Inflation Data Summary - In June, China's CPI turned positive at +0.1% year-on-year, a recovery from -0.1% in May, marking the first positive reading since January 2025[3] - The month-on-month CPI decreased by -0.1%, an improvement from the previous month's decline of -0.2%[3] - Core CPI rose to +0.7% year-on-year in June, up from +0.6% in May, while month-on-month core CPI remained unchanged at 0%[3] PPI Analysis - June's PPI decreased by -3.6% year-on-year, a decline of 0.3 percentage points from the previous month, marking the lowest level since August 2023 and the 33rd consecutive month of negative growth[9] - Month-on-month PPI fell by -0.4%, continuing a trend of negative growth for seven consecutive months, which is weaker than the historical average of -0.1%[9] Key Drivers and Trends - The positive CPI was primarily driven by clothing, household goods, and services, with household goods benefiting from consumption incentives[4] - Food prices decreased by -0.4% month-on-month, with pork prices significantly dropping from +3.1% to -8.5% year-on-year[4] - The international oil price recovery, influenced by geopolitical tensions, supported domestic gasoline prices, which shifted from -3.7% to +0.3% month-on-month[4] Future Outlook - The current inflation rate is still far from the annual target of 2%, indicating a need for further policy support to stabilize domestic demand[12] - The core CPI is expected to remain a key support for prices under existing policies, while industrial product prices may require additional measures to improve[12]

Core Viewpoint - The bond market is experiencing slight differentiation in performance, with economic data having minimal impact on market movements. The overall environment has not shown a significant turning point, leading to expectations of narrow fluctuations in the bond market in the short term [1][9]. Market Performance - Government bond futures closed mostly higher, with the 30-year main contract up 0.19% at 121.090, the 10-year main contract up 0.05% at 109.050, and the 5-year main contract up 0.03% at 106.160. The 2-year main contract remained flat at 102.464 [2]. - The yield on major interbank bonds generally rose slightly, with the 30-year government bond yield increasing by 0.25 basis points to 1.8635%, and the 10-year government bond yield rising by 0.3 basis points to 1.646% [2]. Overseas Market Trends - In North America, U.S. Treasury yields rose across the board, with the 10-year yield increasing by 2.38 basis points to 4.401% [3]. - In Asia, Japanese bond yields, except for ultra-long maturities, generally increased, with the 10-year yield rising by 0.9 basis points to 1.498% [4]. Primary Market Activity - Gansu Province's local bond auction results showed bid multiples exceeding 26 times, with the 20-year bond yielding 2.04% and the 10-year bond yielding 1.74% [5]. - Jilin Province's local bond auction also had bid multiples over 26 times, with the 7-year bond yielding 1.65% [5]. Funding Conditions - The central bank conducted a 755 billion yuan reverse repo operation at a rate of 1.40%, resulting in a net withdrawal of 230 billion yuan for the day [6]. - Shibor rates showed mixed performance, with the overnight rate rising by 0.1 basis points to 1.313% and the 7-day rate increasing by 0.9 basis points to 1.464% [6]. Economic Indicators - June CPI rose by 0.1% year-on-year, marking a shift from four consecutive months of decline, while PPI fell by 3.6% year-on-year [7][8]. - The increase in CPI was primarily driven by a reduction in the decline of industrial consumer goods prices, which narrowed from a 1.0% drop to 0.5% [8]. Institutional Insights - Citic Securities noted a certain degree of preemptive positioning in the bond market, with overall trading density decreasing compared to June. The market lacks short-term catalysts, and the potential for rate declines may be limited [9]. - Huatai Fixed Income suggested a slightly bullish outlook for the bond market, although the space for growth is limited due to low credit spreads [9].