1. Report Industry Investment Rating No information provided in the content. 2. Core Viewpoints of the Report - The Mexican bond market is one of the most mature and highly internationalized fixed - income markets in Latin America. The central bank independently implements monetary policy, the exchange rate floats freely with low foreign exchange control, and the infrastructure for bond issuance, trading, and settlement is well - developed. The debt management mechanism is transparent, and new bond varieties are continuously emerging, enhancing market depth and investability [4]. - Mexico's debt situation has evolved from a high - speed expansion crisis to a gradual improvement in debt structure and management. Currently, the overall debt sustainability has improved, but there are still challenges such as a mild economic growth rate and external financing needs [4]. - The Mexican bond market faces multiple risks including exchange rate, interest rate, credit, and liquidity risks. The investment strategy centers on duration management, aiming to balance returns and risks through multi - dimensional asset allocation optimization [4]. 3. Summary by Relevant Catalogs 3.1 Mexican Macroeconomic and Debt Environment Evolution - In the 1970s, Mexico's economy rapidly expanded due to oil exports and foreign capital inflows, with debt surging nearly 20 times from the early 1970s to the end of 1982, and foreign debt accounting for over 60%. The 1982 debt crisis was triggered by the oil crisis and the increase in US interest rates [7]. - Since the 21st century, the Mexican government has gradually resolved historical debt risks through fiscal policies and structural reforms. As of September 3, 2025, the government bond total reached 14.52 trillion pesos, with fixed - rate and inflation - indexed bonds increasing, reflecting the government's financing and inflation - hedging strategies [8]. - In 2025, Mexico's current account deficit is expected to be between - 1.2% and - 0.5% of GDP, and GDP growth is only 0.6%. The central bank's interest - rate cuts have helped reduce the government's debt burden [9]. 3.2 Bond Market System - The Mexican bond market is highly internationalized and diversified, with participants including the Ministry of Finance, the central bank, domestic financial institutions, international investors, and rating agencies. The Ministry of Finance manages federal debt, and the central bank provides technical and regulatory support [12]. - The central bank has been highly independent since 1994, implementing a prudent interest - rate adjustment strategy, with a robust balance sheet and abundant international reserves [13]. - Mexico adopts a flexible exchange - rate system with low foreign exchange control. The market infrastructure includes the BMV and the OTC market, and the settlement system meets international standards. The market's legal and regulatory framework aligns with international norms [14][15]. 3.3 Classification and Analysis of Major Bond Types - Government bonds include CETES (short - term zero - coupon treasury bills), BONDES (floating - rate bonds), UDIBONOS (inflation - linked bonds), and BPA (savings - protection bonds). Each type has its own characteristics and is suitable for different types of investors [16][17]. - The local government and corporate bond markets are also developing. Corporate bonds include those issued by state - owned and private enterprises, with an increase in green and sustainable bonds. The corporate bond market has been expanding, with a good performance from 2020 - 2025 [17][19][30]. - The investor structure is highly institutionalized and diversified. Domestic institutional investors dominate, and foreign investors play an important role in promoting market internationalization and pricing transparency [22][23]. 3.4 Market Risks and Investment Strategies - Risks include exchange - rate risk (high volatility of the peso), interest - rate risk (fluctuations in policy and market interest rates), credit risk (potential risks in government and corporate debt structures), and liquidity risk (capital outflows during significant events) [32][33][34]. - The investment strategy focuses on duration management based on the yield curve. Investors adjust bond portfolio durations, increase the proportion of corporate and medium - to - long - term government bonds when economic conditions improve, and diversify currency risks to optimize asset allocation [35].

Group 1 - The Hong Kong government aims to encourage more companies to issue bonds in Hong Kong, as mentioned in the Chief Executive's latest Policy Address [1] - The Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) will release a "Fixed Income and Currency" roadmap detailing the initiatives [1] - A dedicated task force established by the two regulatory bodies has discussed three main proposals to enhance the bond market, including attracting more international issuers and improving offshore RMB issuance [1] Group 2 - The task force's discussions also include strategies to lower the funding costs and interest rate volatility for offshore RMB bonds, aligning them closer to onshore rates [1] - There is a preliminary exploration of allowing mainland investors to have more flexible arrangements for funds to "stay" in Hong Kong investment accounts, enhancing the liquidity of the offshore RMB pool [1] - The SFC and HKMA are collaborating with the financial industry and stakeholders to promote activities in both primary and secondary bond markets, further develop the foreign exchange market, and assess the feasibility of necessary financial market infrastructure [1]

Core Insights - The launch of the Bond Connect "Southbound" mechanism marks a significant step in the dual-direction opening of China's financial market, enhancing financial connectivity between the mainland and Hong Kong and promoting the internationalization of the Renminbi [1][2] Group 1: Mechanism Overview - The "Southbound" mechanism allows mainland institutional investors to connect with Hong Kong's bond market, providing more investment options and facilitating the internationalization of the Renminbi [2][3] - The mechanism has evolved from initial exploration to optimization and expansion, injecting new momentum into the offshore Renminbi bond market [2][3] Group 2: Participant Expansion - In July 2023, the People's Bank of China and the Hong Kong Monetary Authority announced measures to expand the types of participating institutions in the "Southbound" mechanism, including brokers, funds, insurance, and wealth management firms [3] - This expansion is expected to provide new overseas investment channels for domestic institutional investors, enhancing asset allocation and attracting international interest in Renminbi assets [3] Group 3: Growth Metrics - As of August 2025, the number of bonds under the "Southbound" mechanism reached 971, with a total balance of 574.21 billion yuan, showing significant growth from 909 bonds and 476.33 billion yuan in the previous year [4] - The increase in the number of bonds and balance indicates a clear trend of scale expansion, with a year-on-year growth of 6.8% in quantity and 20.5% in balance [4] Group 4: Future Optimizations - Experts suggest that the "Southbound" mechanism can continue to optimize its operational framework, potentially expanding to include individual investors and simplifying investment processes to lower transaction costs [5] - Enhancing information transparency and communication will further boost market confidence and participation [5]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - Central Settlement Company and the National Inter - bank Funding Center will launch a centralized bond lending business on October 10, 2025, which can improve market efficiency, risk prevention, and standardization, but also faces challenges such as strict collateral requirements and short - term limits [4][11][12] - The listing of the first convertible bond on the Beijing Stock Exchange (BSE) marks the official opening of the BSE convertible bond market. Although it is in its infancy with some characteristics like non - public transfer and strict terms, it has potential for future optimization [5][15][17] - In August 2025, the overall economic data declined, with fixed - asset investment, social consumption, and industrial added - value growth rates dropping. CPI turned negative year - on - year, while the decline of PPI narrowed [6][18][20] - Last week, the central bank net - injected funds through open - market operations. Due to factors like treasury bond issuance and tax payments, capital prices rose, and the spread between 3 - month and 1 - year Shibor slightly expanded [7][23] - Last week, the issuance scale of credit bonds increased. Different industries and bond types showed different trends in issuance and net financing, and the average issuance cost of credit bonds fluctuated [8][28][31] - In the secondary market of credit bonds last week, trading activity increased, yields of both interest - rate and credit bonds rose, most credit spreads expanded, and rating spreads changed little [37][38][43] 3. Summaries According to Relevant Catalogs Market Hotspots - **Centralized Bond Lending Business Policy** - On September 12, 2025, relevant institutions will launch a centralized bond lending business on October 10, 2025, which is an important supplement to the existing bond lending business [11] - It can improve market efficiency, help market participants prevent risks, and enhance standardization, but also faces challenges from strict collateral requirements and short - term limits [12][13] - **BSE Convertible Bond Market** - On September 9, 2025, the first convertible bond "Youji Dingzhuan" was listed, marking the official opening of the BSE convertible bond market [5][13][15] - The current BSE convertible bond market is in its early stage, featuring non - public transfer, strict terms, and a concentrated investor structure. It is recommended to explore public issuance and innovative clause design [15][16][17] Macroeconomic Data - In August 2025, fixed - asset investment, social consumption, and industrial added - value growth rates declined. CPI turned negative year - on - year, and the decline of PPI narrowed [6][18][20] Money Market - Last week, the central bank net - injected 196.1 billion yuan through open - market operations. Capital prices rose due to factors like treasury bond issuance and tax payments, and the spread between 3 - month and 1 - year Shibor slightly expanded [7][23] Primary Market of Credit Bonds - Last week, the issuance scale of credit bonds increased to 216.271 billion yuan. Different bond types and industries had different performance in issuance and net financing, and the average issuance cost fluctuated [8][28][31] Secondary Market of Credit Bonds - Last week, the secondary - market trading volume of bonds was 876.9869 billion yuan, with increased trading activity. Yields of both interest - rate and credit bonds rose, most credit spreads expanded, and rating spreads changed little [37][38][43]

Key Insights - The expectation of a Federal Reserve interest rate cut has significantly increased, with market predictions exceeding 90% probability, driven by weak economic data, particularly in the labor market [8][9] - The credit bond market is experiencing a cooling trend, with issuance down to 13,127.58 billion yuan in August, a decrease of 1,349.78 billion yuan from the previous month, and net financing dropping to 543.99 billion yuan [10][49] - The monthly rolling default rate in the bond market is at 0.17%, with one new defaulting entity, Shenzhen Zhongzhuang, indicating ongoing credit risks [21][24] Market Review - The manufacturing PMI in August slightly improved to 49.4, indicating a weak recovery in the economy, while liquidity remains generally ample with the central bank injecting 1,466 billion yuan [10][36] - The average issuance rate for credit bonds has mostly increased, with the 3-year AAA corporate bond rate rising by 16 basis points, reflecting higher borrowing costs across various sectors [49][50] - The secondary market saw most bond yields rise, with the 10-year government bond yield increasing by 13 basis points to 1.84% [12][30] Credit Risk and Regulatory Environment - The ongoing high-pressure regulatory environment for implicit debt emphasizes the need to prevent "disposal risk" [11][12] - Five entities, including those in the real estate sector, have extended their bonds due to operational performance declines and cash flow issues, highlighting the challenges faced by these industries [24][25] - Credit spreads for short-term notes have generally widened, with most sectors experiencing increased issuance costs [30][51]

Core Insights - The Bond Connect Company reported that in August, the northbound trading volume reached 750.1 billion RMB, with an average daily trading volume of 35.7 billion RMB [1] - Government bonds and policy financial bonds were the most actively traded, accounting for 38% and 41% of the monthly trading volume, respectively [1] - The ePrime platform supported 20 offshore bond issuances in August, totaling 25.153 billion RMB, with underwriters including Agricultural Bank of China International, Bank of China, CITIC International, and Galaxy International [1] - In the northbound swap market, 793 transactions were completed in August, totaling 419.681 billion RMB; by the end of August, 82 foreign institutions had entered the market [1]

Core Insights - The number of financing platforms in China has decreased by over 60% compared to the beginning of 2023, and the scale of financial debt has dropped by over 50% as of June 2023 [1] - The People's Bank of China (PBOC) has implemented various policies to support risk resolution in the real estate sector, including optimizing down payment ratios and mortgage rates, which could reduce interest expenses by approximately 300 billion yuan for over 50 million households annually [1] - The PBOC emphasizes that during the 14th Five-Year Plan period, financial risks are generally controllable, and the financial system is operating steadily, providing strong support for high-quality economic development [1] Group 1 - The PBOC is focused on balancing economic growth and financial risk prevention, recognizing the interconnection between economic issues and financial risks [2] - The PBOC is actively working to resolve key area risks, including the debt risks of financing platforms, by promoting local governments to manage funds and assets effectively [2] - The PBOC has achieved significant progress in reducing the number of high-risk small and medium-sized banks through various measures such as online repairs and mergers [2] Group 2 - The PBOC is committed to maintaining stable financial markets, ensuring the basic stability of the RMB exchange rate amid changing external environments [2] - The bond market is being closely monitored by the PBOC, which has implemented measures to mitigate risk accumulation and maintain a low default rate [2] - The PBOC is exploring monetary policy tools to stabilize the capital market, collaborating with the China Securities Regulatory Commission to create mechanisms that support market stability [2][3] Group 3 - The PBOC is enhancing the financial stability guarantee system through legislative efforts and the establishment of a financial stability guarantee fund [3] - Continuous improvement of financial risk monitoring, assessment, and early warning systems is a priority for the PBOC [3]

Group 1 - The report suggests that during the interest rate downtrend, the yield on 10-year government bonds in China is likely to follow a similar downward trend, as observed in Japan and the United States [1][2][25] - The report indicates that while the 10-year government bond yield in China reached new lows in 2023 and 2024, the future trend is expected to be a continued downward movement without entering negative territory, although the space for further decline is limited [2][25] - The overall trend for the yield curve in 2025 is expected to be characterized by fluctuations, with a potential for a brief rebound in yields, presenting opportunities for buying on dips [3][13] Group 2 - The report analyzes the bond market's performance in the first three quarters of 2025, noting a bearish trend with a yield curve that initially rose, then fell, and subsequently rose again [3][43] - In the first quarter, the yield on 10-year government bonds increased from 1.60% to approximately 1.90%, influenced by tight liquidity and market corrections [3][43] - The second quarter showed some profit opportunities as the yield curve shifted towards a "bullish steep" pattern, while the third quarter saw a bearish steepening due to regulatory changes affecting fund sales [3][43] Group 3 - The report provides investment strategies for the bond market, including assessing future pricing ranges for various maturities, with the 10-year government bond yield expected to fluctuate between 1.6% and 1.8% [4][6] - The report emphasizes the importance of coupon strategies in a narrow fluctuation market, suggesting dynamic tracking of bond comparisons to adjust configurations accordingly [4][6] - Special bond investment strategies are recommended, focusing on timing based on seasonal factors and key events, as well as point selection based on volatility ranges [6][6]

Core Viewpoint - China has been actively reducing its holdings of U.S. Treasury bonds, selling $25.7 billion in July, bringing its total holdings down to $730.7 billion, the lowest level since 2009 [1][3]. Group 1: China's Actions - In 2022, China sold $173.2 billion in U.S. Treasury bonds, followed by $50.8 billion in 2023, and an additional $57.3 billion by July 2024 [3]. - The recent large-scale sale of over $200 billion indicates China's firm stance on reducing its U.S. bond holdings due to concerns over the reliability of U.S. economic and fiscal policies [3][5]. Group 2: U.S. Economic Concerns - The stability of the U.S. economy and government finances is crucial for maintaining confidence in the dollar and U.S. Treasury bonds [5]. - Concerns about a potential government shutdown due to budget disagreements between Democrats and Republicans have been raised, with a deadline approaching on September 30 [7]. Group 3: Global Financial Trends - The share of the dollar in global foreign exchange reserves has declined from over 70% in 2000 to 57.7% currently, indicating a downward trend in dollar dominance [13]. - Countries are increasingly seeking alternatives to the dollar for transactions, as evidenced by initiatives like the INSTEX system in the EU and currency swap agreements between China and the European Central Bank [13]. Group 4: Geopolitical Implications - The reduction of U.S. Treasury holdings by major buyers like China sends a significant signal to the U.S., indicating a shift in financial power dynamics [17]. - The use of financial instruments as a means of political leverage has transformed the nature of international relations, with countries exploring ways to reduce reliance on the dollar [15].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The bond market yield curve remained steep this week, with the 10Y maturity yield fluctuating around 1.85% and the 1Y Treasury bond maturity yield at 1.40%. The term spreads of 30Y - 10Y and 10Y CDB - 10Y Treasury bonds widened, and the curve steepening continued [3][11]. - There are two "certainties" in the current bond market. First, driven by large - banks' continuous buying of short - term bonds, the short - end is more stable, and the expectation of the central bank buying bonds in the fourth quarter is rising. Second, the anti - decline of credit bonds is expected to continue under the loose funds [3][12]. 3. Summary According to the Directory 3.1 This Week's Institutional Behavior Review: Two "Certainties" in the Bond Market 3.1.1 Yield Curve - Treasury bond yields generally increased. The 1Y yield decreased by 1bp, while the 3Y, 5Y, 7Y, 10Y, 15Y, and 30Y yields increased by about 1bp, 1bp, 5bp, 1bp, 2bp, and 2bp respectively. For CDB bonds, short - end yields increased, and mid - end yields decreased. The 1Y yield increased by 5bp, the 3Y yield increased by 4bp, and the 5Y yield decreased by about 3bp [14]. 3.1.2 Term Spreads - For Treasury bonds, the interest rate spread inversion deepened, and the long - end spreads narrowed. For CDB bonds, the interest rate spread inversion deepened, and the short - end spreads narrowed [16][17]. 3.2 Bond Market Leverage and Funding Situation 3.2.1 Leverage Ratio - From September 15 to September 19, 2025, the leverage ratio decreased weekly. As of September 19, it was about 106.91%, down 0.12pct from last Friday and 0.17pct from Monday [21]. 3.2.2 Average Daily Turnover of Pledged Repurchase - From September 15 to September 19, the average daily turnover of pledged repurchase was about 7.2 trillion yuan, a decrease of 0.33 trillion yuan from last week. The average daily overnight turnover accounted for 87.64%, a decrease of 0.79pct [27][28]. 3.2.3 Funding Situation - From September 15 to September 19, bank - related funds' net lending first decreased and then increased. The main funds' borrowers were securities firms, and money market funds' net lending increased fluctuantly. DR007 and R007 first increased and then decreased. 1YFR007 and 5YFR007 increased fluctuantly [32][33]. 3.3 Duration of Medium - and Long - Term Bond Funds 3.3.1 Median Duration - This week (September 15 - September 19), the median duration of medium - and long - term bond funds was 2.68 years (de - leveraged) and 2.8 years (leveraged). On September 19, the de - leveraged median duration decreased by 0.01 years compared with last Friday, and the leveraged median duration increased by 0.02 years [44]. 3.3.2 Duration by Bond Fund Type - The median duration of interest - rate bond funds (leveraged) decreased to 3.55 years, down 0.12 years from last Friday. The median duration of credit bond funds (leveraged) increased to 2.51 years, up 0.03 years from last Friday [47]. 3.4 Comparison of Category Strategies 3.4.1 Sino - US Yield Spread - The short - end spread widened, and the medium - and long - end spread narrowed. The 1Y, 2Y, and 3Y spreads widened by 5bp, 5bp, and about 3bp respectively, while the 5Y, 7Y, 10Y, and 30Y spreads narrowed [52]. 3.4.2 Implied Tax Rate - The short - end implied tax rate widened, and the mid - end narrowed. As of September 19, the 1Y, 3Y, and 30Y spreads of CDB - Treasury bonds widened, while the 5Y, 7Y, 10Y, and 15Y spreads narrowed [53]. 3.5 Changes in Bond Lending Balance - On September 19, the lending concentration of the second - most active 10Y CDB bond increased, while that of the active 10Y Treasury bond, the second - most active 10Y Treasury bond, the active 10Y CDB bond, and the active 30Y Treasury bond decreased. Except for large banks, all other institutions saw a decline [54].