Report Industry Investment Rating No information provided in the content. Core Viewpoints - In August, liquidity has become a key factor in the bond market. The linkage between risky assets and the bond market has continued for some time, and in the medium - to long - term, the bond market is still priced based on fundamentals. Risky assets' strength is a short - term disturbance. If liquidity is stable, changes in funds flowing to risky assets are not the key to the bond market. An abundant liquidity environment is more likely to lead to a "double - bull" market for stocks and bonds. Attention should be paid to the central bank's operations, large banks' net lending levels, and the liability - side stability of bond funds and other broad - based funds [1][2]. - Although there are disturbances such as government bond supply, certificate of deposit (CD) maturities, and tax payments in August, there are also clear supporting factors. It is expected that the central bank will use various tools to maintain the stability of the money market, and the central level of money market rates will remain in a low - level volatile pattern, but special - time fluctuations need attention [4]. Summary by Directory 1. August: Liquidity Becomes a Key Factor in the Bond Market - Since July, the linkage between stocks, commodities, and bonds has attracted market attention. Liquidity plays a dual role in the stock - bond market linkage. Abundant liquidity benefits both markets, while changes in risk appetite and equity returns drive asset reallocation, causing some bond market funds to flow into stocks and commodities [1][8]. - In late July, high inter - bank liquidity demand and the rise of stocks and commodities suppressed the bond market. At the beginning of August, loose liquidity led to a "double - bull" market for stocks and bonds. From August 11 - 13, the relationship between stocks and bonds changed from a "seesaw" to a "double - bull" situation. On August 11, the central bank's large - scale net withdrawal in the open market and the strength of risky assets dragged down bond market sentiment. On August 13, the bond market showed resilience [1][8][9]. - In the second half of August, the bond market lacks a new narrative. Liquidity will continue to be crucial. The sustainability of risky assets' performance remains to be seen. If liquidity is stable, it won't be the key to the bond market. An abundant liquidity environment is more likely to lead to a "double - bull" market. Attention should be paid to the central bank's operations, large banks' net lending levels, and the liability - side stability of bond funds [2][14]. 2. July: Turbulence in the Money Market - In July, the money market had a "roller - coaster" ride, with funds loosening at the beginning, tightening in the middle, and then fluctuating again in the late stage. The central bank's operations were more targeted, with more precise and flexible liquidity injections [15]. - In terms of money prices, overnight money rates often ran below the policy rate but rose during tax payments and at the end of the month. The 7 - day money rate's central level declined, and the 7 - day money rate's stratification phenomenon was more prominent, while the overnight money rate's stratification was similar to the previous month [17]. - In terms of money quantity, the net lending of large state - owned banks decreased, while the lending of money market funds and wealth management products increased. The microstructure of money lending changed, increasing the volatility of overnight money rates [30]. - Factors affecting money supply and demand in July included precise and targeted open - market operations, government bond issuance (which decreased month - on - month but remained high year - on - year), high CD maturities with stable issuance prices, and a structural differentiation in credit in July after an unexpected increase in June [35][40][46]. 3. Current Concerns about the Money Market - Historically, August has a relatively low central level of money market rates in the second half of the year. In 2022 and 2023, there were large fluctuations at the end of August due to external policy variables [53]. - Currently, there are several concerns: high CD maturities above 3 trillion yuan in August, but banks' liability - side pressure is neutral, and the demand for price - increasing issuance is limited; continued government bond supply pressure, with the central bank likely to use various tools to maintain money market stability; and over 1.2 trillion yuan of medium - to long - term liquidity maturing in August, but a 70 - billion - yuan 3 - month buy - out reverse repurchase was carried out on August 8 [61][62][64]. - Although there are disturbances in August, there are also supporting factors such as seasonal factors and the central bank's support. It is expected that the central level of money market rates will remain low - level volatile, but attention should be paid to fluctuations at special times [66].

Core Insights - The report highlights a continuation of weak economic conditions, with a notable decline in new RMB loans in July 2025, amounting to -0.05 billion compared to 2.24 billion in June 2025. New social financing (社融) was 1.16 billion, down from 4.20 billion in June 2025, while the year-on-year growth rate of social financing was 9%, slightly up from 8.9% in June 2025 [3][4][5]. Group 1: Social Financing and Government Debt - Government debt continues to support the growth of social financing in July, with net financing reaching 1.25 billion, although this is a decrease from 1.41 billion in June. This high level of government debt financing has effectively supported social financing growth despite weak credit demand from the real economy [3][5]. - The report indicates that corporate short-term loans were low, while bill financing saw significant growth. This is attributed to a rapid decline in bill rates, which created a substitution effect with short-term loans, and effective measures to clear overdue accounts [3][4][5]. Group 2: Household and Corporate Credit Demand - Both household and corporate credit demand in July were below seasonal levels, reflecting low consumer willingness to spend and weak housing demand. The implementation of personal consumption loan subsidies and childcare allowances may stimulate future household consumption, but improvements in housing demand remain uncertain due to inventory and pricing factors [3][4][5]. - The report notes that new non-bank deposits increased to a seasonal high in July, indicating a trend of residents moving deposits to equity markets, influenced by favorable performance in the equity market and a seasonal decline in wealth management products [3][4][5]. Group 3: Monetary Indicators - M1 and M2 growth rates both increased, with the M1-M2 spread narrowing, suggesting a marginal improvement in economic activity. The increase in M1 is attributed to several factors, including a low base effect from previous financial data adjustments and significant net fiscal spending [3][4][5]. - The report also mentions that the bond market's pricing of fundamentals and liquidity has weakened, with a flattening yield curve reflecting pessimistic expectations for the economy. The bond market has shown weakness following the release of financial data, indicating a potential shift of funds from bonds to equities [3][4][5]. Group 4: Future Outlook - The report anticipates that the bond market may face pressure in August, coinciding with a peak in government debt supply. The coordination of monetary policy with fiscal liquidity may be challenging, and if bond market adjustments intensify, there is a possibility that the central bank may restart bond purchases [3][4][5]. - The report concludes that the third and fourth quarters may present risk windows, as a decline in government debt supply could reduce liquidity support, while inflation risks may rise [3][4][5].

Report Industry Investment Rating - Not provided in the document Core Viewpoints - In the context of the "stock-bond seesaw" effect, the bond market adjusted due to the stock market's rise. However, the bond market still has support from fundamentals and capital, and the yield center may remain low. The Politburo meeting's policies may boost stock market activity, causing short-term disturbances to the bond market [4][11][12] - The Central Bank and the Ministry of Agriculture and Rural Affairs issued a document encouraging the issuance of rural revitalization bonds, which may lead to the expansion of such bonds [5][14][15] - Industrial enterprise profits declined in the first half of the year, with industrial product prices dragging down revenue and profits, while "volume" remained an important support factor for profit recovery [6][17] Summary by Directory Market Hotspots - **Stock-Bond Seesaw Effect and Bond Market Adjustment**: The stock market rose significantly last week, with the Shanghai Composite Index breaking through 3600 points, triggering the "stock-bond seesaw" effect. The bond market adjusted, with most major bond market indices falling and bond yields rising. The 10-year Treasury yield reached 1.73%. The Politburo meeting's policies may increase stock market activity, causing short-term disturbances to the bond market, but the bond market still has support [4][11][12] - **Policy Encouragement for Rural Revitalization Bonds**: The Central Bank and the Ministry of Agriculture and Rural Affairs jointly issued a document encouraging the issuance of rural revitalization bonds. This policy aims to provide comprehensive financial support for rural revitalization, and rural revitalization bonds may expand in the future [5][14][15] Macroeconomic Data - Industrial enterprise profits declined by 1.8% year-on-year from January to June, with the decline widening compared to the previous period. In June, the profit decline narrowed, indicating marginal improvement but overall weakness. Industrial product prices continued to drag down profits, while industrial production was supported by factors such as the "export rush" effect and the "618" shopping festival [6][17] Money Market - The central bank's net capital injection decreased last week, leading to a marginal tightening of liquidity. Most interbank repurchase rates rose, except for a slight decline in the DR1m rate. The spread between the 3-month and 1-year Shibor widened [20] Primary Market of Credit Bonds - The issuance scale of credit bonds increased last week, reaching 3243.17 billion yuan, an increase of 418.72 billion yuan from the previous period. Different bond types showed varying trends, with ultra-short-term financing bonds and corporate bonds increasing significantly. The infrastructure investment and financing industry had a net outflow of financing, while most industries in the industrial bond sector had a net inflow. The issuance cost of credit bonds mostly increased [23][25][31] Secondary Market of Credit Bonds - The trading volume in the secondary bond market increased last week, with the daily average trading volume reaching 19682.03 billion yuan. Bond yields generally rose, with interest rate bonds and credit bonds both showing significant increases. Most credit spreads widened, while rating spreads showed mixed trends with small changes [33][36][40]

Group 1 - The bond market experienced a recovery, with the 10-year government bond yield declining from a high of nearly 1.74% on July 24 to around 1.69% [1] - The economic fundamentals show a "strong total + weak structure" characteristic, limiting the upward and downward space for government bond yields [1][6] - The People's Bank of China is expected to maintain a balanced and moderately loose monetary policy, with a potential 50 basis points (BP) reserve requirement ratio cut and 10-20 BP interest rate reduction by the end of Q3 or early Q4 [1] Group 2 - The recent meeting of the Central Political Bureau emphasized the implementation of existing policies rather than introducing new ones, indicating a cautious approach towards "anti-involution" measures [2] - The focus on "anti-involution" reflects a shift in policy emphasis from actual growth to nominal growth, suggesting a potential slowdown in economic growth in the second half of the year [2][6] - The July inflation data showed no signs of reversal in the economic fundamentals, with the Consumer Price Index (CPI) slightly exceeding market expectations while the Producer Price Index (PPI) declined by 3.6% [3][5] Group 3 - The bond market remains under pressure from strong policy expectations, with the focus shifting from total quantity to structural transformation and upgrading [1][2] - The current economic environment is characterized by "total resilience + structural differentiation," with prices in a bottoming phase and commodity prices supported by "anti-involution" policies [6] - The recovery of prices and the potential for PPI to turn positive depend significantly on demand-side performance, indicating that the bond market's direction is closely tied to demand and monetary policy changes [5][6]

Report Information - Report Title: "Fixed Income Weekly: Have Large Banks Started Buying Long-Term Bonds? - Weekly Report on Bond Market Institutional Behavior (Week 1 of August)" [1] - Report Date: August 10, 2025 [2] - Chief Analyst: Yan Ziqi [3] - Analyst: Hong Ziyan [3] 1. Report Industry Investment Rating No industry investment rating information is provided in the report. 2. Report Core View - The bond market ran smoothly this week, with the 10-year Treasury yield slightly dropping to 1.69%, the funding rate staying around 1.42%, and the 5-year AAA medium - short note yield dropping to 1.91% [3][11] - Large banks continued to buy short - term bonds, and although they bought some long - term bonds, the volume was less than 10 billion yuan, so it's hard to say they have started buying long - term bonds. However, they have bought long - term local government bonds in multiple weeks since June, which may be related to duration balance and return requirements [3][4][12] - Funds further increased their purchases of credit bonds and Tier 2 capital bonds. With the easing of the funding situation, the bond market leverage ratio climbed, and there is still an opportunity for credit spreads to compress [4][13] 3. Summary by Directory 3.1 This Week's Institutional Behavior Review - **Yield Curve**: Treasury yields declined overall, with the 1Y yield down 2bp, 3Y down 3bp, 5Y down about 3bp, 7Y down 1bp, 10Y down 2bp, 15Y flat, and 30Y up 1bp. For CDB bonds, short - term yields declined and long - term yields increased, with the 1Y yield changing less than 1bp, 3Y down 1bp, 5Y down 1bp, 7Y changing less than 1bp, 10Y up 2bp, 15Y up 2bp, and 30Y up 1bp [14] - **Term Spread**: Treasury interest spreads rose, and the spreads widened overall; CDB bond interest spreads were stable, and the middle - term spreads widened [15][16][17] 3.2 Bond Market Leverage and Funding Situation - **Leverage Ratio**: It dropped to 107.51%. From August 4th to August 8th, it first decreased and then increased during the week. As of August 8th, it was about 107.51%, down 0.07 pct from last Friday and up 0.24 pct from Monday [21] - **Average Daily Turnover of Pledged Repurchase**: The average daily turnover of pledged repurchase this week was 8.1 trillion yuan, with the average daily overnight proportion at 89.87%. The average overnight turnover was 7.3 trillion yuan, up 1.53 trillion yuan month - on - month, and the overnight trading proportion was up 3.10 pct [27][28] - **Funding Situation**: Bank lending showed a fluctuating upward trend. As of August 8th, large and policy banks' net lending was 5.22 trillion yuan; joint - stock and urban/rural commercial banks' average daily net borrowing was 0.57 trillion yuan, and the net borrowing on August 8th was 0.74 trillion yuan. The net lending of the banking system was 4.47 trillion yuan. DR007 fluctuated upward, and R007 fluctuated downward [31] 3.3 Duration of Medium - and Long - Term Bond Funds - **Median Duration**: The median duration of medium - and long - term bond funds decreased to 2.81 years (de - leveraged) and 3.12 years (leveraged). On August 8th, the de - leveraged median duration was 2.81 years, down 0.02 years from last Friday; the leveraged median duration was 3.12 years, down 0.06 years from last Friday [45] - **Duration by Bond Fund Type**: The median duration (leveraged) of interest - rate bond funds decreased to 3.92 years, up 0.04 years from last Friday; the median duration (leveraged) of credit bond funds decreased to 2.89 years, down 0.07 years from last Friday. The de - leveraged median duration of interest - rate bond funds was 3.44 years, down 0.03 years from last Friday; the de - leveraged median duration of credit bond funds was 2.65 years, down 0.04 years from last Friday [48] 3.4 Category Strategy Comparison - **Sino - US Yield Spread**: It generally narrowed, with the 1Y narrowing by 8bp, 2Y by 10bp, 3Y by 6bp, 5Y by 9bp, 7Y by 7bp, 10Y by 6bp, and 30Y by 3bp [54] - **Implied Tax Rate**: It generally widened. As of August 8th, the CDB - Treasury spread widened by 2bp for 1Y, 2bp for 3Y, 1bp for 5Y, about 1bp for 7Y, 3bp for 10Y, about 2bp for 15Y, and less than 1bp for 30Y [55] 3.5 Bond Lending Balance Changes - On August 8th, the lending concentration of the active 10 - year Treasury bond increased, while the lending concentration trends of the second - active 10 - year Treasury bond, active 10 - year CDB bond, second - active 10 - year CDB bond, and active 30 - year Treasury bond declined. All institutions showed a decline [59]

Core Insights - The "Bond Connect" program has achieved significant success since its launch seven years ago, facilitating the internationalization of China's financial market [1][2][3] Group 1: Performance and Impact - The average daily trading volume of the "Northbound Connect" has grown at an annual rate of 63%, with nearly 60% of foreign investors' transactions in Chinese bonds conducted through this channel [2] - In the past year, the "Swap Connect" has attracted 61 foreign institutions, resulting in over 4,300 transactions with a total nominal principal amount of approximately 2.2 trillion RMB [2] - Last year, international investors' total trading volume in mainland bonds exceeded 15 trillion RMB, with about two-thirds executed via "Bond Connect" [2] Group 2: Future Developments - The People's Bank of China plans to launch a new service allowing foreign institutions to use "Bond Connect" for paying "Swap Connect" margin, which will enhance the application of RMB bonds as offshore collateral [5] - Ongoing research aims to improve the openness of the bond market and enhance cross-border investment facilitation, including refining the "Bond Connect" and "Swap Connect" mechanisms [5] - The Hong Kong Stock Exchange is preparing to introduce a 10-year government bond futures product to help international investors manage RMB asset interest rate risks [6] Group 3: Regulatory and Market Integration - The Hong Kong Monetary Authority emphasizes the need for continued expansion of bond issuance in Hong Kong to enhance the offshore RMB bond market [7] - Future measures may include the introduction of government bond futures and bank bond repurchase agreements to meet diverse trading strategy needs of foreign investors [7]

Core Insights - Recent participation of over 1,160 foreign institutions in China's bond market indicates a growing confidence in the sector, with total bond holdings reaching 4.5 trillion yuan, an increase of over 270 billion yuan since the end of 2024 [1] - The total size of China's bond market has reached 183 trillion yuan, making it the second largest in the world, with significant increases in the weight of Chinese bonds in major international indices [1] - The current foreign investor bond holding ratio is only 2.4%, suggesting substantial room for growth compared to developed and some emerging markets [2] Group 1 - Over 1,160 foreign institutions from more than 70 countries and regions are actively participating in China's bond market, with total holdings of 4.5 trillion yuan, an increase of over 270 billion yuan since the end of 2024 [1] - The issuance of Panda bonds by foreign institutions has exceeded 950 billion yuan, reflecting strong interest in China's debt instruments [1] - China's bond market has been included in major international indices, with the weight of Chinese government bonds in the Bloomberg Global Aggregate Index reaching 9.7%, an increase of 3.7 percentage points over four years [1] Group 2 - The People's Bank of China plans to continue promoting high-level openness in the bond market, aiming to attract more foreign investors, especially long-term investors [2] - The current foreign investment ratio in China's bond market is relatively low at 2.4%, indicating significant potential for future growth [2]

Group 1 - The Inner Mongolia Autonomous Region is actively promoting the development of its bond market, with a current total of 40 outstanding non-financial corporate credit bonds amounting to 70 billion yuan [1] - The Inner Mongolia Electric Power Group has received significant support from the regional financial office in its bond issuance efforts, achieving the status of a "well-known mature issuer" on the Shanghai Stock Exchange, which lays a solid foundation for the issuance of technology innovation bonds [1] - The Inner Mongolia Energy Group has been guided by the regional financial office in its REITs issuance process since 2022, ensuring compliance and project planning for successful fund issuance [1] Group 2 - The recent event focused on "bond policy interpretation + financing tool training + discussion," highlighting the latest policies and optimization mechanisms for innovative bond products such as technology innovation bonds and high-growth industry bonds [2] - The event included detailed explanations of measures to prevent bond defaults and the usage of liquidity risk prevention funds, aimed at supporting local enterprises in their financing needs [2] - Representatives from various government departments and 19 enterprises participated in the event to explore the use of bond financing tools and to enhance direct financing channels [2]

Core Insights - The bond market's "technology board" has become a focal point for industry attention since 2025, supported by a series of policy measures aimed at enhancing financing for technology innovation [1][2] Policy Support - Since 2025, numerous policies have been introduced to support the technology innovation sector, with the bond market explicitly prioritizing technology innovation as a key financing direction [2] - The issuance of technology innovation bonds (referred to as "tech bonds") has gained significant momentum, with a total issuance scale of approximately 1 trillion yuan in the first half of 2025, representing an 86% increase year-on-year [2] - The total outstanding scale of tech bonds reached 2.5 trillion yuan by July 16, 2025, an increase of over 900 billion yuan since the beginning of the year [2] Market Growth - The underwriting scale of tech bonds continued its rapid growth trend, with a total underwriting amount of 381.39 billion yuan in the first half of 2025, reflecting a year-on-year increase of 56.48% [3] - The market for tech bonds is expected to maintain growth due to ongoing financing needs from tech enterprises and improvements in the issuance review mechanism [3] ETF Development - The first batch of tech bond ETFs raised 28.99 billion yuan, and by the fifth trading day, the total scale exceeded 100 billion yuan, reaching 101.09 billion yuan [4] - The overall bond ETF market has surpassed 500 billion yuan, indicating a growing demand for transparent, low-cost, and highly liquid investment tools [4] - The number of bond ETF products has increased from 20 at the end of 2024 to 39 by July 24, 2025, with the total scale of bond ETFs reaching 507.53 billion yuan, nearly doubling since the end of 2024 [4]

Wind数据显示，截至8月3日，今年以来银行间市场熊猫债发行规模为1166.50亿元。截至目前，熊猫债 累计发行规模已突破1万亿元。专家表示，近年来，熊猫债发行主体不断丰富，发行人数量稳步攀升， 持续获得国际知名机构青睐，熊猫债市场深度广度不断拓展。中诚信国际研究院研究报告认为，融资成 本优势是熊猫债密集发行的重要因素之一。"当前熊猫债票面利率显著低于同期美元债，国际发行人通 过置换存量美元债务，可直接降低融资成本，这一'性价比'优势提升了发行意愿。"报告分析称。（中 证报） ...