1. Report Industry Investment Rating No information provided in the content. 2. Core View of the Report - The bond market has generally recovered this week, with short - term and credit bonds performing stronger. The short - term and credit interest rates have declined significantly, while the long - term recovery is relatively mild [1][8]. - Although there were concerns about bond supply and bank deposit outflows at the beginning of the year, the actual situation shows that the supply of government bonds is not fast, and banks do not have obvious liability gaps. The current trading structure shows that non - banks are reducing their positions, while banks and insurance companies are increasing their allocations [1][5][8]. - The short - term bond market may fluctuate, and the space for further adjustment is limited. It is advisable to wait for opportunities to increase allocations, which may occur in late January or later. As the market develops, the bond market may start to recover in the middle and later stages of the first quarter, and at that time, it is possible to consider gradually lengthening the duration [5][21]. 3. Summary by Related Catalogs Supply Level - The supply rhythm of government bonds at the beginning of the year is not fast. In the first three weeks, the total net financing of government bonds was 886.5 billion yuan, slightly lower than 970.3 billion yuan in the same period last year. The net financing of local bonds was 386.4 billion yuan, also lower than 472.1 billion yuan in the same period in 2025 [1][8]. - The term structure of bond issuance remains long. Among the 424.1 billion yuan of local bonds issued in the first three weeks of this year, bonds with a term of more than 10 years accounted for 58%, and the proportion of 30 - year bonds was 33.8%, higher than 21.0% last year [1][8]. Demand Level - The market was once worried that bank deposit outflows would lead to insufficient allocation power. Due to the maturity of high - interest time deposits and the strong performance of the stock market, there were concerns about deposit outflows to non - banks, time deposit current - account conversion, and non - bank conversion [2][11]. - However, from the perspective of certificates of deposit (CDs), banks have not shown obvious liability shortages or liquidity indicator pressures. In the past four weeks, banks have had a net repayment of 885.5 billion yuan of CDs, and they have been increasing their allocation of CDs since the beginning of the year [3][14]. - The repurchase volume and interest rates also show that there is no large gap in bank liabilities. Although the recent capital price has risen slightly from the low at the beginning of the year, it is still at a low level. The overnight interest rate of 1.3% - 1.4% and the 7 - day inter - bank lending rate of 1.4% - 1.5% are significantly lower than previous years, and the seasonal increase is weaker. The inter - bank pledged repurchase trading volume is 8.76 trillion yuan, significantly higher than previous years, indicating that the capital supply in the market is more abundant [4][15]. Trading Structure - Currently, non - banks are reducing their positions, while banks and insurance companies are increasing their allocations. Non - banks are shifting their positions from long - term bonds to credit bonds, which has promoted the strength of secondary capital bonds (Second - tier and Perpetual bonds, "二永") and credit bonds [5][17]. - The credit spreads have been compressed to a relatively low level. The spreads between 5 - year AAA - second - tier capital bonds, AAA urban investment bonds, and treasury bonds are only 56bps and 39bps respectively, both at relatively low levels in the past few years. The spread between 30 - year and 1 - year treasury bonds has reached a high of 106bps, and the space for further compression of credit spreads may be limited [5][17].