Core Viewpoint - The core issue in the bond market is finding certainty amid policy and risk fluctuations, as discussed by Chen Jie, the fund manager of Huashang Hongyue Pure Bond Fund and Huashang Hongfeng Pure Bond Fund [1][2]. Economic Overview - In Q4 2025, the domestic economy is running smoothly overall, with structural differentiation, showing stronger external demand compared to internal demand. Exports supported the economy with a cumulative year-on-year growth rate of 5.4% from January to November 2025 [1]. - Consumer growth is slowing, with the retail sales growth rate of social consumer goods at 1.3% in November 2025, down 1.6 percentage points from the previous value [1]. - Investment is under significant pressure, with a cumulative year-on-year decline in fixed asset investment of -2.6% from January to November 2025 [1]. - Price levels are low, with November's CPI down 0.1% month-on-month and up 0.7% year-on-year, while PPI increased by 0.1% month-on-month but decreased by 2.2% year-on-year [1]. Bond Market Analysis - In Q4 2025, the bond market experienced fluctuations due to multiple factors. In October, bond market sentiment improved as trade frictions persisted and the central bank resumed bond purchases, leading to a decline in the 10-year government bond yield to around 1.8% [2]. - In November, the central bank's bond purchases were slightly below market expectations, causing the 10-year government bond yield to stabilize around 1.8%. However, as credit risks in real estate companies emerged, the yield rose to 1.84% [2]. - In December, the Central Economic Work Conference raised expectations for fiscal expansion, but concerns about supply pressure and redemption disturbances led to a peak in the 10-year government bond yield at around 1.86%. The 30-year government bond yield reached approximately 2.28%, indicating a widening yield curve [2]. Investment Strategy - Chen Jie adopts a conservative credit strategy, primarily investing in interest rate bonds. The portfolio duration is maintained at a slightly higher than market-neutral position, with opportunities for tactical trading based on domestic fundamentals and policy conditions [2].

Core Insights - The structural differentiation of the economy continues into 2026, with an accelerated adjustment in the transition from old to new growth drivers, making the bond market a sensitive window for observing macroeconomic changes [1] Economic Overview - In Q4 2025, the domestic economic fundamentals maintained a structural differentiation, with production and exports showing resilience, as indicated by the PMI returning to the expansion zone and a moderate recovery in price levels from low points [1] - However, domestic demand remains weak, with a slowdown in retail sales growth, significant pressure on fixed asset investment, and stagnant real estate sales [1] - Monetary policy continues to be moderately accommodative, with overall stability in funding prices [1] Bond Market Analysis - The bond market has experienced significant adjustments in Q3, with interest rates for government bonds fluctuating at high levels due to factors such as trade frictions, new fund regulations, changes in institutional behavior, and credit risks in real estate companies [2] - The yield curve has steepened, with the 1-year government bond yield decreasing from 1.37% at the end of September to 1.34% at the end of December, while the 10-year yield remained around 1.85% and the 30-year yield increased from 2.25% to 2.27% during the same period [2] - In the credit bond sector, benefiting from a loose funding environment and demand for amortized bond funds, the yields on medium to short-term credit bonds have generally declined, with credit spreads narrowing [2] Investment Strategy - The investment strategy focuses on allocating to medium to high-grade credit bonds while actively participating in trading both interest rate and credit bonds, aiming for long-term stable growth of fund assets while strictly controlling risks [2]