1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - This week, the equity market continued to rise strongly, and the bond market remained highly volatile. However, from the perspective of institutional behavior, the sentiment of trading desks stabilized significantly in the second half of the week, enhancing the bond market's resilience to pressure. The selling pressure from funds on interest - rate bonds was concentrated in the first two days, and they turned to net buyers in the second half of the week. The purchasing power of allocation desks has weakened. The focus in the future is still on the redemption pressure and sentiment improvement of trading desks [9]. 3. Summary According to the Table of Contents 3.1 Overall Sentiment: Bond Market Vitality Index Declined - The bond market vitality index declined this week. As of August 22, the bond market vitality index dropped 12 pcts to 17% compared to August 15, and the 5D - MA decreased 4 pcts to 23% [10]. - Indicators of rising bond market vitality include the median duration of medium - and long - term pure bond funds (the rolling two - year percentile increased from 98.3% to 99.7%), the excess level of the inter - bank bond market leverage ratio compared to the average of the past four years (the rolling two - year percentile increased from 24% to 26%), and the implied tax rate of the 10 - year China Development Bank bond (inverse) (the rolling two - year percentile increased from 4% to 8%) [1]. - Indicators of falling bond market vitality include the trading volume of the active 10Y CDB bond / the balance of 9 - 10Y CDB bonds (the rolling two - year percentile decreased from 86% to 38%) and the turnover rate of 30Y treasury bonds (the rolling two - year percentile decreased from 55% to 44%) [1]. 3.2 Institutional Behavior: Trading Desks Were Net Sellers, and the Purchasing Power of Allocation Desks Weakened 3.2.1 Buying and Selling Strength and Bond Selection - In the cash bond market this week, the order of net buying strength was large banks > insurance > other product types > wealth management > overseas institutions and others > rural financial institutions, and the order of net selling strength was funds > city commercial banks > securities firms > money market funds > joint - stock banks. For ultra - long bonds (bonds with a maturity of over 15 years), the order of net buying strength was insurance > rural commercial banks > city commercial banks > wealth management > overseas institutions and others, and the order of net selling strength was funds > large banks > joint - stock banks > securities firms > other product types [20]. - The main bond types of various institutions are as follows: large banks mainly focus on 3 - 5Y interest - rate bonds; rural commercial banks have no obvious main bond types; insurance mainly focuses on 7 - 10Y credit bonds; funds have no obvious main bond types; wealth management mainly focuses on 1 - 3Y credit bonds; other product types mainly focus on 3 - 5Y interest - rate bonds and 7 - 10Y other bonds [2]. 3.2.2 Trading Desks: Interest - Rate Bond Funds Significantly Increased Duration, Credit Bond Funds Slightly Increased Duration, and High - Performing Bond Funds Made Smaller Duration Adjustments - As of August 22, the mean and median durations of the full - sample medium - and long - term pure bond funds increased by 0.05 years and 0.08 years respectively compared to August 15, reaching 4.61 years and 4.48 years, and were at the 99.1% and 99.7% rolling two - year percentiles respectively. Among them, the median durations of pure interest - rate bond funds, interest - rate bond funds, and credit bond funds increased by 0.42 years, 0.23 years, and 0.03 years respectively, reaching 5.85 years, 5.47 years, and 4.05 years. The median durations of high - performing interest - rate bond funds and credit bond funds increased by 0.33 years and 0.11 years respectively, reaching 6.87 years and 4.65 years [39]. 3.2.3 Allocation Desks: Wealth Management Extended Duration in the Secondary Market, Rural Commercial Banks and Insurance Deployed Ultra - Long Bonds - **Differentiated Primary Subscription Demand for Treasury Bonds and Policy Financial Bonds, Declining Demand for Ultra - Long Bonds**: This week, the primary subscription demand for treasury bonds and policy financial bonds showed differentiation, with the demand for ultra - long bonds declining. The weighted average full - coverage multiples of treasury bonds and policy financial bonds decreased from 3.30 times to 2.87 times and increased from 2.87 times to 2.98 times respectively compared to the previous week. Among them, the weighted average full - coverage multiples of treasury bonds and policy financial bonds with a maturity of 10Y and above decreased from 4.08 times to 2.69 times and from 2.62 times to 2.51 times respectively [52]. - **Large Banks: Maintained Strong Net Buying of 1 - 3Y Treasury Bonds since August**: Since the beginning of this year, the issuance of government bonds has been fast and the duration has been long. Large banks' net selling of cash bonds in the secondary market in the first half of the year was significantly stronger than in the same period of previous years. From July to August, large banks increased their net buying. As of August 22, the cumulative net selling of cash bonds for the whole year was lower than the levels in the same period of 2022 and 2023. In terms of short - term treasury bonds, large banks increased their net buying of treasury bonds with a maturity of less than 1Y since June, but the cumulative net buying since the beginning of the year was still much lower than the level in the same period of 2024 and higher than the level in 2023. Large banks maintained strong net buying of 1 - 3Y treasury bonds from May to July, and the daily average net buying strength decreased slightly in August compared to July. As of August 22, the cumulative net buying of 1 - 3Y treasury bonds this year was 5657 billion yuan (compared to 5330 billion yuan at the end of August 2024) [57]. - **Rural Commercial Banks: Weak Bond - Buying Strength, Focusing on Long - Term Bonds and Neglecting Short - Term Bonds**: The cumulative net buying of cash bonds by rural commercial banks since the beginning of this year has been significantly weaker than in the same period of previous years, mainly due to the weak net buying of short - term bonds with a maturity of less than 1Y. As of August 22, rural commercial banks had a cumulative net selling of 3732 billion yuan of bonds with a maturity of less than 1Y (compared to net buying of 1.99 trillion yuan and 2.67 trillion yuan at the end of August in 2023 and 2024 respectively). However, the net buying of bonds with a maturity of 7 - 10Y and over 10Y was higher than in the same period of previous years [68]. - **Insurance: The Accelerated Issuance of Government Bonds Facilitated the Deployment of Ultra - Long Bonds by Insurance**: The net buying of cash bonds by insurance since the beginning of this year has been significantly higher than in the same period of previous years, mainly due to the strong buying of ultra - long bonds with a maturity of over 10Y. Assuming that the cumulative year - on - year growth rates of premium income in July and August are 6% and 8% respectively, as of August 22, the ratio of cumulative net buying of cash bonds to cumulative premium income this year reached 47.76%, exceeding the level of 40.10% at the end of August last year. The strong allocation by insurance is mainly due to the sufficient supply of ultra - long - term government bonds this year. As of August 22, the ratio of insurance's cumulative net buying of cash bonds to the cumulative issuance of government bonds with a maturity of over 10Y was only 28.28%, lower than the levels of 35.14% and 31.15% at the end of July and August last year [75]. - **Wealth Management: The Duration in the Secondary Market Rose Again**: Since June, the cumulative net buying of cash bonds by wealth management has been continuously increasing and is significantly higher than the levels of the past three years. In particular, the net buying of bonds with a maturity of over 10Y has been very strong. As of August 22, wealth management had a cumulative net buying of 1414 billion yuan of bonds with a maturity of over 10Y this year, while in previous years (except 2022), there was cumulative net selling in the same period. This week, the duration of wealth management's net buying of cash bonds in the secondary market remained basically the same and was still at the highest level since February 23, 2024. As of August 22, the weighted average duration of wealth management's cumulative net buying of cash bonds was 1.76 years, the same as on August 15 [77][83]. 3.3 Asset Management Product Tracking: Most Interest - Rate Bond Funds Recorded Negative Returns in the Past Three Months - Since August, the month - on - month growth rate of the scale of equity funds has been higher than that of bond funds. In August, the month - on - month increases in the scale of bond funds and equity funds were 57.8 billion yuan and 339 billion yuan respectively, compared to 142.3 billion yuan and 164.1 billion yuan in July. - The issuance share of newly established bond - type funds this week was still low. The scale of newly established bond funds this week was only 3.7 billion yuan, which rebounded from 1.2 billion yuan in the previous week but was still at a relatively low level. - In terms of the performance of bond funds, the net value of various types of bond funds continued to decline significantly this week, and credit bond funds had relatively stronger resistance to decline. The median annualized returns of pure interest - rate bond funds, interest - rate bond funds, and credit bond funds in the past week were - 8.6%, - 7.8%, and - 7.1% respectively. Most pure interest - rate bond funds and interest - rate bond funds recorded negative returns in the past three months [86].

1. Report Industry Investment Rating There is no information provided in the text regarding the industry investment rating. 2. Core Viewpoints of the Report - Last week, the bond market experienced significant fluctuations, and institutional behavior adjusted accordingly. After a series of market movements, the "chasing up" behavior of trading desks became more cautious, and the allocation desks showed differentiation without forming a joint force [8]. - The bond market vitality index increased. As of August 1st, it rose by 13 pcts to 49% compared to July 25th, and the 5D - MA increased by 1 pct to 45% [1][9]. - In July, the increase in wealth management scale was significantly weaker than the seasonal average. The scale of bond funds also had a notable decline in its month - on - month growth rate, while the month - on - month growth rate of stock funds was larger [4]. 3. Summaries Based on Relevant Catalogs 3.1 Overall Sentiment: Bond Market Vitality Index Increase - The bond market vitality index is compiled based on the historical percentile levels of bond market leverage, turnover rate, bond fund duration, and the implied tax rate of government bonds since 2022 and their correlation with the bond market trend. As of August 1st, it rose by 13 pcts to 49% compared to July 25th, and the 5D - MA increased by 1 pct to 45% [9]. - Indicators of increasing bond market vitality include the trading volume of 10Y government bond active bonds/balance of 9 - 10Y government bonds, inter - bank bond market leverage, median duration of medium - and long - term pure bond funds, and 1 minus the implied tax rate of 10 - year government bonds. Indicators of decreasing bond market vitality include the turnover rate of 30Y government bonds [1][11][12]. 3.2 Institutional Behavior: After Repeated Market Fluctuations, Funds' Bullish Sentiment Became More Cautious 3.2.1 Buying and Selling Strength and Bond Selection - In the cash bond market last week, the order of net buying strength was: overseas institutions and others > other product types > insurance > wealth management > money market funds > funds. The order of net selling strength was: city commercial banks > joint - stock banks > securities firms > rural financial institutions. For ultra - long bonds (bonds with a maturity of over 15 years), the order of net buying strength was: insurance > wealth management > funds > other product types, and the order of net selling strength was: large - scale banks > joint - stock banks > city commercial banks > rural commercial banks > overseas institutions and others [19]. - Currently, the main bond types for various institutions are: large - scale banks focus on 3 - 5Y credit bonds; rural commercial banks focus on 3 - 5Y credit bonds; insurance focuses on 7 - 10Y interest - rate bonds; funds focus on 3 - 5Y interest - rate bonds; wealth management has no obvious main bond type; other product types focus on 7 - 10Y interest - rate bonds [2][24]. 3.2.2 Trading Desks: Interest - Rate Bond Funds Extended Duration, Credit Bond Funds Shortened Duration, and High - Performing Bond Funds Had Smaller Duration Adjustments - As of August 1st, the median duration of the full - sample medium - and long - term pure bond funds increased by 0.03 years to 4.39 years compared to July 25th. Among them, the median durations of pure interest - rate bond funds, interest - rate bond funds, and credit bond funds were 5.67 years, 5.43 years, and 3.95 years respectively, with changes of +0.98 years, +0.86 years, and - 0.47 years. The median durations of high - performing interest - rate bond funds and credit bond funds were 6.79 years and 4.75 years respectively, with changes of - 0.39 years and +0.19 years [2][41]. 3.2.3 Allocation Desks: Wealth Management Continuously Extended Duration, Rural Commercial Banks and Insurance Arranged Ultra - Long Bonds - In the primary market, the subscription demand for treasury bonds and policy - bank bonds increased last week. In the secondary market, large - scale banks' cumulative net purchase of 1 - 3Y treasury bonds this year was higher than the same period last year; rural commercial banks' cumulative net purchase of cash bonds this year was significantly weaker than in previous years, mainly due to the weak net purchase of short - term bonds within 1 year, but their net purchase of 7 - 10Y and over 10Y cash bonds was higher than the same period in previous years; insurance's net purchase of cash bonds and its ratio to premium income were significantly higher than in previous years, mainly because of the sufficient supply of ultra - long - term government bonds; wealth management continued to increase the duration of its net - purchased cash bonds in the secondary market, reaching the highest level since February 23, 2024 [3][55][79]. 3.3 Asset Management Product Tracking: The Increase in Wealth Management Scale in July Was Significantly Weaker than the Seasonal Average - In July, the increase in wealth management scale was weaker than the seasonal average. The actual month - on - month increase was 274.1 billion yuan, while the estimated increase based on the average month - on - month growth rate of the past four months was 1.87 trillion yuan. The month - on - month growth rate of bond fund scale declined significantly in July, while that of stock funds was larger. Last week, the net value of various types of bond funds increased significantly, but they still recorded overall negative returns in the past month [4][90][98].

Report Summary 1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints - The inter - bank market's funding situation remained loose on Thursday, with overnight rates oscillating at a low level around 1.36%. The 7 - day weighted average rate dropped 3.79bp to 1.4674%. The central bank's liquidity injection is expected to stay loose due to external uncertainties from trade frictions, but the scope for further loosening of the funding situation is limited as long - term bond yields are relatively low and the inter - bank bond market leverage ratio has risen above 108% [4]. - The stock index continued to fluctuate and rise. The US - Vietnam trade agreement may have a negative impact on China's re - export trade, while the lifting of export restrictions on China by three US chip design software suppliers will boost the relevant A - share electronics sector. In the short term, the stock index may present a volatile pattern due to shrinking trading volume and lackluster domestic and foreign positive factors. In the long term, the Politburo meeting in late July will set the policy tone for the second half of the year. Given the possible deterioration of real estate sales and investment and the overall weakness of consumption, policies are expected to further support domestic demand. Additionally, the uncertain US tariff policy, the approaching Fed rate - cut time, and changes in overseas liquidity and geopolitical patterns will bring phased trading opportunities for the stock index [6]. 3. Summary by Related Catalogs 3.1 Macro - financial Data - **Interest Rates**: DR001 closed at 1.51, down 4.43bp; DR007 at 1.91, down 3.79bp; GC001 at 1.15, down 20.00bp; GC007 at 1.49, down 1.50bp; SHBOR 3M at 1.61, down 1.35bp; LPR 5 - year remained at 3.50; 1 - year treasury bond at 1.34, down 0.50bp; 5 - year treasury bond at 1.49, up 0.50bp; 10 - year treasury bond at 1.65, up 0.10bp; 10 - year US treasury bond at 4.30, up 4.00bp [3]. - **Central Bank Operations**: The central bank conducted 572 billion yuan of 7 - day reverse repurchase operations, with 5093 billion yuan of reverse repurchases maturing, resulting in a net withdrawal of 4521 billion yuan [3]. 3.2 Stock Index Market - **Index Performance**: The CSI 300 closed at 3968, up 0.62%; SSE 50 at 2725, up 0.07%; CSI 500 at 5923, up 0.50%; CSI 1000 at 6343, up 0.53%. The trading volume of the Shanghai and Shenzhen stock markets was 13098 billion yuan, a decrease of 672 billion yuan from the previous day. Most industry sectors closed higher, with consumer electronics, biopharmaceuticals, electronic components, chemical pharmaceuticals, batteries, and traditional Chinese medicine sectors leading the gains, while shipbuilding and mining sectors leading the losses [5]. - **Futures Contracts**: IF当月 closed at 3947, up 0.7%; IH当月 at 2708, up 0.2%; IC当月 at 5874, up 0.3%; IM当月 at 6279, up 0.3%. IF trading volume was 73590, up 3.9%, and its open interest was 238967, down 0.2%; IH trading volume was 34173, down 8.3%, and its open interest was 80640, down 2.3%; IC trading volume was 64956, down 0.8%, and its open interest was 220451, up 0.7%; IM trading volume was 162960, down 1.7%, and its open interest was 321768, up 0.8% [5]. - **Premium and Discount Situation**: IF升贴水 was 13.16% for the current - month contract, 8.57% for the next - quarter contract, 5.90% for the current - quarter contract, and 4.85% for the next - month contract; IH升贴水 was 1.87% for the current - month contract; IC升贴水 was 14.74% for the current - month contract, 12.12% for the next - quarter contract, 10.16% for the current - quarter contract, and 19.99% for the next - month contract; IM升贴水 was 13.19% for the current - month contract, 15.26% for the next - quarter contract, 24.26% for the current - quarter contract, and 18.07% for the next - month contract [7].

Key Points - The overall funding market has warmed up, with a slight decrease in leverage ratios in the interbank bond market [1] - There is a divergence in the issuance heat of new bonds, with an increase in the issuance of national development bonds and a decrease in other policy financial bonds [1][2] - In the secondary market, funds and rural commercial banks have significantly increased their positions in short-term bonds, while trading activity in ultra-long bonds continues to weaken [2] - The scale of wealth management products has seen a low growth rate in May, with a total increase of 16 billion yuan, primarily in cash management and fixed-income products [3] - The scale of funds has increased by 61.8 billion yuan in May, with notable increases in equity and bond funds [3]