [2][3] Fiscal and Monetary Policy - Fiscal revenue saw a significant decline at year-end, with major tax categories dropping, while fiscal expenditure decreased at a slower rate [3] - The fiscal deficit rate for 2026 is expected to remain at a high level of 4.0%, ensuring that expenditure efforts will not diminish [3] - The central bank announced a reduction in the interest rates of structural monetary policy tools and expanded their scope, indicating ongoing targeted support for key sectors [3] External Environment and Market Trends - The Federal Reserve maintained its benchmark interest rate at 3.5%-3.75% in January, aligning with expectations, while continuing its asset purchase program [4] - Global stock markets experienced a broad rally in January, with emerging markets performing particularly well, and A-share indices all rising [4] - The bond market is expected to remain stable under conditions of liquidity easing and policy support, with certain bonds still holding investment value [5]

Core Insights - The interest rate swap market experienced significant growth in 2025, with a nominal principal transaction volume reaching 43.57 trillion yuan, a year-on-year increase of 33.3% [2] - The market is expected to face a range-bound fluctuation in 2026, influenced by the ongoing economic transition and moderate inflation recovery [12] Group 1: 2025 Interest Rate Swap Market Trading Conditions - The nominal principal of RMB interest rate swaps increased significantly, with 38.58 million transactions, marking a 17.0% year-on-year growth [2] - The trading volume for 1-year and below maturities accounted for 67.9% of total nominal principal, while transactions for maturities of 10 years and above surged by 241.5% year-on-year [2][3] - The market saw a rise in the number of participating institutions, with 871 entities registered for RMB interest rate swap business by the end of 2025, primarily consisting of non-legal person products [3] Group 2: 2025 Interest Rate Swap Market Trends Review - The interest rate swap market did not continue the downward trend of 2024, instead exhibiting an "N" shaped trajectory with rates rising, falling, and then rising again throughout the year [4] - The 1-year and 5-year FR007 swap rates ended the year at 1.4985% and 1.6116%, respectively, reflecting increases of 3 basis points and 18 basis points from the previous year [4][7] - The year was divided into four phases, with notable movements in interest rates influenced by various economic factors, including monetary policy adjustments and market sentiment [4][5][6][7] Group 3: 2026 Interest Rate Swap Market Outlook - The interest rate swap market is anticipated to experience a range-bound fluctuation, with economic fundamentals indicating a transition period and moderate inflation recovery [12] - Key factors to monitor include the economic recovery and government bond issuance pace, which could impact interest rate movements [13]