Market Overview - On August 25, the equity market experienced a significant surge in trading volume, reaching the highest level since October 9, 2024, indicating heightened market sentiment and increased speculative demand [1] - Despite the strong performance in the equity market, the bond market exhibited an independent trend, with yields on government bonds across various maturities declining [1] Bond Market Performance - The recent bond market adjustment began on August 8, 2025, with the Ping An Company Bond ETF (511030) showing the best performance in terms of controlling drawdown, having the least market discount in the past week and maintaining a relatively stable net value [1] - The table provided lists various bond ETFs, detailing their scale, recent performance, and metrics such as pledge rates and drawdown statistics, highlighting the performance of different funds during the bond market adjustment [1]

1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints of the Report - The current credit bond market is at a turning point with both pressure and opportunities. The yield has risen to the high of the year, making the absolute value prominent, especially the allocation cost - performance of the over - adjusted long - term varieties is gradually emerging. The liability side of wealth management has not shown large - scale redemption negative feedback, and the net purchase volume of credit bonds on the investment side remains relatively stable. It is recommended to make an optimal layout under the premise of stable liabilities, adopt a barbell strategy to balance defense and opportunities, control the overall duration within 3 years to maintain flexibility, and pay attention to the structural spread opportunities of credit bonds brought by the new bond VAT regulations [2][6]. 3. Summary According to Relevant Catalogs 3.1 Yield and Spread Overview 3.1.1 Yields and Changes of Each Term - Yields of various bonds such as national bonds, national development bonds, local government bonds, and different types of credit bonds (including urban investment bonds, industrial bonds, etc.) at different terms (0.5Y, 1Y, 2Y, 3Y, 5Y) are presented, along with their weekly changes and historical quantiles. For example, the 0.5Y national bond yield is 1.38%, with a weekly change of 0.3bp and a historical quantile of 9.1% [15]. 3.1.2 Spreads and Changes of Each Term - Credit spreads of various bonds at different terms are shown, including their weekly changes and historical quantiles. For instance, the 0.5Y credit spread of public non - perpetual urban investment bonds is 18bp, with a weekly change of 0bp and a historical quantile of 3.2% [18]. 3.2 Credit Bond Yields and Spreads Classified by Category (Hermite Algorithm) 3.2.1 Urban Investment Bonds by Region - **Yields and Changes of Each Term**: Yields of public non - perpetual urban investment bonds in different provinces at different terms, along with their weekly changes and historical quantiles, are provided. For example, the 0.5Y yield of Anhui's public non - perpetual urban investment bonds is 1.77%, with a weekly change of 4bp and a historical quantile of 3.0% [21]. - **Spreads and Changes of Each Term**: Credit spreads of public non - perpetual urban investment bonds in different provinces at different terms, their weekly changes, and historical quantiles are given. For example, the 0.5Y credit spread of Anhui's public non - perpetual urban investment bonds is 26.11bp, with a weekly change of 1bp and a historical quantile of 4.4% [24]. - **Yields and Changes of Each Implicit Rating**: Yields of different implicit ratings (AAA, AA +, AA, etc.) of public non - perpetual urban investment bonds in different provinces, along with their weekly changes and historical quantiles, are presented. For example, the AAA - rated 0.5Y yield of Anhui's public non - perpetual urban investment bonds is 1.79%, with a weekly change of 5.1bp [28]. - **Spreads and Changes of Each Implicit Rating**: Credit spreads of different implicit ratings of public non - perpetual urban investment bonds in different provinces, their weekly changes, and historical quantiles are shown. For example, the AAA - rated credit spread of Anhui's public non - perpetual urban investment bonds is 21.99bp, with a weekly change of 1.68bp and a historical quantile of 19.4% [33].

Core Viewpoint - The recent adjustments in the bond market have drawn investor attention, particularly towards the 5Y National Development Bank active bonds, which exhibit significant volatility and a potential slight bearish trend in the market [1] Bond Market Analysis - The current IRR of government bond futures is low, indicating that futures prices are relatively cheap overall [1] - Long-term contracts have experienced more adjustments due to market expectations and VAT-related factors [1] ETF Performance - The Ping An Company Bond ETF (511030) has the best performance in terms of controlling drawdown during the recent bond market adjustment, with the least market discount in the past week and a relatively stable net value [1] - The table provided shows various ETFs, their scale in billions, recent performance metrics, and drawdown statistics, highlighting the performance of different bond ETFs [1]

Core Insights - The new mechanism for PPP projects and industrial gradient transfer may activate local economies [1] - The State Council has forwarded the latest guidance on "PPP stock projects," allowing the use of "general bonds and special bonds" for expenditures on these projects, which is a significant benefit for the main lending banks involved [1] - Long-term, the bank loans for PPP projects may achieve full repayment, significantly improving local government debt situations and enhancing the operational efficiency of local banks [1] - A series of "China's industrial transfer development docking activities" and the active introduction and support of eastern enterprises by various provinces and cities are facilitating the gradual transfer of certain industries from eastern regions to central and western regions [1] - This regional industrial collaboration and benefit-sharing mechanism is a major national strategy that may assist local governments in upgrading industries, increasing tax revenues, and continuously reducing debt ratios [1] Bond Market Insights - The Ping An Company Bond ETF (511030) has the best performance in controlling drawdown during the recent bond market adjustment, with the least market discount in the past week and a relatively stable net value [1] - The bond market adjustment began on August 8, 2025, and the table provided shows various ETFs with their respective performance metrics [1] - The data indicates that the average discount and year-to-date performance of several ETFs, including their pledge rates and drawdown metrics, are presented, highlighting the stability of the Ping An Company Bond ETF compared to others [1]

Group 1 - The rare earth industry is experiencing positive mid-year performance due to policy support and growing demand, with the Wande Rare Earth Concept Index rising by 19.41% since August 18 [1] - Analysts believe the rare earth sector will benefit from increasing demand in applications such as electric vehicles and robotics, highlighting the scarcity of resources and potential price increases [1] - The Central Committee and State Council's recent opinions support the development of a national carbon market, aiming for comprehensive coverage of major industrial sectors by 2027 and a robust carbon pricing mechanism by 2030 [1] Group 2 - During the 14th Five-Year Plan period, China's customs will manage an average of 5.2 billion tons of imports and exports annually, with a total value of 41.5 trillion yuan, making it the largest globally [2] - The customs authority, in collaboration with over 20 ministries, has launched annual cross-border trade facilitation initiatives, expanding participation to 25 cities across 17 provinces [2] Group 3 - Over 1600 listed companies reported their mid-year results, with insurance funds entering the top ten shareholders of over 120 companies, particularly favoring sectors like chemicals, machinery, and electrical equipment [3] - The onshore RMB strengthened against the USD, closing at 7.1517, a rise of 288 basis points, influenced by a decline in the dollar index and improved market sentiment [3] Group 4 - The bond market is under pressure, with rising yields leading to capital losses, and traditional investment logic failing, prompting a shift towards a risk preference-driven pricing state [4] - Analysts suggest that the most pessimistic phase for the bond market may be over, indicating potential trading and allocation opportunities [4] Group 5 - Agricultural Bank of China announced a tender for AI quality inspection capabilities, reflecting the banking sector's active engagement in AI development [5] - The white liquor market faces challenges due to a lack of unified standards for vintage liquor, leading to issues of trust and quality [6] Group 6 - The implementation of personal consumption loan interest subsidies is set for September 1, with banks preparing to assist customers despite pending policy details [7] - Public fund institutions have been actively purchasing their own products, with equity funds making up a significant portion of these purchases [7] - The total scale of equity ETFs in China reached a historical high of 4.117 trillion yuan, marking a 24.05% increase since the beginning of the year [7]

Group 1 - The core viewpoint of the news is that European bond yields have generally decreased, indicating a shift in market sentiment towards lower interest rates [1][2] Group 2 - The yield on the French 10-year government bond increased by 8.9 basis points to 3.507% [1] - The yield on the German 10-year government bond rose by 3.6 basis points to 2.755% [1] - The yield on the Italian 10-year government bond went up by 7 basis points to 3.593% [1] - The yield on the Spanish 10-year government bond increased by 7 basis points to 3.368% [1]

Group 1 - The yield on French 10-year government bonds increased by 9.3 basis points, reaching a daily high of 3.511%, approaching the peak of 3.631% from March 6 [1] - The yield on Italian 10-year government bonds rose by 6.9 basis points, reported at 3.595% [1] - The yield on Spanish 10-year government bonds also increased by 6.9 basis points, reaching 3.370% [1] Group 2 - The yield on Greek 10-year government bonds rose by 7.8 basis points, reported at 3.447% [1] - The yield on French 30-year government bonds increased by 8.5 basis points, reaching 4.393%, nearing the peak of 4.522% from November 16, 2011 [1] - The yield on French 2-year government bonds rose by 4.0 basis points, stabilizing near the daily high [1]

Debt Growth and Historical Context - The U.S. federal debt has increased significantly, from $10.6 trillion at the end of Obama's term to $36.2 trillion at the end of Biden's term, with an acceleration in growth rates[3][22] - The first $12 trillion took over 200 years to accumulate, the second $12 trillion took about 10 years, and the third $12 trillion took less than 5 years[22] - As of August 11, 2025, the U.S. debt surpassed $37 trillion[22] Interest Burden and Fiscal Impact - Net interest expenditure for FY 2024 is projected to reach approximately $881.1 billion, a year-on-year increase of 33.9%, accounting for over 13% of total expenditures[4][22] - Each percentage point increase in interest rates could result in an additional $360 billion in refinancing costs annually[4][22] Current Challenges Facing U.S. Debt - The federal debt for FY 2024 is $35.5 trillion, with a debt-to-GDP ratio of 123%, which is lower than Japan (220.8%) and Greece (181.6%), but higher than Germany (60.0%) and France (108.6%)[11][37] - The average annual debt growth from FY 2022 to FY 2024 exceeds $2.3 trillion, approximately $64.3 billion per day, doubling the growth rate from FY 2017 to FY 2019[12][43] - Mandatory spending, including Medicare and Social Security, constitutes 60.1% of total expenditures in FY 2024, making cuts difficult[12][44] Political and Economic Pressures - Political motivations favor fiscal stimulus to maximize voter support, with 90% of surveyed individuals indicating the importance of Social Security in voting decisions[12][46] - The recent "Big and Beautiful" tax and spending bill is expected to increase the debt ceiling by $5 trillion, potentially adding $3.4 trillion to the deficit over the next decade[13][22]

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the bond market, focusing on the current state and future outlook of government bonds, particularly the 10-year and 30-year bonds, as well as the impact of value-added tax (VAT) on these bonds [1][5][14]. Core Insights and Arguments 1. **Market Stability and Adjustment** - There are signs of over-adjustment in the short-term bond market, with indicators showing a demand for stabilization. The rapid adjustment, floating losses for funds, and strong short-seller forces are key manifestations of this over-adjustment [1][4]. 2. **Attractiveness of Long-term Bonds** - Long-term government bonds subject to VAT are attractive in the current market environment, with strong demand from institutional investors. These bonds offer advantages in yield and tax treatment compared to other risk-free assets of similar duration [1][5]. 3. **Influencing Factors on Bond Market** - The recent bond market is influenced by the equity market's rise, economic fundamentals, and monetary policy. If the equity market's rise is driven solely by risk appetite, the bond market's interest rates will gradually become less responsive after adjustments [1][6]. 4. **Interest Rate Predictions** - Most interest rate prediction models are pessimistic about the bond market's future, with expectations that the 10-year government bond yield may break 1.8%, with a high point projected at 1.85% [1][8]. 5. **Investment Strategy Recommendations** - Short-term investment strategies should focus on a rebound approach, avoiding chasing yields during interest rate declines. A hold strategy is recommended for bond portfolios, with caution against increasing duration [1][9][10]. 6. **Bond Curve Dynamics** - The current curve shape is slightly bear steep, with long-term rates relatively weaker than short-term rates. In a bear steep environment, a bullet strategy is suggested, while a barbell strategy is recommended for dynamic investment to quickly adjust duration [1][11]. 7. **Specific Bond Recommendations** - The newly issued 10-year and 30-year bonds are highlighted as having the potential to become mainstay bonds. The 10-year bond (250,215) is noted for its value, while the new 30-year special government bond (25 特 6) is expected to have a significant issuance scale [2][12][15]. 8. **Impact of VAT on Bond Trading** - The introduction of VAT on government bonds is not expected to significantly alter market behavior. Investors will still consider after-tax returns when trading bonds, but the VAT will not deter trading activity [14]. 9. **Long-term vs. Short-term Bond Strategies** - Investors are advised to consider the differences in volatility and yield spreads when choosing between 10-year and 30-year bonds. The 30-year bonds may present greater opportunities in a rebound market, while the 10-year bonds are more suited for defensive strategies [20][21]. Other Important Considerations - The bond market's future trajectory will be influenced by government debt issuance and central bank policies, particularly in the fourth quarter, which may lead to fluctuations in liquidity [8][9]. - The potential for the new 30-year special government bond (25 特 6) to become a mainstay bond is emphasized, with its issuance scale expected to be significant compared to existing bonds [15][17]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future outlook of the bond market, along with strategic recommendations for investors.

Report Industry Investment Rating - Not provided in the given content Core Viewpoints of the Report - The adjustment environment of this round of the bond market is different from the past. The redemption pressure may stop at the fund level, and the situation of comprehensive and substantial supplementary decline in the bond market and significant redemption of wealth management products by residents may not occur [4][7]. - The redemption pressure caused by the decline of the bond market this time is mostly concentrated in the fund level. Institutions reduce bond positions and redeem funds, but the pressure may stop at institutional redemptions and not spread to residents redeeming wealth management products [15]. - The "right - hand side" signal of this round of the bond market may appear earlier than expected. Investors are advised to pay attention to central bank operations and interest rate trends [16]. Summary by Relevant Catalogs 1. Bond Market Weekly Viewpoint - During the recent bond market adjustment, investors have different views on bond investment. One view is that the bond market decline will end after short - term and credit bonds fully make up for the decline or after residents panic - redeem wealth management products. However, the report believes that the adjustment environment is different this time, and the redemption pressure may stop at the fund level [4][7]. - There are three reasons: 1) During this bond adjustment, funds are continuously loose, and the central bank cares about the capital market. The adjustment is not caused by capital shortage, and the risk of supplementary decline in bonds is controllable, which has less impact on wealth management products held by residents [8]. 2) This bond adjustment is in the stage of accelerating decline in broad - spectrum interest rates, and investors have a more adequate expectation of the decline in investment returns and are more likely to accept the decline in wealth management yields, making it less likely for negative feedback to occur [10]. 3) Wealth management products used the smoothing valuation method in 2024, which stabilized the scale and helped the stable liability side of wealth management [13]. 2. This Week's Focus in the Fixed - Income Market 2.1 Domestic August PMI to be Announced - China will announce August PMI, the US will announce July core PCE and August University of Michigan consumer confidence index, and the ECB will announce the minutes of the July monetary policy meeting [17]. 2.2 This Week's Interest - Bearing Bond Issuance Volume Declines - This week, the issuance of local bonds continues at a high level, and there is no issuance plan for national bonds at the end of the month. It is expected that a total of 5116 billion yuan of interest - bearing bonds will be issued, falling to a relatively low level in the same period. Among them, there is no issuance plan for national bonds, 81 local bonds are planned to be issued with a scale of 3516 billion yuan, and the actual issuance scale of policy - financial bonds is expected to be about 1600 billion yuan [19]. 3. Review and Outlook of Interest - Bearing Bonds 3.1 Net Reverse Repurchase Operation Injection of 1.37 Trillion - The central bank's open - market operation has a net injection of more than one trillion. The reverse repurchase injection scale first rises and then falls, with a total injection of 2077 billion yuan and a net injection of 1365.2 billion yuan. After adding the net withdrawal of treasury fixed - term deposits, the open - market operation has a net injection of 1265.2 billion yuan. The capital price first rises and then falls. The repurchase trading volume gradually rises to 7.38 trillion, and the overnight ratio average falls to around 88%. The capital interest rate first rises and then falls [22][23]. - The issuance scale of certificates of deposit declines, and the primary and secondary prices both rise. From August 18th to August 24th, the issuance scale is 549.2 billion yuan, the maturity scale is 794.7 billion yuan, and the net financing amount is - 245.5 billion yuan. The primary and secondary interest rates of certificates of deposit both rise [29]. 3.2 Weak Liability - Side Stability of Fixed - Income Asset Management Products - Last week, the Shanghai Composite Index broke through upwards again, and interest rates were under pressure. The liability - side stability of fixed - income asset management products was weak, facing greater redemption pressure. On Friday, the Shanghai Composite Index broke through 3800 points, and interest rates rose significantly again. On August 22nd, the yields of 1 - year, 3 - year, 5 - year, 7 - year, and 10 - year national bonds all increased compared with the previous week, with the 3 - year national bond rising the most, up 9.7bp [41]. 4. High - Frequency Data - On the production side, the operating rates are differentiated. The blast furnace operating rate and petroleum asphalt operating rate decline, while the semi - steel tire operating rate and PTA operating rate rise. The year - on - year decline in the average daily crude steel output in early August narrows [49]. - On the demand side, the year - on - year growth rates of passenger car manufacturers' wholesale and retail sales have rebounded to a relatively high level. The year - on - year growth rate of the commercial housing transaction area is still significantly negative. The export indices SCFI and CCFI have decreased by 3.1% and 1.5% respectively [49]. - On the price side, the crude oil price rises, the copper and aluminum prices are differentiated, and the coal prices are also differentiated. In the middle - stream, the building materials composite price index decreases by 1.1%, the cement index increases by 1.8%, and the glass index decreases by 3.1%. The output of rebar decreases, the inventory rapidly rises to 4.33 million tons, and the futures price decreases by 2.1%. In the downstream consumer sector, the prices of vegetables, fruits, and pork change by 1.9%, - 1.3%, and 0.2% respectively [50].