Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The bond market is affected by a combination of bullish and bearish factors, with bond yields expected to maintain a range - bound oscillation. Trading positions can take the opportunity to close when interest rates decline, and allocation positions can enter the market when prices are high. Medium - and long - term bonds have better allocation value [3][121]. - In the fourth quarter, the pressure to achieve the annual economic goal is relatively small, and the space for incremental policies such as reserve requirement ratio cuts and interest rate cuts may be limited. The central bank may prefer to use open - market operations such as outright repurchases to reduce the cost of banks' liability side, and structural monetary policies will play a greater role in stabilizing growth and foreign trade [2][88]. Summary by Directory 1. Macroeconomy: Domestic Demand Continues to Decline, and Inflation Rises Slowly - **Demand: Domestic demand continues to decline, and production maintains resilience** - The cumulative year - on - year GDP growth rate in the first three quarters is 5.2%, reducing the pressure to stabilize growth in the fourth quarter, and the probability of policy intensification in the short term is low [7][8]. - From January to September, the cumulative year - on - year growth rate of fixed - asset investment was - 0.5%, with the growth rate turning negative. The growth rates of real estate, manufacturing, and infrastructure investment all declined, dragging down fixed - asset investment [9]. - From January to September, real estate development investment and sales growth rates continued to decline. Real estate is still in the process of bottom - seeking, and real estate investment is expected to remain at a low level [10]. - In September, the consumption growth rate continued to decline to 3%. Affected by the withdrawal of subsidies and weak catering consumption, it is expected to further decline below 3% in October [15][18]. - In September, the national urban survey unemployment rate decreased slightly after the graduation season. The employment demand of large, medium, and small enterprises all increased, alleviating some employment pressure [19]. - From January to September, the cumulative year - on - year export growth rate was 6.1%, and the import growth rate increased significantly. The trade surplus narrowed in September and is expected to continue narrowing [23][27][28]. - High - frequency data shows that the daily coal consumption of power plants decreased in October, the steel and coking enterprise start - up rates were differentiated, and the truck tire start - up rate decreased [33][35][39]. - **Production: Production shows strong resilience** - From January to September, the cumulative year - on - year growth rate of the added value of large - scale industries was 6.2%. In September, the added value of industries increased by 6.5% year - on - year, indicating strong production resilience [44]. - **CPI remains negative, and the decline of PPI continues to narrow** - In September, CPI increased slightly but remained negative, and PPI increased year - on - year. It is expected that CPI will gradually recover in the fourth quarter [47][55]. - The year - on - year decline of PPI narrowed by 0.6 percentage points. Some industries showed positive price changes, and the impact of anti - involution policies was significant [57][62]. 2. Liquidity and Monetary Policy: The Central Bank Conducts Outright Repurchase Operations with Increased Volume, and the Liquidity is Expected to be Balanced and Slightly Loose - **Liquidity review: The central bank conducts outright repurchase operations with increased volume, and short - term interest rates return to stability after the quarter** - Since October, the liquidity has remained loose, and DR007 mostly operates within 5bp above the policy rate. The central bank conducts outright repurchase operations with increased volume, and the large - scale banks' fund lending is mostly above 4 trillion [2][64]. - The long - term fund price has changed little, and the pressure on inter - bank certificates of deposit repayment in October has decreased [70][72]. - **Financial data: New credit increases less year - on - year, the growth rate of social financing declines, and the growth rate of M1 exceeds expectations** - In September, new credit increased less year - on - year, mainly due to the weak credit demand of residents and enterprises. Social financing also increased less year - on - year, mainly dragged down by government bonds and RMB loans [79][83]. - In September, M2 increased by 8.4% year - on - year, a decrease of 0.4%. M1 increased by 7.2% year - on - year, and the gap between M1 and M2 narrowed [84]. - **Next - stage liquidity outlook: The bond supply pressure in the fourth quarter eases, and the liquidity is expected to be balanced and slightly loose** - Since October, the liquidity has remained loose, and the central bank conducts outright repurchase operations with increased volume. Although the supply - demand contradiction in the first half of the fourth quarter is relatively large, the liquidity disturbance is expected to be limited [2][88]. - The central bank may prefer to use open - market operations to reduce the cost of banks' liability side, and structural monetary policies will play a greater role [88]. 3. Interest - Rate Bond Strategy: A Combination of Bullish and Bearish Factors, with Interest Rates Oscillating within a Range - **Interest - rate bond trend review** - Bond yields first rose and then fell. The 10 - year treasury bond yield is around 1.85%, and the 10 - year CDB bond yield rose to around 2.01%. The yield curve first steepened and then flattened [90]. - Since September, the implicit tax rate has generally increased, with the 1Y and 3Y implicit tax rates being relatively high [100]. - **Analysis of interest - rate bond influencing factors** - **Economic fundamentals**: Domestic demand continues to decline, but the bond market is more sensitive to bearish fundamentals [103]. - **Inflation**: Inflation is gradually recovering from a low level, but the impact on the bond market is currently small [104]. - **Broad liquidity**: Social financing and loans increase less year - on - year, while M1 continues to rise [105]. - **Narrow liquidity**: The central bank of funds is stable, and the repurchase trading volume increased in October [109][111]. - **Sino - US interest rate spread**: The inversion amplitude has narrowed, and the exchange rate is relatively stable, not restricting monetary policy [112][113]. - **Stock - bond ratio**: It continues to decline, and the allocation value of bonds increases [114][116]. - **Bond supply and demand**: The overall supply pressure has decreased, but the supply of policy - based financial bonds is expected to increase slightly [117]. - **Interest - rate bond strategy: A combination of bullish and bearish factors, with interest rates oscillating within a range** - Bond yields are expected to maintain a range - bound oscillation. Trading positions can close when interest rates decline, and allocation positions can enter the market when prices are high. Medium - and long - term bonds have better allocation value [121].