Group 1: Macroeconomic Outlook - The report highlights that both the US and China are entering critical years, with global investment driven by three and a half engines: AI investment, defense spending, and industrial restructuring [1][14] - The nominal GDP growth rate is expected to recover, with a focus on domestic demand and technology as key policy areas [1][2] - The transition from old to new economic drivers in China is anticipated to gain momentum, leading to a rebalancing of supply and demand [2][11] Group 2: Policy Environment - The "15th Five-Year Plan" sets a supportive policy tone, with monetary policy expected to remain accommodative, albeit with less room than in the current year [3][15] - Fiscal policy is projected to maintain a certain level of expansion, with total tools estimated at 15.7 trillion yuan, an increase of approximately 1.2 trillion yuan from this year [3][15] - The report emphasizes the importance of structural tools and the coordination between monetary and fiscal policies to support various sectors [3][15] Group 3: Supply and Demand Dynamics - The narrative of "asset scarcity" in the bond market is expected to weaken, with a focus on the verification of corporate profits and capacity utilization [4][18] - The report notes that government bond supply is likely to increase, but market pressure will be manageable due to central bank support [4][18] - Institutional behavior is identified as a major source of market volatility, with a reduction in stable funding leading to increased market fluctuations [4][18] Group 4: Bond Market Strategy - The bond market is expected to maintain a "low interest rate + high volatility" characteristic, with the central rate likely remaining stable or slightly increasing [5][18] - The report suggests a strategy of segment trading, coupon strategies, and equity exposure as priorities over duration adjustment and credit downgrading [5][18] - The ten-year government bond yield is projected to fluctuate between 1.6% and 2.1%, with a widening of term spreads anticipated [5][18]

1. Report's Industry Investment Rating The provided content does not mention the industry investment rating. 2. Report's Core View - Adopt short - and medium - term credit as the foundation, conduct band - trading on secondary and perpetual bonds, and be cautious about chasing long - term credit. The central bank's bond - buying is not a one - time benefit. It aims to promote banks to expand their balance sheets and absorb the fourth - quarter supply. There may be more measures to encourage bank bond - buying, and the bond market is likely to turn around in the fourth quarter, but the process will not be rapid. Short - duration credit remains the core, secondary and perpetual bonds can be traded in bands, and long - term credit should be approached with caution [5][8]. - In terms of specific allocation, continue to explore the steeper parts of the 2 - 3Y yield curve. There are many entities with a 3Y - 2Y term spread of over 25bp in public bonds, and there is also a wide range of bond selection with a 5Y - 3Y term spread between 30 - 40bp [5][10]. 3. Summary According to Relevant Catalogs 3.1 Credit Bond Weekly View - The central bank's restart of treasury bond trading enhanced Q4 liquidity, leading to a rapid decline in bond yields and a rise in credit bonds, especially in the medium - and long - term. Future central bank policies may further boost the bond market. Short - duration credit is the base, secondary and perpetual bonds can be traded in bands, and long - term credit should be chased cautiously [5][8]. - Suggest exploring the 2 - 3Y steeper parts of the yield curve, with favorable term - spread conditions for bond selection [5][10]. 3.2 Credit Bond Weekly Review 3.2.1 Negative Information Monitoring - From October 27 to November 2, there was no downgrade in corporate or bond ratings. However, some companies had negative events, such as Rongqiao Group with large - scale overdue loans and commercial acceptance bills, and Greenland Holdings with a large number of new lawsuits [12][13]. 3.2.2 Primary Issuance - Credit bond issuance decreased significantly week - on - week, and the maturity volume also shrank. The net financing was 126 billion yuan, indicating a basic balance between inflow and outflow. Two bonds with a total scale of 700 million yuan were cancelled or postponed. The issuance cost fluctuated slightly, with the AA+ level rising slightly [13][14]. 3.2.3 Secondary Trading - The repair slope of credit bonds of all grades and tenors increased, with a central decline of about - 6bp. Credit spreads widened at the short end and narrowed at the long end. The 5Y - 1Y term spread of all grades narrowed significantly, and the 3Y - 1Y spread narrowed slightly. The AA - AAA grade spread narrowed at the short - and medium - term and widened at the long - term. The weekly turnover rate decreased slightly to 2.02%. Only one bond was traded at a discount of over 10%, and no real - estate enterprise bonds were involved. The top five real - estate enterprises with widening spreads were Times Holdings, Yuzhou Hongtu, and Zhongjun [17][25][26].

Group 1 - Hong Kong is committed to driving economic growth and enhancing competitiveness to solidify its status as an international financial center [1] - The government supports mainland tech companies raising funds in Hong Kong and encourages overseas companies to list in Hong Kong as a second listing [1] - There are currently over 1,200 fintech companies in Hong Kong, a 10% increase from last year, with projected total revenue for the fintech sector exceeding $600 billion by 2032, growing at an annual rate of over 28% [1] Group 2 - The Hong Kong government plans to relax restrictions to attract more investors into the fintech sector [1] - The Hong Kong Monetary Authority's Ensemble project sandbox is exploring tokenization applications [1] - Hong Kong aims to deepen its stock market and expand world-class bond and currency markets, improving bond market infrastructure and establishing connections with overseas markets, including Switzerland and the UAE [1] Group 3 - Hong Kong is the largest offshore RMB hub and will continue to support the use of RMB in its economy [1] - The Hong Kong Monetary Authority will provide long-term RMB financing for enterprises through currency swap arrangements with the People's Bank of China for trade, operations, and capital expenditures [1]

Summary of Key Points from Conference Call Records Industry Overview - The records primarily discuss the fixed income market and the bond market dynamics in 2025, with a focus on government bonds and credit bonds. Core Insights and Arguments 1. **Market Dynamics and Institutional Behavior** Institutions are actively accumulating positions through early and late trading sessions to meet annual KPIs, but there has been significant outflow of bank funds this year, leading to a reliance on equity contributions from insurance asset management [1][3][12] 2. **Central Bank's Role** The central bank's buying and selling of government bonds aims to stabilize long-term interest rates and support the real economy, rather than to lower rates or stimulate loan growth. This is to control national leverage costs and prevent excessive interest rate increases [1][8][10] 3. **Short-term and Long-term Expectations** Short-term expectations for long-term bonds are clear, but uncertainties exist, particularly regarding potential CPI increases that could lead to rising interest rates. There is also a risk of inversion in one-year time deposits by year-end [1][9] 4. **Investment Strategy Recommendations** It is advised to focus on the timing of profit-taking, particularly within a 30 basis points range, and to balance short-term and long-term bonds to mitigate risks [4][13][15] 5. **Credit Bond Market Resilience** The credit bond market is expected to show strong resilience in 2025 due to high credit spreads and enhanced trading attributes of fixed income assets. However, volatility is anticipated to increase in 2026 [2][16][17] 6. **Government Bond Market Performance** The performance of the government bond market in 2025 will be influenced by various factors, including the central bank's actions and the overall economic environment. The expected yield for ten-year government bonds is projected to fluctuate between 1.7% and 1.75% [1][14][15] 7. **Investment Opportunities** There are potential investment opportunities in the credit bond market, particularly in high-rated, liquid securities, and sectors with structural growth potential such as batteries, public utilities, and the electronics industry [23] Other Important but Overlooked Content 1. **Market Sensitivity to News** The market reacts sensitively to positive news while being less responsive to negative news, indicating a balance maintained by both allocation and speculative forces [1][11][15] 2. **Impact of Policy on Market** The central bank's actions are not solely aimed at stabilizing the bond market but also at stimulating the overall capital market, including equities. The long-term effects depend on the performance of the equity market and capital flows [10][11] 3. **ETF and Fund Trends** There has been a notable trend of net subscriptions in fixed income and convertible bond funds, indicating a stable inflow of capital and a positive outlook for future growth in these areas [20][21][22] 4. **Caution in Long-term Investments** Caution is advised for long-term government bonds and credit assets due to potential pressure and limited investment space, especially if yield spreads narrow significantly [13][15]

Group 1: Bond Market Overview - In September, the bond market issued a total of 81,027.8 billion yuan in various bonds, including 14,904.9 billion yuan in government bonds, 8,519.1 billion yuan in local government bonds, 11,741.0 billion yuan in financial bonds, 13,407.3 billion yuan in corporate credit bonds, 365.7 billion yuan in credit asset-backed securities, and 31,627.8 billion yuan in interbank certificates of deposit [1] - As of the end of September, the bond market's custody balance reached 193.1 trillion yuan, with 170.5 trillion yuan in the interbank market and 22.6 trillion yuan in the exchange market [1] - The custody balance for different bond types includes 39.2 trillion yuan in government bonds, 53.5 trillion yuan in local government bonds, 44.1 trillion yuan in financial bonds, 34.2 trillion yuan in corporate credit bonds, 1.0 trillion yuan in credit asset-backed securities, and 20.0 trillion yuan in interbank certificates of deposit [1] Group 2: Interbank Bond Market Activity - In September, the interbank bond market recorded a transaction volume of 32.7 trillion yuan, with an average daily transaction of 1.4 trillion yuan, reflecting a year-on-year increase of 7.3% but a month-on-month decrease of 9.7% [2] - The average transaction size was 4,029.3 million yuan, with transactions between 5 million and 50 million yuan accounting for 50.13% of the total transaction amount [2] - As of the end of September, foreign institutions held a custody balance of 3.8 trillion yuan in the Chinese bond market, representing 2.0% of the total custody balance [2] Group 3: Money Market and Commercial Paper - In September, the interbank lending market recorded a transaction volume of 9.3 trillion yuan, a year-on-year increase of 21.8% and a month-on-month increase of 5.3% [3] - The weighted average interest rate for interbank lending was 1.45%, up by 5 basis points month-on-month [3] - The commercial paper acceptance amount reached 3.5 trillion yuan, with a discount amount of 2.6 trillion yuan, and small and micro enterprises accounted for 93.5% of the total number of enterprises issuing bills [3] Group 4: Stock Market Performance - As of the end of September, the Shanghai Composite Index closed at 3,882.8 points, with a month-on-month increase of 24.9 points, reflecting a growth of 0.6% [3] - The Shenzhen Component Index closed at 13,526.5 points, with a month-on-month increase of 830.4 points, reflecting a growth of 6.5% [3] - The average daily trading volume in the Shanghai market was 10,322.1 billion yuan, an increase of 7.9% month-on-month, while the Shenzhen market's average daily trading volume was 13,604.9 billion yuan, an increase of 2.8% month-on-month [3] Group 5: Bond Market Holders - As of the end of September, there were 3,988 institutional members in the interbank bond market, all of which were financial institutions [4] - The top 50 investors in corporate credit bonds held 53.3% of the total bond holdings, primarily concentrated in public funds, state-owned commercial banks, and insurance financial institutions [4] - The trading volume of the top 50 investors in corporate credit bonds accounted for 61.49% of the total trading volume, mainly concentrated in securities companies, fund companies, and bank wealth management subsidiaries [4]

Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints of the Report - The bond market showed an overall volatile performance in the latest week. On October 31, the yield to maturity of the active 10Y Treasury bond dropped to 1.79%, and the 30Y - 10Y term spread narrowed. Medium - and short - term bonds remained strong [4][10]. - There were three characteristics of institutional behavior this week: large banks increased their purchases of short - term bonds, securities firms increased their allocation of medium - and long - term bonds, and funds allocated more to credit bonds than to interest - rate bonds [4][10]. - In November, the money market rate and short - term bonds are expected to be stable, but the certificate of deposit (CD) rate may not decline significantly. The money market is likely to be stable, and the short - end interest rate is expected to range between 1.35% - 1.40%. Although the 1Y AAA - rated CD rate has dropped to 1.63%, it is less likely to decline further [4][11]. - Interest rates are in a high - probability winning state this year, but the probability of a trending market is not high, yet there are structural opportunities. The October PMI was lower than market expectations, and the fundamentals are generally not negative for the bond market. The 30Y - 10Y Treasury spread, 10Y CDB - 10Y Treasury spread, and 5Y CDB - Treasury spread are at relatively high odds [4][11]. - The short - term performance of Bond 25 Special 06 is strong, but there is a certain risk of interest rate increase. The balance of Bond 25 Special 06 was 247 billion yuan on October 31. The probability of its refinancing next year is small, and there is a "herding" phenomenon among funds holding this bond. If it is not refinanced, it may experience excessive decline [4][12]. 3. Summary by Relevant Catalog 3.1 This Week's Bond Market Review - The bond market was volatile. The 10Y Treasury yield dropped to 1.79% on October 31, and the 30Y - 10Y term spread narrowed. Medium - and short - term bonds were strong [10]. - Large banks mainly bought Treasury bonds with maturities of less than 1Y and 1 - 3Y. Securities firms increased their purchases of 7Y, 10Y, and 30Y Treasury bonds, with low net purchases of policy - financial bonds. Funds continued to allocate more to credit bonds than to interest - rate bonds since October [4][10]. 3.2 Bond Yield Curve Tracking 3.2.1 Key Maturity Interest Rates and Spread Changes - As of October 31, compared with October 27, the 1Y Treasury yield dropped 7.95bp to 1.38%, the 10Y Treasury yield dropped 4.69bp to 1.80%, and the 30Y Treasury yield dropped 6.00bp to 2.14% [13]. - The 30Y Treasury - 10Y Treasury spread dropped 1.31bp to 34.77bp, and the 10Y CDB - 10Y Treasury spread dropped 2.41bp to 13.00bp [14]. 3.2.2 Treasury Term Spread Changes - As of October 31, compared with October 27, the 3Y - 1Y Treasury spread dropped 2.28bp to 3.20bp, the 5Y - 3Y Treasury spread rose 6.31bp to 15.16bp, the 7Y - 5Y Treasury spread dropped 4.14bp to 11.06bp, the 10Y - 7Y Treasury spread rose 3.37bp to 11.86bp, the 20Y - 10Y Treasury spread dropped 1.63bp to 32.88bp, and the 30Y - 20Y Treasury spread rose 0.32bp to 1.89bp [16]. 3.3 Bond Market Leverage and Funding Situation 3.3.1 Balance of Inter - bank Pledged Repurchase - As of October 31, 2025, compared with October 27, the balance of inter - bank pledged repurchase increased by 0.40 trillion yuan to 11.41 trillion yuan [19]. 3.3.2 Changes in Inter - bank Bond Market Leverage Ratio - As of October 31, 2025, compared with October 27, the inter - bank bond market leverage ratio increased by 0.24 pct to 106.85% [20]. 3.3.3 Pledged Repurchase Turnover - From October 27 to October 31, the average daily turnover of pledged repurchase was 6.70 trillion yuan. The average overnight turnover was about 5.75 trillion yuan, and the average overnight turnover ratio was 85.95% [24][27]. 3.3.4 Operation of Inter - bank Funding - Bank funds for lending first increased and then decreased. As of October 31, the net lending of large banks and policy banks was 4.16 trillion yuan, and the net borrowing of joint - stock banks, city commercial banks, and rural commercial banks was 0.36 trillion yuan. The net lending of the banking system was 3.80 trillion yuan [28]. - The daily lending amount of banks first increased and then decreased. As of October 31, the daily lending amount of large banks and policy banks was 3.17 trillion yuan, and that of small and medium - sized banks was - 0.45 trillion yuan [30]. - As of October 31, DR001 was 1.3184%, DR007 was 1.4551%, R001 was 1.4069%, and R007 was 1.4923% [30]. 3.4 Duration of Medium - and Long - Term Bond Funds 3.4.1 Median Duration of Bond Funds - As of October 31, the median duration of medium - and long - term bond funds was 2.65 years (de - leveraged), up 0.05 years from October 27; the median duration (including leverage) was 2.71 years, up 0.07 years from October 27 [40]. 3.4.2 Median Duration of Interest - Rate Bond Funds - As of October 31, the median duration of interest - rate bond funds (including leverage) was 3.73 years, up 0.11 years from October 27; the median duration of credit bond funds (including leverage) was 2.49 years, up 0.14 years from October 27. The median duration of interest - rate bond funds (de - leveraged) was 3.30 years, up 0.01 years from October 27, and the median duration of credit bond funds (including leverage) was 2.45 years, up 0.06 years from October 27 [43]. 3.5 Changes in Bond Lending Balance - As of October 31, compared with October 27, the borrowing volume of 10Y CDB bonds showed volatility [48].

1. Report Industry Investment Rating No specific industry investment rating is provided in the content. 2. Core Views of the Report - The 10 - year Treasury bond may break below 1.75% (250016) and reach a new low by the end of the year (250011 breaking below 1.6%). The trend of bond market interest rate decline will not change, as the fundamental weakness and monetary easing are the general trends, and the supply - demand relationship is becoming more favorable for the bond market [3]. - The final version of the fund sales new regulations may be released in November, and the impact on the bond market is considered to be positive overall. The incremental growth - stabilizing policies are mainly focused on next year. The fundamental stabilization still needs time, and the central bank is likely to maintain a supportive monetary policy stance. The supply - demand structure is becoming more favorable for the bond market [3][4]. 3. Summary According to the Table of Contents 3.1 10 - month Bond Market: Ready to Take Off - In October, the bond market interest rate fluctuated downward and the curve flattened. The main driving factor was the central bank's announcement to restart Treasury bond purchases, which increased the market's expectation of monetary easing. The 10 - year Treasury bond yield dropped 6.51bp to 1.80%, and the term spread between 1 - year and 10 - year Treasury bonds narrowed 8.24BP to 41.28BP [8]. - Other factors included Sino - US trade frictions and subsequent improvement in relations, the release of the Fourth Plenary Session of the 20th CPC Central Committee and the 14th Five - Year Plan, and the weakening of the fundamentals [8][9]. 3.2 Historical Performance of the Bond Market in November - Historically, in November, Treasury bond interest rates mostly declined, which was related to macro data pressure, policy implementation, and institutional cross - year allocation demands. There were only two significant adjustments in 2020 and 2022 [14]. - The release of October macro data has an impact on the November bond market trend, especially economic and financial data. The main factors to focus on in November include policy implementation, fundamental stabilization, monetary policy and capital flow, and cross - year allocation [16][17]. 3.3 Policy Implementation - **Fund Sales New Regulations**: The final version may be released in November, which may cause a structural impact on the bond market. However, the overall view on regulatory impact is positive. The demand for bonds will not disappear, and the central bank has set an upper limit for the 10 - year Treasury bond yield. After the policy is implemented, the bond market may experience a situation of "bad news is out" [18][19]. - **Incremental Growth - Stabilizing Policies**: There have been incremental policies in the broad - sense fiscal area to hedge against the economic downturn pressure. The subsequent focus is on next year, and attention should be paid to the possible impact of policy expectations [4]. 3.4 Fundamental Stabilization - Recently, the demand and price of rebar have shown signs of stabilization and rebound, but the cement price remains at a low level. The PPI and bill interest rates indicate that the effect of previous incremental policies is not significant, and the fundamental stabilization still needs time [4]. 3.5 Supportive Monetary Policy Stance - The central bank is likely to maintain a supportive monetary policy stance. The probability of an overall interest rate cut within the year is limited, but DR001 can decline to OMO - 20bp, and the market expectation can further ferment. The restart of Treasury bond purchases is beneficial to the bond market, and the long - term and ultra - long - term yield spreads can continue to compress [4]. 3.6 Supply - Demand Structure Favors the Bond Market - **Supply Side**: The supply of government bonds is decreasing, and credit is relatively sluggish, which is conducive to pushing down interest rates [4]. - **Demand Side**: The central bank's restart of bond purchases, the low - level replenishment of institutional duration, and the cross - year allocation market are all beneficial to the bond market. The cross - year allocation will not be absent, and non - bank institutions have shown a trend of net buying in the secondary market recently [4].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The bond market institutions reached re - balance under the policy events in October after the redemption panic before October. The current bond market has fully priced in the resumption of treasury bond trading, and the central bank's move is mainly to support fiscal efforts and supplement bank liquidity, with a neutral impact on the bond market in the medium - to - long - term [1][8][10]. - In October, the bond market yield declined rapidly under Trump's tariff measures, but the decline was much smaller than in April. After the Sino - US economic and trade consultations, the bond market yield did not show an obvious rebound. Investors have certain "learning ability", and the bond market prices faster but with a smaller decline in yield. The long - position sentiment in the bond market has recovered, but institutions are more cautious compared to April [1][17][18]. - The bond market is likely to maintain a volatile trend. It is recommended to adopt a dumbbell - shaped strategy, appropriately control the duration level in trading, seize trading opportunities from oversold rebounds, and pay attention to reverse operations [1][22]. 3. Summary According to the Directory 3.1 11 - month Bond Market Outlook - The expectation of the central bank's resumption of treasury bond trading started when large banks continuously bought short - term bonds in the secondary market and was realized after Governor Pan Gongsheng's announcement. The bond market yield generally declined on the day of the announcement, and institutions' behavior in bond trading has changed compared to 2024 [8][9]. - The central bank's move is to support fiscal efforts and supplement bank liquidity. It helps the central bank make more policy reserves, enhances the flexibility of central bank regulation, and eases the pressure on banks' liability side [10]. - The tariff measures in October had a different impact on the bond market compared to April. Investors have become more rational, and institutions' bond - buying behavior has changed. The bond market is expected to be volatile, affected by factors such as the new regulations on public fund redemption fees and the equity market [17][18][22]. 3.2 10 - month Bond Market Review 3.2.1 Bond Market Trend Review - In the first week, the 10 - year treasury bond rate declined to 1.82%. In the second week, it fluctuated narrowly and closed at 1.82%. In the third week, it rose to 1.85%. In the fourth week, it declined to 1.80%. The market was affected by factors such as tariff games, policy expectations, and the resumption of treasury bond trading [24][25][26]. 3.2.2 Funding Situation - The central bank net - injected 47 billion yuan through four major tools. The funding situation was balanced and loose in October. The average monthly values of R001, R007, DR001, and DR007 declined, and the 3 - month inter - bank certificate of deposit issuance rate and other rates showed different trends [27][28]. 3.2.3 Secondary Market Trend - The long - term interest rate had a ceiling and a floor. Except for the 1 - year treasury bond, the yields of other key - term treasury bonds declined, and most of the term spreads narrowed [35]. 3.2.4 Bond Market Sentiment - In October, the weekly turnover rate of 30 - year treasury bonds decreased compared to September. The 30Y - 10Y treasury bond spread narrowed, the bank - to - bank leverage ratio declined, and the median duration of bond funds increased [43]. 3.2.5 Bond Supply - The net financing of interest - rate bonds continued to decline in October, while the net financing of inter - bank certificates of deposit increased significantly. The issuance scale of treasury bonds, local government bonds, and policy - financial bonds changed compared to September and 2024 [54][56][60]. 3.3 Economic Data - In October, the manufacturing supply and demand weakened, while the service industry expanded rapidly. The real - estate transaction was weak year - on - year, and travel performance was stronger than the seasonal average. Industrial production improved marginally, and infrastructure and price high - frequency data showed different trends [62][63][67]. 3.4 Overseas Bond Market - The Federal Reserve cut interest rates again in October, and there were internal disagreements. The UK and German bond markets rose, and most emerging markets also showed an upward trend. The 10 - year Sino - US treasury bond yield spread narrowed [74][75][77]. 3.5 Major Asset Performance - In October, the Shanghai Gold and Shanghai Copper strengthened, while live pigs and crude oil weakened. The performance order of major assets was: Shanghai Gold > Shanghai Copper > US Dollar > Rebar > Chinese - funded US Dollar Bonds > Chinese Bonds > Convertible Bonds > CSI 300 > CSI 1000 > Crude Oil > Live Pigs [80]. 3.6 Policy Review - Multiple policies and events occurred in October and November, including the APEC meeting, the Sino - US leaders' meeting, and the release of policies related to funds, trusts, and the "15th Five - Year Plan". Future attention should be paid to the implementation and impact of these policies [84][85][90].

Report Industry Investment Rating No information provided in the given content. Core Viewpoints of the Report - In November, the bond market is expected to break through and start a downward trend, with a higher probability of yield decline. If the market restarts the expectation of interest rate cuts, the long - term interest rate is expected to challenge the low level before the bond market adjustment in July. The 10 - year treasury bond yield may fall to 1.70%, and the 30 - year treasury bond yield may drop to the range of 2.00 - 2.05%. [7][61] - The fundamental data in October may be weak. With the prior implementation of fiscal and quasi - fiscal policies in the fourth quarter, interest rate cuts may become a more flexible incremental stimulus tool, and the bond market may restart the trading of the expectation of "looser monetary policy". [2][30] - The potential negative factors in the bond market in November, such as government bond supply and bond fund redemption fee regulations, may have a lower - than - expected impact due to regulatory and market precautions. [3][34] - Institutional behavior in November may affect the market through two main lines. The short - and long - end assets may be repriced, and the profit - taking power of the allocation disk may slow down the decline of interest rates but is less likely to reverse the upward trend. [6][45] Summary According to the Table of Contents 1. October Bond Market: Calm After the Storm - In October, the long - term interest rate continued the trading logic of September and achieved a "step - down" due to the decline in risk appetite caused by the US tariff pressure. The 10 - year treasury bonds generally showed a "head - and - shoulders top" pattern, indicating that the interest rate may have basically completed the topping process. [1] - The bond market pricing in October was mainly based on three main lines: when the central bank would buy bonds, the evolution of Sino - US relations, and the new regulations on bond fund redemption fees. The market could be divided into three stages. [13] - In terms of various bond market varieties in October, interest - rate bonds recovered, and credit bonds were stronger than interest - rate bonds. The yields of most bonds declined. [17][18] 2. Macro - Narrative Vacuum Period: Rising Expectations of Interest Rate Cuts - In November, before the Politburo meeting and the Central Economic Work Conference in December, the market will enter a macro - narrative vacuum period. Whether the macro - economic data in October can boost the expectation of interest rate cuts will be the key to bond market pricing. [22] - The manufacturing PMI in October was lower than expected, with significant drag from production and new order sub - items, indicating a possible economic slowdown. [22] - The end - of - month bill interest rates approaching zero in October suggest that credit demand may have returned to a low point. [23][24] - High - frequency price data indicates that the year - on - year decline of PPI in October may widen again. [29] 3. Government Bond Supply and Bond Fund Redemption Fee Regulations: Apparent Negative Factors - The potential negative factors in the bond market in November are the significant increase in government bond net supply compared to October and the uncertainty of the official implementation of the new regulations on public bond fund redemption fees. However, the actual impact may be lower than expected due to regulatory and market precautions. [3][34] - The slow issuance of local government bonds in October is likely to be accelerated in November and December. It is estimated that the net supply of government bonds in November and December will be 1.23 trillion and 0.81 trillion yuan respectively. The large - scale supply in November may prompt the central bank to strengthen liquidity support, and the capital market may remain stable. [3][35] - If the new regulations on bond fund redemption fees are strictly implemented as in the solicitation draft, the bond market may experience a short - term shock at the time of implementation, especially credit - type bond funds may be more affected. [5][40] 4. Institutional Behavior: Returning to a Neutral Variable - In November, institutional behavior may affect the market through two main lines. The short - and long - end assets may be repriced. After the central bank announced the resumption of treasury bond trading operations, the market's willingness to price short - term varieties increased, and the long - term interest rate may decline as the negative factors in the bond market are exhausted and institutional investors pursue year - end performance. [6][45] - The profit - taking power of the allocation disk may slow down the decline of interest rates but is less likely to reverse the upward trend. Banks' self - operated institutions may prefer to take profits during the bond market's upward period. [51] 5. Bond Market Breakthrough: Starting a Downward Trend - Currently, the bond market has two characteristics: low duration and limited short - selling power. The risk of trading long - term bonds is relatively controllable. [55][58] - It is predicted that the bond market yield in November is more likely to decline. The bond market strategy in November can consider increasing duration on rallies, and priority can be given to ultra - long treasury bonds or policy - financial bonds with sufficient spread protection. Tax - inclusive bonds may perform better. [7][61]

Report Investment Rating - The report does not mention the industry investment rating. Core Viewpoints - After the meeting between the Chinese and US heads of state, the trading hot - spot of the year may have passed. The next month is likely to be a period of asset allocation re - balancing. Bonds have hedging and trading value, and in the equity market, both structural balance and absolute position control are important [3]. - The meeting between the Chinese and US heads of state achieved a win - win result. The tariffs of both sides are better than before September. The Chinese side obtained a 10% reduction in the so - called "fentanyl tariff" [3]. - In the capital market, both the Chinese and US equity markets reached new highs before the meeting. After the meeting, the stock markets have digested part of the "CO (Chickens Out)" in the "TACO" trading. Although the industrial trends of high - performance and high - risk - preference varieties are still solid, they face high institutional congestion and weakened external industrial catalysts [3]. - For stocks, when technology becomes less sensitive to good news due to previous rises, it is advisable to choose sectors weakly related to technology and relatively lagging in the past for hedging, such as finance, chemical industry in the pro - cyclical sector, and innovative drugs under the warming Sino - US narrative [3]. Summary by Directory 1. Tariff Transaction: Sino - US Win - Win but Market Priced in Advance - The meeting between the Chinese and US heads of state achieved a win - win result, and trade frictions were at least temporarily alleviated. The US will cancel the 10% so - called "fentanyl tariff" on Chinese goods and continue to suspend the 24% reciprocal tariff for one year. China will adjust corresponding counter - measures [6]. - The US actual comprehensive tax rate on China this year is 20%, which is almost the same as that on some Asia - Pacific countries. This may invalidate the "substitution effect" of tariffs and refute the view that other economies will seize China's export share [7]. - The market has priced in the meeting in advance. Both Chinese and US stock indices reached new highs before the meeting (October 29) and then pulled back [7]. 2. Risk Assets May Have Been Priced in Advance, Cyclical Products Remain Weak - The anticipation of the meeting between the Chinese and US heads of state and the various catalysts such as technology narratives and super - expected performances after the Fed's rate cuts in September are the reasons for the advance pricing of risk assets [9]. - The 10Y US Treasury yield has declined since September. The US stock market and the corresponding A - share technology sector have good performances, but these may have been reflected in the previous prices. During the super - week of macro and earnings reports, the participation of incremental funds in the technology leaders held by public funds is low. The SCI 50 index, which has a high proportion of technology leaders, fell by 3.2% this week while the Shanghai Composite Index rose by 0.1% [9]. - From the perspective of commodities, cyclical products remain weak. Except for some leading "anti - involution" concept stocks like coking coal, other varieties have returned to the downward channel [10]. - From the perspective of growth, the demand side may still put pressure on the cyclical sector. The GDP growth rate weakened in the third quarter, and the manufacturing PMI in October continued to decline. The real estate and infrastructure sectors have not shown significant improvement expectations [13]. 3. Bond Market: How to Understand Low Cost - Effectiveness and FOMO? - The logic of going long in the bond market is mainly driven by chip trading. Insurance and banks have a demand for a good start in the fourth quarter, and the subsequent supply of bonds is small. As of October, 83% of government bonds have been issued [14][19]. - The duration of public bond funds decreased to the lowest point in the third quarter and has a demand for duration game in the fourth quarter. There is a certain space for narrowing spreads, such as the 30 - 10 spread and the secondary - tiered capital bond spread [19]. - The news about the redemption fee policy of public bond funds is mainly positive, which reduces the market's concern about redemptions at the end of the year. The central bank's resumption of Treasury bond trading stimulates the market sentiment. Although the point cost - effectiveness of bonds is not high, there is trading space for spreads [21].