Core Viewpoint - The article discusses the significance of municipal investment bonds (城投债) in financing urban infrastructure projects in China, highlighting their role as a financial tool for local governments while also addressing concerns regarding hidden debts and credit risks [1][3][9]. Group 1: Definition and Characteristics - Municipal investment bonds are defined as bonds issued by local government financing platforms, primarily used for urban infrastructure and public welfare projects [3]. - The issuance of municipal bonds is distinct from direct government debt, as they are issued by corporate entities, reflecting a "government core, enterprise shell" characteristic [3][4]. - In 2023, the total outstanding municipal bonds reached 13.7 trillion yuan, accounting for 28% of the credit bond market [1]. Group 2: Comparison with National Bonds - National bonds are issued by the Ministry of Finance and are backed by the central government's credit, while municipal bonds are issued by local state-owned enterprises [4][6]. - The funding purposes differ: national bonds fund major cross-regional projects, whereas municipal bonds focus on local infrastructure [4]. - The repayment sources also vary; national bonds rely on national fiscal revenue, while municipal bonds depend on project revenues and local government income, including land sales [4][6]. Group 3: Credit Ratings and Market Dynamics - Municipal bonds exhibit a wide range of credit ratings, with 45% rated AAA and 38% rated AA in 2023, indicating varying levels of market confidence in repayment capabilities [6]. - In 2023, the default rate for ordinary corporate bonds was significantly higher than that of municipal bonds, although the impact of municipal bond defaults can be more pronounced [7]. - Regulatory policies are pushing municipal bonds towards a more market-oriented approach, with a notable increase in bonds linked to projects with stable cash flows [9][10]. Group 4: Economic Impact and Risks - Municipal bonds have played a crucial role in supporting over 90% of urban rail lines and 70% of affordable housing projects in China [9]. - However, excessive reliance on municipal bonds has led to high debt ratios in some regions, with 12 cities exceeding a 200% debt ratio in 2023 [10]. - The decline in land sale revenues in 2023, down 13.2% year-on-year, poses a risk to the repayment capabilities of municipal bonds [10]. Group 5: Future Trends and Investor Considerations - The issuance of municipal bonds in Q1 2024 reached 1.8 trillion yuan, with a shift towards new investments rather than refinancing existing debts [11]. - Investors are advised to consider local fiscal strength, debt ratios, and the cash flow stability of funded projects when evaluating municipal bonds [10][11]. - The ongoing regulatory framework aims to mitigate financial risks associated with municipal bonds while ensuring their contribution to urban development [10][11].

Report Summary 1. Report Industry Investment Rating The document does not provide the industry investment rating. 2. Core View of the Report In August 2025, the leverage ratio of the inter - bank bond market increased slightly month - on - month and was lower than the same period in previous years. The total bond custody scale of China Central Depository & Clearing Co., Ltd. (CCDC) and Shanghai Clearing House increased. Different institutions had different investment preferences for various bonds, with commercial banks increasing their allocation of treasury bonds and policy - financial bonds, and broad - based funds increasing their holdings of local government bonds [1][2][50]. 3. Summary by Relevant Catalogs 3.1 Bank - Inter Leverage Ratio In late August, the inter - bank bond market leverage ratio was 106.88%, up 0.07 pct from the end of the previous month, and generally lower than the leverage ratio in the same period of previous years [1]. 3.2 Custody Data Overview In August 2025, the total bond custody scale of CCDC and Shanghai Clearing House was 174.54 trillion yuan, a month - on - month increase of 1.506 trillion yuan. Among them, CCDC's custody scale increased by 1.5382 trillion yuan, and Shanghai Clearing House's decreased by 32.2 billion yuan. Treasury bonds, local government bonds, policy - bank bonds, and medium - term notes contributed to the increase, while enterprise bonds, short - term financing bills, ultra - short - term financing bills, directional instruments, and inter - bank certificates of deposit contributed to the decrease [2][12]. 3.3 By Bond Type - **Interest - rate Bonds**: In August 2025, the total custody scale of major interest - rate bonds was 116.60 trillion yuan, a month - on - month increase of 1.7871 trillion yuan. Commercial banks were the main buyers, increasing their holdings by 1.2979 trillion yuan. Broad - based funds, insurance institutions, etc. also increased their holdings, while overseas institutions reduced their holdings [3][49]. - **Credit Bonds**: The total custody scale of major credit bonds was 16.06 trillion yuan, a month - on - month increase of 23 billion yuan. Commercial banks were the main buyers, increasing their holdings by 54.4 billion yuan. Broad - based funds and securities companies were the main sellers, reducing their holdings by 18.1 billion yuan and 14.8 billion yuan respectively. Insurance institutions and overseas institutions also reduced their holdings [3][49]. - **Inter - bank Certificates of Deposit**: The custody scale was 20.38 trillion yuan, a month - on - month decrease of 355.6 billion yuan. Broad - based funds and commercial banks were the main sellers [3][49]. 3.4 By Institution - **Commercial Banks**: The custody scale of major bonds was 85.29 trillion yuan, a month - on - month increase of 1.153 trillion yuan. They increased their holdings of interest - rate bonds and credit bonds by 1.2979 trillion yuan and 54.4 billion yuan respectively, and reduced their holdings of inter - bank certificates of deposit by 199.3 billion yuan [4][50]. - **Broad - based Funds**: The custody scale of major bonds was 37.38 trillion yuan, a month - on - month decrease of 172.3 billion yuan. They increased their holdings of interest - rate bonds by 120.7 billion yuan and reduced their holdings of credit bonds and inter - bank certificates of deposit by 18.1 billion yuan and 274.9 billion yuan respectively [4][50]. - **Overseas Institutions**: The custody scale of major bonds was 3.69 trillion yuan, a month - on - month decrease of 98.8 billion yuan. They reduced their holdings of interest - rate bonds, credit bonds, and inter - bank certificates of deposit by 27.5 billion yuan, 3.5 billion yuan, and 67.8 billion yuan respectively [4][54]. - **Insurance Institutions**: The custody scale of major bonds was 4.26 trillion yuan, a month - on - month increase of 43.2 billion yuan. They increased their holdings of interest - rate bonds by 49.5 billion yuan and reduced their holdings of credit bonds and inter - bank certificates of deposit by 5.9 billion yuan and 0.4 billion yuan respectively [4][54]. - **Securities Companies**: The custody scale of major bonds was 2.64 trillion yuan, a month - on - month decrease of 2 billion yuan. They increased their holdings of interest - rate bonds by 13.4 billion yuan and reduced their holdings of credit bonds and inter - bank certificates of deposit by 14.8 billion yuan and 0.6 billion yuan respectively [4][54]. - **Credit Unions**: The custody scale of major bonds was 2 trillion yuan, a month - on - month increase of 11.9 billion yuan. They increased their holdings of interest - rate bonds and credit bonds by 22.1 billion yuan and 0.7 billion yuan respectively, and reduced their holdings of inter - bank certificates of deposit by 10.8 billion yuan [5][55].

Core Views - The report indicates that the yield rates of credit bonds have mostly risen, with the overall change ranging from -5 BP to 5 BP during the period from September 15 to September 21 [2] - The issuance scale of credit bonds has increased on a month-on-month basis, with corporate bonds maintaining zero issuance while other varieties saw an increase in issuance amounts [2] - The net financing amount of credit bonds has also increased, with corporate bonds and short-term financing bonds showing positive net financing, while company bonds, medium-term notes, and directional tools showed a decrease [2] Market Performance - The transaction amount of credit bonds in the secondary market has increased, with all varieties seeing a rise in transaction amounts [2] - The credit spreads have shown differentiation due to the varied performance of interest rate bonds, with short-term yields widening and long-term yields narrowing [2] - The report notes that the credit spreads for short-term bonds remain at historical lows, while long-term bonds have seen an increase in spreads, particularly for 5-year and 7-year AAA-rated bonds, which have reached around the 10% and 20% percentiles respectively, indicating high allocation value [2] Investment Strategy - The report suggests that despite the recent market fluctuations, the conditions for a comprehensive bear market in credit bonds are not sufficient, and yields are expected to enter a downward channel in the long term [2] - It recommends an active allocation strategy, particularly focusing on the trends in interest rate bonds and the coupon value of individual bonds [2] - The report emphasizes the importance of aligning investment strategies with market trends and adjusting trading strategies accordingly, while also monitoring the impact of growth-stabilizing policies on the bond market [2][3] Real Estate Market Insights - The report highlights that the central and local governments are actively optimizing real estate policies, which is expected to positively influence the stabilization of the real estate market [3] - It notes that the recovery of the real estate market will take time, and the sales recovery process will significantly impact bond valuations [3] - The focus for investment should be on high-quality central enterprises, state-owned enterprises, and well-guaranteed private enterprise bonds, with a potential for yield enhancement through longer durations [3] City Investment Bonds - The report states that the likelihood of default on city investment bonds is low under the current backdrop of stabilizing growth and preventing systemic risks [4] - It suggests that city investment bonds remain a key allocation target, although there may be valuation volatility risks during the transition of financing platforms [4] - Future opportunities may arise from the reform and transformation of "entity-type" financing platforms [4]

1. Report Industry Investment Rating There is no information provided regarding the industry investment rating in the documents. 2. Core Viewpoints of the Report - During the period from September 15 to September 21, the issuance guidance rates announced by the National Association of Financial Market Institutional Investors mostly increased, with an overall change range of -5 BP to 5 BP. The issuance scale of credit bonds increased month - on - month, while corporate bonds remained at zero issuance, and the issuance amounts of other varieties increased. The net financing of credit bonds increased month - on - month, with an increase in the net financing of corporate bonds and commercial paper, and a decrease in the net financing of corporate bonds, medium - term notes, and private placement notes. The trading volume of credit bonds in the secondary market increased month - on - month, and the yields of most credit bonds rose. Credit spreads showed a differentiated trend, with short - to - medium - term spreads narrowing and long - term spreads widening. [1][61] - On September 19, the Shanghai, Shenzhen, and Beijing Stock Exchanges issued a notice to optimize bond repurchase business. When the closing price of corporate bonds drops by 5% compared to the 20th trading day before, the repurchaser can repurchase bonds to stabilize market fluctuations. [2][64] - The central and local governments are actively optimizing real estate policies, which are playing a positive role in stabilizing the real estate market. For real estate bonds, investors with high - risk tolerance can consider early layout, focusing on high - quality bonds of central and state - owned enterprises and some high - quality private enterprises. [2][65][66] - Against the background of stable growth and prevention of systemic risks, the probability of urban investment bond defaults is low, and they can still be a key allocation variety. However, during the process of local financing platform clearance and transformation, some urban investment bonds may face valuation fluctuations. [3][66] 3. Summary According to the Directory 3.1 First - level Market Situation 3.1.1 Issuance and Maturity Scale - From September 15 to September 21, a total of 407 credit bonds were issued, with an issuance amount of 326.433 billion yuan, a month - on - month increase of 25.20%. The net financing of credit bonds was 88.638 billion yuan, an increase of 17.911 billion yuan month - on - month. [12] - Corporate bonds remained at zero issuance, with a net financing of - 4.241 billion yuan, an increase of 2.288 billion yuan month - on - month. The issuance amount of corporate bonds, medium - term notes, commercial paper, and private placement notes increased, but the net financing of corporate bonds, medium - term notes, and private placement notes decreased. [12] 3.1.2 Issuance Interest Rates - The issuance guidance rates announced by the National Association of Financial Market Institutional Investors mostly increased, with an overall change range of -5 BP to 5 BP. The rate changes varied by term and rating. [14] 3.2 Second - level Market Situation 3.2.1 Market Trading Volume - From September 15 to September 21, the total trading volume of credit bonds was 896.955 billion yuan, a month - on - month increase of 22.76%. The trading volumes of all varieties increased. [17] 3.2.2 Credit Spreads - For medium - and short - term notes, corporate bonds, and urban investment bonds, the credit spreads showed a differentiated trend, with 1 - year and 3 - year spreads narrowing and 5 - year and 7 - year spreads widening. [20][28][38] 3.2.3 Term Spreads and Rating Spreads - For AA+ medium - and short - term notes, the 3Y - 1Y term spread narrowed, while the 5Y - 3Y and 7Y - 3Y spreads widened. For rating spreads, the 3 - year (AA - )-(AAA) and (AA)-(AAA) spreads remained unchanged, and the (AA+)-(AAA) spread narrowed. [45] - For AA+ corporate bonds, the 3Y - 1Y, 5Y - 3Y, and 7Y - 3Y term spreads widened. For rating spreads, the 3 - year (AA - )-(AAA) and (AA)-(AAA) spreads widened, and the (AA+)-(AAA) spread remained unchanged. [50] - For AA+ urban investment bonds, the 3Y - 1Y term spread narrowed, while the 5Y - 3Y and 7Y - 3Y spreads widened. For rating spreads, the 3 - year (AA - )-(AAA) and (AA)-(AAA) spreads widened, and the (AA+)-(AAA) spread remained unchanged. [53] 3.3 Credit Rating Adjustments and Default Bond Statistics 3.3.1 Credit Rating Adjustment Statistics - From September 15 to September 21, the rating of one company was downgraded. [57] 3.3.2 Default and Extension Bond Statistics - Wuhan Contemporary Science & Technology Investment Co., Ltd.'s credit bond "H20 Technology 4" defaulted, with a default balance of 650 million yuan. There were no credit bond extensions during this period. [59][60] 3.4 Investment Views - In terms of absolute returns, the supply shortage and strong allocation demand support the strength of credit bonds. Although fluctuations are inevitable, the conditions for a full - scale bear market in credit bonds are still insufficient. In the long run, yields will enter a downward channel, and the strategy of increasing allocation during adjustments is still feasible. [1][61] - In terms of relative returns, due to the low historical levels of rating spreads, credit risk - taking is not effective at present. High - grade long - term bonds have certain advantages, and the duration can be appropriately extended, but the rhythm needs to be grasped. [1][61] - For real estate bonds, with the market gradually stabilizing, investors with high - risk tolerance can consider early layout, focusing on high - quality bonds of central and state - owned enterprises and some high - quality private enterprises. [2][66] - For urban investment bonds, they can be a key allocation variety, but attention should be paid to the valuation fluctuations during the clearance and transformation of local financing platforms. [3][66]

Group 1: Financial Data Overview - In August, new social financing (社融) reached 2.57 trillion yuan, a decrease of 463 billion yuan compared to the same month last year, but an increase of 1.44 trillion yuan from July, slightly above consensus expectations[2] - The year-on-year growth rate of social financing stock in August was 8.8%, down 0.17 percentage points from July, and slightly below the expected 8.85%[2] - New RMB loans in August amounted to 623.3 billion yuan, a decrease of 417.8 billion yuan compared to the same month last year, but an increase of 1.05 trillion yuan from July[2] Group 2: Financing Structure and Trends - The significant growth in August was seen in bill financing, indicating a recovery in short-term financing demand in the real economy[2] - Government bonds accounted for the largest share of new financing in August, with 1.37 trillion yuan, while direct financing through corporate bonds and stock financing remained relatively high[2] - The proportion of government bonds in the financing structure increased by 0.20 percentage points from July, while RMB loans, corporate bonds, and entrusted loans saw notable declines[2] Group 3: Deposit and Loan Trends - The trend of "deposit migration" continued, with new resident deposits of 110 billion yuan and new corporate deposits of 299.7 billion yuan, while non-bank deposits increased significantly by 1.18 trillion yuan compared to last year[2] - New loans from financial institutions in August totaled 590 billion yuan, a decrease of 310 billion yuan year-on-year, with corporate loans down by 250 billion yuan[2] - The increase in short-term loans and interbank loans was the only area showing growth compared to the same month last year, highlighting a shift in corporate financing behavior[2] Group 4: Economic Outlook and Risks - The marginal improvement in corporate financing demand is attributed to ongoing US-China tariff negotiations and domestic macro policies aimed at stabilizing employment and market expectations[2] - Attention is needed on the decline in long-term loans to residents compared to last year, indicating potential challenges in consumer financing[2] - Risks include a potential second wave of global inflation, rapid economic downturns in Europe and the US, and increasing complexity in international relations[2]

Group 1: Primary Market - In the week from September 8 to September 12, 2025, a total of 303 credit bonds were issued, with a total issuance scale of 372.67 billion yuan, representing a week-on-week increase of 123.89% [4] - Among the issued bonds, industrial bonds accounted for 120 issues with an issuance scale of 123.70 billion yuan, up 124.04% week-on-week, making up 33.19% of the total issuance [4] - Local government bonds had 136 issues with an issuance scale of 92.58 billion yuan, up 18.32% week-on-week, representing 24.84% of the total [4] - Financial bonds had 47 issues with an issuance scale of 156.40 billion yuan, up 373.94% week-on-week, accounting for 41.97% of the total [4] - The average issuance term for credit bonds was 2.97 years, with industrial bonds averaging 2.15 years, local government bonds 3.98 years, and financial bonds 2.20 years [4] - The overall average coupon rate for credit bonds was 2.27%, with industrial bonds at 2.19%, local government bonds at 2.46%, and financial bonds at 1.88% [4] - Six credit bonds were canceled during the week [4] Group 2: Secondary Market - In terms of credit spread, the largest increase for AAA-rated industries was in pharmaceuticals, up 5.6 basis points; for AA+-rated industries, the largest increase was in chemicals, up 6.9 basis points, while the largest decrease was in steel, down 49.2 basis points [5] - For AA-rated industries, the largest increase was in real estate, up 12.7 basis points, while the largest decrease was in commercial trade, down 1.5 basis points [5] - Among local government bonds, the largest increase in AAA-rated credit spreads was in Shaanxi, up 7.7 basis points, while the largest decrease was in Inner Mongolia, down 1.9 basis points [5] - For AA+-rated credit spreads, the largest increase was in Fujian, up 8.8 basis points, while the largest decrease was in Jilin, down 12.5 basis points [5] - The largest increase for AA-rated credit spreads was in Hebei, up 26.3 basis points, while the largest decrease was in Yunnan, down 0.9 basis points [5] Group 3: Trading Volume - The total trading volume of credit bonds was 1,199.55 billion yuan, representing a week-on-week decrease of 6.75% [6] - The top three categories by trading volume were commercial bank bonds, corporate bonds, and medium-term notes [6] - Commercial bank bonds had a trading volume of 379.95 billion yuan, down 15.44%, accounting for 31.67% of the total trading volume [6] - Corporate bonds had a trading volume of 332.49 billion yuan, up 6.12%, making up 27.72% of the total [6] - Medium-term notes had a trading volume of 272.84 billion yuan, down 4.65%, representing 22.75% of the total [6]

Investment Rating - The report does not explicitly state an investment rating for the credit bond industry Core Insights - The report discusses the challenges of achieving excess returns in credit bond investments due to a low interest rate and low credit spread environment, emphasizing the need for effective investment strategies [5] - It outlines a framework for analyzing credit bonds, including market segmentation, historical performance during "asset scarcity" phases, and a five-factor model for credit spreads [5][7] - The report highlights the rapid expansion of the Chinese credit bond market, with total outstanding credit bonds reaching CNY 46.99 trillion by July 2025, of which non-financial credit bonds account for CNY 31.96 trillion [13][14] Summary by Sections 1. Overview of the Chinese Credit Bond Market - The credit bond market in China has expanded significantly since 2009, with a notable increase in the variety of products available [11][13] - As of July 2025, the total balance of credit bonds is CNY 46.99 trillion, with non-financial credit bonds making up 68% of this total [13][14] 2. Analysis Framework for Credit Bond "Asset Scarcity" - The report analyzes four phases of "asset scarcity" since 2015, identifying key characteristics and predictive indicators for investors [5][7] 3. Historical Review of Credit Spreads - A historical review of credit spreads since 2008 reveals significant fluctuations, with a focus on the factors influencing these changes [5][7] 4. Research Framework for Credit Spreads - The report presents a five-factor model for analyzing credit spreads, noting that while the factors remain the same, the focus has shifted in the current market context [5][7] 5. Common Investment Strategies in the Credit Bond Market - The report discusses various investment strategies, including duration management, credit selection, leverage operations, and tactical trading, which are crucial for navigating the current low spread environment [5][7]

Report Industry Investment Rating No relevant content provided. Core Viewpoints - The combined policies of the central and local governments are expected to expand the scope of credit bond issuers and increase the supply of bonds in areas such as urban renewal and urban village renovation. The optimization of the general repurchase mechanism in the inter - bank bond market will improve the market's overall liquidity and the credit bond collateral financing environment, but also bring some risks [4][5]. - Although the allocation value of short - and medium - term credit bonds is emerging, risks such as long project return cycles, uncertain cash flows, and intensified credit stratification need to be vigilant, and the issue of new implicit debts should be prevented [4]. Summary by Relevant Catalogs Market Hotspots - **Central - local cooperation for urban construction financing**: The central government's "Opinions on Promoting High - quality Urban Development" and Shanghai's "Implementation Opinions on Accelerating the Renovation of Urban Villages in the City" are expected to expand the scope of credit bond issuers and increase bond supply in urban construction. However, risks such as long project return cycles, uncertain cash flows, and intensified credit stratification need to be noted, and new implicit debts should be prevented [4][11][12]. - **Optimization of the inter - bank general repurchase mechanism**: On September 1, the general repurchase business mechanism in the national inter - bank bond market was optimized. The scope of participating institutions was expanded, and the range of eligible collateral bonds was extended. This is expected to improve market liquidity and the credit bond collateral financing environment, but may also intensify the internal differentiation of credit bonds and has limited short - term boosting effects on low - quality bonds [5][14][15]. Macroeconomic Data - In August, the official manufacturing PMI rose slightly by 0.1 percentage points to 49.40% compared with the previous month but remained in the contraction range. The manufacturing production index increased by 0.3 percentage points to 50.8%, and the new export order index continued to contract for 12 months. The PMI of small and medium - sized enterprises was still below the boom - bust line [6][18]. Money Market - Last week, the central bank net - withdrew 40.39 billion yuan through open - market operations. The central bank injected liquidity through over - renewal of MLF and increased reverse repurchase. The overall money market was stable across the month. The pledged repurchase rates of each term fluctuated, and the 3 - month and 1 - year Shibor changed little [7][20]. Primary Market of Credit Bonds - The issuance scale of credit bonds last week was 256.145 billion yuan, an increase of 21.105 billion yuan from the previous period. The cancellation scale of credit bond issuance was 4.71 billion yuan, a decrease of 10.745 billion yuan from the previous period. The average issuance cost of credit bonds fluctuated between 2 - 20bp [23][25]. Secondary Market of Credit Bonds - The trading volume of cash bonds in the secondary market last week was 831.0473 billion yuan, and the average daily trading volume decreased by 7.6835 billion yuan from the previous period. The yields of treasury bonds and policy - bank bonds generally declined by 1 - 3bp, while the yield of 10 - year treasury bonds increased by 6bp to 1.84%. The yields of credit bonds showed long - and short - term differentiation, and the credit spreads and rating spreads fluctuated within a limited range [34][38][42].

Core Viewpoint - A global bond sell-off is intensifying due to rising concerns over inflation, massive government debt, and fiscal discipline, pushing long-term bond yields to multi-decade highs [1][3]. Group 1: Market Dynamics - The sell-off pressure in the global bond market escalated, with the U.S. 30-year Treasury yield surpassing the significant 5% psychological threshold [1]. - The U.K. 30-year bond yield reached 5.75%, the highest level since 1998, while Japan's 20-year bond yield hit a peak not seen in this century [1]. - A media index measuring global bond returns fell by 0.4%, marking the largest single-day drop since June 6 [3]. Group 2: Investor Sentiment - Concerns over large-scale government spending and its potential inflationary consequences are central to the sell-off [3]. - The yield curve is steepening as investors demand higher risk premiums for long-term bonds, reflecting worries about government fiscal conditions [4]. - The Australian 10-year bond yield has risen to its highest level since July, indicating widespread pressure across major economies' bond markets [4]. Group 3: Trading Strategies - The "steepeners" trading strategy, which involves going long on short-term bonds and short on long-term bonds, is gaining popularity as traders anticipate a widening yield spread [6]. - Recent market movements, such as unexpected rate cuts by central banks in New Zealand and Indonesia, have supported this trading strategy [6]. - Investors like Franklin Templeton's Andrew Canobi are betting on the performance of 2-year U.S. Treasuries over 10-year Treasuries, citing persistent inflation challenges and significant fiscal pressures [6].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The current stock - bond state may be what the authorities desire, namely "a slow - bull in stocks and no continuous sharp decline in bonds." The monetary authorities maintain liquidity but avoid rapid policy rate cuts, using more structural tools and supporting the real estate market. This encourages the transfer of funds from real estate and bonds to equities, achieving a slow - bull in stocks and preventing continuous sharp declines in bonds and real estate to ensure financial stability [1][88]. - In September, the stock - bond state is likely to remain unchanged, and the headwind period for the bond market may not be over. The 10 - year Treasury yield has two pressure levels: 1.80% and 1.90%. Currently, it hovers around 1.78%. Short - term bond market operations may require patience, with more focus on band - trading during pullbacks. After two major macro - events in September (domestic military parade and Fed's decision on interest rate cuts), the bond market may enter a favorable period in late September and the fourth quarter [2][91]. 3. Summary According to the Table of Contents 3.1 Current Open Market Analysis - **Macroeconomic Environment**: The economic fundamentals are still "weak." In July, CPI was flat year - on - year, with core CPI rising to 0.8%. PPI's year - on - year decline remained at 3.6%, but the month - on - month decline narrowed. Financial data showed a seasonal decline in social financing, a contraction in credit financing, and a negative increase in new RMB loans for the first time in 20 years. Some economic indicators were divided, and domestic economic recovery was restricted by multiple factors [7][8]. - **Policy Environment**: The Fed's dovish stance is conducive to the implementation of domestic aggregate monetary policy in the fourth quarter. The central bank mainly uses structural policies and guides funds through a two - step allocation: in asset allocation, it guides funds from bonds to stocks; in economic development, it focuses on consumption, infrastructure, and real estate in sequence. If three of the four conditions are met, the probability of a domestic central bank's comprehensive interest rate cut is high, and currently, three conditions are gradually being met [24][27]. - **Bank Funding**: The bank funding situation has been relatively loose since July, with a slight reduction in net central bank money injection in July compared to June. As of August 14, the central bank's money withdrawal was 43,530 billion yuan, and the injection was 17,265 billion yuan. The 7 - day reverse repurchase rate remained stable at 1.40%, and market interest rates such as DR007 and FR007 showed a downward trend [28][31]. - **Corporate Profit and Financing Environment**: From January to July 2025, the total profit of industrial enterprises above the designated size continued to decline year - on - year, but the decline narrowed. The manufacturing PMI in July was 49.3%, below the boom - bust line. In July, corporate short - term and long - term loans decreased, and only bill financing increased year - on - year. Overall, industrial profits are still suppressed by price factors, and the financing structure is tilting towards bonds [37]. 3.2 Interest Rate Market Analysis - **Primary Market**: In July, the total issuance of interest - rate bonds was 3.2 trillion yuan, with a net financing of 1.53 trillion yuan. As of August 14, the total issuance was 1.9 trillion yuan. The issuance interest rates of four types of interest - rate bonds (Treasury bonds, local government bonds, policy - bank bonds, and inter - bank certificates of deposit) have shown a trend of convergence since January 2025, with the Treasury bond rate rising by more than 15BP [43]. - **Secondary Market**: From July to August 2025, the short - end interest rates of Treasury bonds remained stable, while the medium - and long - end rates generally increased, making the yield curve steeper. In July, the 10 - year Treasury yield rose from 1.65% to 1.70%, and in August, it fluctuated between 1.70% - 1.79%. The trend of China Development Bank bonds was different from that of Treasury bonds, and the spread between them widened [48][53]. 3.3 Credit Market Analysis - **Primary Market**: In July, the net financing of credit bonds was strong, with a net financing of 3,519 billion yuan. As of August 14, the issuance scale was 6,364.05 billion yuan, and the repayment amount increased to 8,742 billion yuan. The weighted average issuance interest rate of credit bonds in July was 1.91%, down 30BP year - on - year [67]. - **Secondary Market**: As of August 14, the yields of AAA - rated corporate bonds of various maturities declined, with the long - end decline being greater. Credit spreads continued to converge, and the spreads between AA and AAA - rated corporate bonds also narrowed [73]. - **Real Estate Bonds**: In July, the net financing of real estate bonds turned positive, with a net financing of 44 billion yuan. As of August 14, the net financing was negative. The transaction volume of commercial housing has been at a low level in the past five years, and as of August 9, the average weekly transaction area of commercial housing in 30 large and medium - sized cities decreased by 13.31% year - on - year [78][81]. - **Urban Investment Bonds**: In July 2025, the net financing of urban investment bonds was - 423 billion yuan, remaining at a historical low. This reflects the pressure on the financing environment of urban investment platforms and the acceleration of their transformation process [85]. 3.4 September Bond Market Strategy - The current stock - bond state is expected to continue in September. The bond market may still face headwinds, with 1.80% and 1.90% as two pressure levels for the 10 - year Treasury yield. Short - term bond market operations should focus on band - trading during pullbacks, and the bond market may improve after two major macro - events in September [2][91].