1. Report Industry Investment Rating No information provided regarding the industry investment rating. 2. Core Viewpoints of the Report - Credit bonds showed a compensatory rise this week, with most yields declining and credit spreads narrowing. The market is expected to consolidate around the 1.75% level, and investors can focus on adding positions in 4 - 5y bonds with spreads above the central level [5][10]. - The marginal release of negative factors in the bond market, with the main negative disturbances being the implementation of the fund sales fee policy and potential short - term increases in risk appetite. The attractiveness of medium - and long - term bonds with wider credit spreads has increased [5][10]. - The allocation power of funds for 3 - 5y credit bonds has recovered. The 4 - 5y bonds are cost - effective, and the narrowing of spreads is expected, but it may be difficult to reach the lows of July - August [2][14]. - For bonds over 5y, although the yields are high, caution is needed as they test the stability of the liability side. Institutions with stable liability sides can capture allocation opportunities, while those with weak liability sides should participate with small positions [3][23]. 3. Summary by Directory 3.1 Credit Strategy: 4 - 5y Bond Spreads Are Still Above the Central Level, and Positions Can Be Appropriately Added 3.1.1 Credit Bond Market Review: Yields Generally Declined, and Credit Spreads Generally Narrowed - This week, credit bonds compensated for the rise, with most yields declining and credit spreads narrowing. The capital price remained low, and the bond market was affected by various factors such as Sino - US tariff games, the stock - bond seesaw effect, and the new regulations on public fund sales fees, showing a volatile trend. Institutions had a good allocation sentiment for credit bonds, and credit performance was better than interest - rate products [9]. 3.1.2 Outlook for the Future: Negative Factors Are Marginally Released, and Attention Should Be Paid to the Opportunity to Add Positions in 4 - 5y Bonds - The 10y Treasury bond's volatility center has moved down due to tariff shocks, and the market may consolidate around 1.75%. The negative factors in the bond market are marginally released, and the main negative disturbances are the implementation of the fund sales fee policy and potential short - term increases in risk appetite. The attractiveness of 4 - 5y bonds with spreads above the central level has increased [5][10]. 3.2 Key Policies and Hot Events: The New Policy - Based Financial Instruments in This Round Have Exceeded One Billion, and the Chairman of Vanke Has Changed - The Ministry of Finance will continue to issue in advance the new local government debt quota for 2026, which can be used for project construction, resolving implicit debts, and solving government arrears to enterprises [24]. - The first - phase funds of new policy - based financial instruments in 12 provinces have exceeded 1.1 billion, with local state - owned enterprises as the main recipients, including many urban investment companies [24]. - Xin Jie resigned as the chairman of Vanke, and Huang Liping took over. Vanke's bond valuation has fluctuated recently, and attention should be paid to Shenzhen Metro's support and debt - resolution plans [25]. - The Ministry of Finance has issued a quota of 28 billion yuan for Hebei Province to replace implicit debts in 2026, which is currently awaiting allocation [25]. - Beijing has issued a plan to strengthen the role of the capital market in supporting scientific and technological innovation, including creating a "Zhongguancun Science and Technology Board" for bonds and supporting eligible projects to issue REITs [26]. 3.3 Secondary Market: Credit Bond Yields Generally Declined, and Credit Spreads Generally Narrowed - This week, credit bond yields generally declined, and credit spreads generally narrowed. For different types of bonds such as urban investment bonds, real - estate bonds, cyclical bonds, and financial bonds, most yields declined and spreads narrowed, with some individual varieties showing different trends [29]. 3.4 Primary Market: The Net Financing of Credit Bonds and Urban Investment Bonds Increased Month - on - Month - This week, the issuance of credit bonds was 418.1 billion yuan, a month - on - month increase of 341.9 billion yuan, and the net financing was 184.7 billion yuan, a month - on - month increase of 295 billion yuan. The net financing of urban investment bonds was 22 billion yuan, a month - on - month increase of 89.9 billion yuan [6]. 3.5 Trading Liquidity: The Trading Activity in the Inter - bank and Exchange Markets of Credit Bonds Increased - This week, the trading activity in both the inter - bank and exchange markets of credit bonds increased [6]. 3.6 Rating Adjustments: No Rating Upgrades or Downgrades This Week - There were no rating upgrades or downgrades of bond issuers this week [6].

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]

Group 1 - The report indicates that the credit bond market is experiencing a divergence in trends, with most credit bond yields rising and credit spreads showing mixed performance, particularly in the short-end segment [10][21] - It is suggested to focus on the 2-3 year credit bonds for yield opportunities, as their spreads are higher than the lowest points in 2024 and lower than the average spread since 2024, indicating potential for value [12][21] - The report highlights that the financial bonds have shown some recovery after significant adjustments, but the sentiment remains cautious with limited room for bullish positions [10][21] Group 2 - Key policies include the announcement of a loan from Shenzhen Metro Group to Vanke for debt repayment, totaling up to 2.064 billion yuan, with cumulative loans since 2025 reaching 25.941 billion yuan [3][14] - The Ministry of Finance reported that from January to August, the national general public budget revenue was 1.48198 trillion yuan, a year-on-year increase of 0.3%, with tax revenue slightly up by 0.02% [15][20] - The central bank is guiding commercial banks to provide loans to state-owned enterprises and financing platforms to settle overdue accounts, with a total debt scale of approximately 1.8 trillion yuan [4][16] Group 3 - The report notes that the secondary market for credit bonds is active, with a significant increase in trading volume observed [21] - The report emphasizes the importance of monitoring the adjustments in the credit bond market, particularly in the context of the upcoming policy changes and market conditions [10][21] - The report also mentions that the Shanghai Stock Exchange has optimized the bond repurchase business to stabilize market prices, which may lead to a narrowing of spreads for lower-rated bonds [4][13]

Report Industry Investment Rating No information provided in the content. Core Viewpoints - Agency behavior has become the core concern recently. The regulations on redemption fees in the new public - offering fund sales rules have raised concerns about bond fund redemptions, leading to declines in policy - financial bonds, Tier 2 and perpetual bonds, and ultra - long - term government bonds. If the new rules are implemented, funds may flow back from bond funds to the balance sheets of banks and insurance companies. Wealth management products and bond ETFs are relatively more advantageous. Under the re - balancing of funds, the spreads of Tier 2 and perpetual bonds preferred by bond funds may widen, while general credit bonds and ETF component bonds are relatively more advantageous, especially those with medium - short durations [1]. - In the short term, institutions are cautious, approaching the quarter - end, and the stock market remains strong. The odds of bonds have improved, but the probability of success is still not high. It is recommended to explore medium - short - duration coupon opportunities and use moderate leverage while defending. Institutions with stable liability ends should gradually increase their allocations during adjustments, with general credit bonds and ABS being better than Tier 2 and perpetual bonds [1]. Summary According to Relevant Catalogs 1. Overall Market Situation - The bond market continues to be under pressure due to the shock - strengthening of the stock market and the disturbance of the new bond fund redemption fee rules, with the curve continuing to steepen. The recent strengthening of the stock market restricts bond - buying, and the new rules on bond fund redemption fees have led to large - scale bond market adjustments from September 8 - 12, with significant declines in policy - financial bonds and Tier 2 and perpetual bonds [12]. - The odds of bonds have increased, but sentiment is weak, and the probability of success is still not high. The real inflection point requires the coordination of fundamentals, the stock market, and the implementation of the new rules [15]. 2. Impact of Agency Behavior Bond Funds - Bond funds are greatly affected by the new rules. If redemption fees increase, their flexibility and cost - effectiveness will weaken significantly, leading to a decline in demand. Funds may flow back to the balance sheets of banks and insurance companies. Wealth management products will have relatively more advantages, and the outsourcing of bond funds may decrease. ETFs are exempt from redemption fees (excluding over - the - counter index funds and ETF link funds), with expanded product advantages, and the "Matthew effect" in the industry may intensify. Certificate of deposit funds and money market funds that are also exempt will also benefit relatively. There is also uncertainty about the adjustment of the tax - exemption policy for public - offering funds [16]. - This shift in behavior significantly affects the demand structure of the bond market. Banks and insurance companies' self - operations prefer government bonds and local government bonds, increasing their allocation demand, while the demand for policy - financial bonds, Tier 2 and perpetual bonds, and even 30 - year government bonds preferred by funds will shrink, and the spreads of relevant varieties will widen significantly. The proportion of trading positions in the bond market will decrease, affecting market trading activity and pricing efficiency [16]. Bond ETFs - The new rules are relatively beneficial to bond ETFs, which have developed rapidly this year and still have room for expansion in the future, bringing about the allocation demand for relevant underlying bonds. The second batch of 14 science and technology innovation bond ETFs was approved on September 8, and after their establishment, they are expected to bring more allocation demand. However, in the short term, the yield of relevant underlying bonds of science and technology innovation bonds has limited room for further decline, and medium - short - duration bonds can be considered for allocation during adjustments [16]. Wealth Management Products - Wealth management products are relatively more advantageous. Without the constraint of redemption fees, with a wider investment scope and better net - value drawdown control, they are more in line with individual investment preferences. If the redemption fees of bond funds increase, wealth management products may further seize market share. The outsourcing of wealth management products may also decrease. Compared with bond funds, wealth management products prefer general credit bonds with shorter durations [20]. Insurance Companies - Insurance companies may return more to their own investments. If redemption fees increase and with the implementation of I9, insurance companies may be more inclined to invest on their own. Compared with funds, insurance companies prefer to allocate ultra - long - term local government bonds and increase their allocation of medium - and high - grade credit bonds during market adjustments [20]. 3. Investment Strategies Coupon Strategy - Institutions with unstable liability ends are recommended to focus on medium - short - duration sinking allocation. Institutions with stable liability ends can gradually increase their allocation of credit bonds during adjustments, initially focusing on bonds with a duration of less than 5 years, and then increasing the allocation of long - duration bonds as the uncertainties in the stock market and agency behavior become clearer. Key attention should be paid to high - quality urban investment bonds in regions with controllable credit risks and central and state - owned enterprises in stable industries such as power, transportation, and non - ferrous metals [23]. Variety Selection - Tier 2 and perpetual bonds are greatly affected by the new bond market redemption fee rules. If the policy is implemented, their variety premiums may be re - evaluated. It is recommended to shorten the duration recently. Trading institutions can focus on trading opportunities brought about by over - adjustments but should also enter and exit quickly within 5 years. Institutions with stable liability ends such as insurance companies can build positions in an inverted - pyramid manner during adjustments. The return of bond - allocation funds to the balance sheets of banks and insurance companies is beneficial to the investment in high - grade ABS, which still has a certain variety spread and can continue to be allocated in medium - and high - grade bonds. Private perpetual bonds need to guard against liquidity and valuation disturbances caused by increased redemption pressure, especially those with medium - long durations [26]. Leverage - The interest - rate spread has widened with market adjustments. The liquidity situation may continue to be neutral and loose, and with the expectation of the central bank's purchase of government bonds rising, moderate leverage can be used to increase returns. However, attention should be paid to liquidity disturbances near the quarter - end [26]. Duration - Continue to focus on medium - short - duration defense. Wait for the uncertainties in the stock market and agency behavior to become clear before looking for opportunities for the bond market to rebound and extend the duration. Currently, the market sentiment is still cautious, and there may still be adjustment risks in the medium - and long - ends due to factors such as bond fund redemptions and wealth management product redemptions at the quarter - end [26]. 4. Specific Bond Types Tier 2 and Perpetual Bonds - If the new bond fund redemption fee rules are implemented, it may lead to a re - pricing of the spreads of Tier 2 and perpetual bonds. As of mid - 2025, bond funds held a total of 2.53 trillion yuan of Tier 2 and perpetual bonds, accounting for 35% of the outstanding scale. If banks, insurance companies, and wealth management products redeem half of their bond funds, Tier 2 and perpetual bonds will bear the brunt due to their good liquidity. Theoretically, it may drive the yields of Tier 2 and perpetual bonds up by 9 - 10BP [2][47]. - After over - adjustments, positive factors include the allocation demand from insurance companies, wealth management products, and annuities. However, compared with bond funds, insurance companies prefer medium - long - duration, medium - high - grade Tier 2 and perpetual bonds, with a higher preference for Tier 2 capital bonds than bank perpetual bonds. Wealth management products may have more demand for general credit bonds. Annuities may prefer new bonds after the new VAT rules [52]. - Recently, caution is recommended for Tier 2 and perpetual bonds. The duration should be appropriately shortened. Trading institutions can focus on trading opportunities brought about by over - adjustments but should also enter and exit quickly within 5 years. Institutions with stable liability ends such as insurance companies can build positions in an inverted - pyramid manner during adjustments [52]. Urban Investment Bonds - In August 2025, urban investment bonds continued the net - repayment trend, but the net - repayment amount decreased compared with the same period last year and the previous month. The registration and review situation showed that the amount of urban investment bonds registered by the association increased year - on - year but decreased month - on - month, and the amount of urban investment bonds whose review was terminated by the exchange decreased year - on - year and month - on - month [81]. - Since this year, debt - resolution resources have become more abundant. As of September 5, 2025, the planned issuance scale of "special bonds for replacing hidden debts" was 1.95 trillion yuan, and 109.85 billion yuan of "special new - issue special bonds" had been issued. Eight provinces had allocated 171.5 billion yuan of special bonds to repay local arrears [86][87][89]. - The yield of urban investment bonds has been rising, with short - end varieties performing better than long - end ones. Since mid - August 2025, affected by the strong stock market and the new bond fund redemption fee rules, the yield of urban investment bonds has generally increased, with the spreads of AAA and AA + rated bonds with a duration of less than 2 years slightly decreasing by about 1BP, while the yields of long - end bonds mostly increasing by more than 10BP [99]. - In the short term, it is recommended to look for opportunities while defending, and the short - duration sinking strategy may be relatively better. Institutions with stable liability ends can gradually participate in the allocation opportunities of medium - long - duration bonds of high - grade issuers. Sinking can focus on regions with controllable credit risks and high coupons, and control the duration within 3 years [103]. Industrial Bonds - In the first half of 2025, the revenue and profits of industrial bond - issuing entities decreased year - on - year, but the operating cash flow improved year - on - year. There was significant profit differentiation among industries. Industries such as home appliances, non - ferrous metals, agriculture, forestry, animal husbandry, and fishery, machinery, and power had profit growth and high ROE. Industries such as steel and cement benefited from anti - involution policies, with product prices rising and profits slightly recovering from a low base. The real estate, light manufacturing, and construction industries remained sluggish, and the profits of the coal industry further declined [4]. - The fundamentals of industrial bonds are weakly recovering, and with increased market disturbances, it is recommended to mainly allocate state - owned enterprise bonds with medium - short durations and moderately sink to explore local state - owned enterprises and leading private enterprises in stable industries such as non - ferrous metals, transportation, power, and new energy. For real estate bonds, the incremental policies are yet to be observed, and the valuation risks may still rise. It is recommended to mainly allocate state - owned enterprise bonds with a duration of about 1 year and medium - high grades, and pay attention to the sales trends in September - October and the statements of real estate - stabilizing policies [4].

Group 1 - The capital market landscape in 2025 is shifting towards diversified asset allocation, moving away from single-asset strategies to include equities, fixed income, and physical assets [1] - Emerging industry leaders and high-rated corporate bonds are becoming mainstream investment options, with a focus on a three-dimensional combination of stocks, bonds, and physical gold [1] - The Hong Kong stock market is showing structural opportunities, with specific stocks in AI healthcare and renewable energy infrastructure benefiting significantly [2] Group 2 - Gold is highlighted as a traditional safe-haven asset, particularly during the Federal Reserve's interest rate cut cycle, showcasing unique allocation value [3] - The combination of physical gold and gold ETFs meets liquidity needs while avoiding trading losses, with gold mining stocks showing a high correlation to gold prices [3] - Risk management strategies are emphasized, including the use of cross-market ETFs to hedge currency risks and volatility index products to manage market risks [5] Group 3 - The rise of smart investment advisory tools is changing allocation methods, allowing for dynamic adjustments based on economic indicators [5] - There is a recommendation to maintain a minimum of 15% gold holdings in portfolios, alongside a focus on consumer recovery stocks and high-yield municipal bonds [5] - The importance of maintaining a balance between algorithmic and actively managed products is noted to enhance portfolio differentiation [5]

Overall Summary - **Report Period**: August 11 - August 17, 2025 [1][11] - **Investment Rating**: Not provided - **Core View**: The issuance guidance rates from the Dealer Association showed a differentiated trend, with high - grade rates rising and medium - low - grade rates falling. Credit bond issuance volume decreased, and net financing turned negative. Secondary - market trading volume declined, yields rose, and credit spreads showed mixed trends. Currently, the allocation cost - effectiveness is low. In the long run, yields are in a downward channel, but due to high prices, the allocation pace can be slowed. For relative returns, credit - sinking and duration - stretching are not cost - effective, and high - grade short - term bonds can be considered for defense [1][60] 1. Primary Market 1.1 Issuance and Maturity Scale - Total credit bonds issued 350 with an amount of 260.56 billion yuan, a 29.04% decrease from the previous period. Net financing was - 12.116 billion yuan, a decrease of 203.684 billion yuan [11] - Enterprise bonds had zero issuance with a net financing of - 16.575 billion yuan, a decrease of 11.059 billion yuan [11] - Corporate bonds issued 126 with an amount of 96.654 billion yuan, an 8.73% increase; net financing was 43.48 billion yuan, an increase of 10.703 billion yuan [11] - Medium - term notes issued 116 with an amount of 92.57 billion yuan, a 43.70% decrease; net financing was 20.422 billion yuan, a decrease of 92.531 billion yuan [11] - Short - term financing bills issued 91 with an amount of 61.219 billion yuan, a 39.28% decrease; net financing was - 52.858 billion yuan, a decrease of 104.478 billion yuan [11] - Private placement notes issued 17 with an amount of 9.613 billion yuan, a 22.10% decrease; net financing was - 6.585 billion yuan, a decrease of 6.319 billion yuan [11] 1.2 Issuance Interest Rates - The issuance guidance rates from the Dealer Association showed a high - grade up and medium - low - grade down trend, with a change range of - 3 BP to 2 BP [1][15] - For 1 - year terms, the rate change was between - 1 BP and 2 BP; for 3 - year terms, between - 2 BP and 2 BP; for 5 - year terms, between - 3 BP and 2 BP; for 7 - year terms, between - 3 BP and 2 BP [15] - For key AAA and AAA grades, the rate change was between 0 BP and 2 BP; for AA + grade, between - 1 BP and 1 BP; for AA grade, between - 3 BP and - 1 BP; for AA - grade, between - 3 BP and - 2 BP [15] 2. Secondary Market 2.1 Market Trading Volume - Total credit - bond trading volume was 775.373 billion yuan, a 7.29% decrease from the previous period [19] - Enterprise bonds, corporate bonds, and medium - term notes' trading volumes decreased, while short - term financing bills and private placement notes' trading volumes increased [1][19] 2.2 Credit Spreads - For medium - and short - term notes, most credit spreads narrowed, especially for 5 - year terms, except for the 3 - year AAA - grade spread which widened [22][25] - For enterprise bonds, most credit spreads narrowed, especially for 5 - year terms, except for the 3 - year AA + grade which remained unchanged [29] - For urban investment bonds, credit spreads showed a differentiated trend. 1 - year and 5 - year spreads generally narrowed, while 3 - year and 7 - year spreads generally widened [1][39] 2.3 Term Spreads and Rating Spreads - For AA + medium - and short - term notes, 3Y - 1Y, 5Y - 3Y, and 7Y - 3Y term spreads widened. Rating spreads for 3 - year medium - and short - term notes generally narrowed [47] - For AA + enterprise bonds, 3Y - 1Y and 7Y - 3Y term spreads widened, 5Y - 3Y narrowed. Rating spreads for 3 - year enterprise bonds had mixed trends [52] - For AA + urban investment bonds, 3Y - 1Y and 7Y - 3Y term spreads widened, 5Y - 3Y narrowed. Rating spreads for 3 - year urban investment bonds had mixed trends [53] 3. Credit Rating Adjustment and Default Bond Statistics 3.1 Credit Rating Adjustment - No company rating (including outlook) adjustments during the period [58] 3.2 Default and Extension Bonds - No credit - bond defaults or extensions during the period [59] 4. Investment Views Credit Bonds - From an absolute - return perspective, supply shortages and strong allocation demand support credit bonds. Although fluctuations are inevitable, yields are in a downward channel in the long run. Due to high prices, the allocation pace can be slowed, and bonds can be added during adjustments. Pay attention to interest - rate bond trends and coupon values. Consider bonds of relevant entities underperforming in the Sci - tech Innovation Bond ETF [1][60] - From a relative - return perspective, since rating spreads are at historical lows, credit - sinking and duration - stretching are not cost - effective. High - grade short - term bonds can be used for defense [1][60] Real Estate Bonds - With the real - estate market gradually stabilizing, high - risk - appetite funds can consider early layout, focusing on the balance between risk and return. Allocate to central and state - owned enterprises with stable historical valuations and high - quality private - enterprise bonds with strong guarantees. Long - term allocation can increase returns, and trading opportunities from undervalued real - estate bonds can be explored [2][62] Urban Investment Bonds - In the context of stable growth and prevention of systemic risks, the probability of urban investment bond defaults is low. They can still be a key allocation for credit bonds. The short - term credit risk is low, and the current strategy can be positive. However, during the process of local financing platform clearance and transformation, some urban investment bonds may face valuation fluctuations. Future opportunities in the reform and transformation of "entity - type" financing platforms can be monitored [2][62]

Group 1 - Credit bond yields have generally risen, with financial bond spreads widening more than non-financial credit bonds. The 5-year and 7-year spreads for lower-rated bonds narrowed significantly, by 4-8 basis points [2][10] - The 3-year financial bonds saw a notable widening in spreads, particularly for perpetual bonds, with 3-year spreads widening by 3-4 basis points [2][10] - The overall turnover rate of credit bonds decreased from 1.99% to 1.93%, indicating a decline in market activity. The weighted average transaction duration for all credit bonds fell from 3.1 years to 3.0 years [3][10] Group 2 - Institutional behavior shows an increased allocation to credit bonds by wealth management and insurance sectors, while funds have reduced their holdings in secondary capital bonds. Wealth management has focused on increasing positions in bonds with maturities of one year or less [4][10] - Market sentiment remains cautious, with a recommendation to prioritize defensive strategies. It is suggested to adopt a short-duration strategy to enhance returns while maintaining portfolio stability [5][10] Group 3 - The average yield for city investment bonds with an implied rating of AA- and above is 2.12%, with significant variations across provinces. High-yield city investment bonds are concentrated in longer-term bonds [13][17] - The average yield for industrial bonds with an implied rating of AA- and above is 1.90%, with the textile and social services sectors showing higher yields [17]

Fixed Income Research - The issuance amount and net financing of credit bonds increased significantly on a low base effect, while transaction amounts slightly decreased [2] - The overall change in the issuance guidance rates was a decline of 4 to 2 basis points, with corporate bonds seeing zero issuance [2] - The net financing amount for credit bonds is at a historically high level, with corporate bonds showing a decrease in net financing while other types increased [2] - The transaction amount in the secondary market for credit bonds slightly decreased, with corporate bonds and company bonds seeing an increase [2] - Credit bond yields declined across the board, with credit spreads for medium-term notes, corporate bonds, and urban investment bonds narrowing [2] - The current pricing of credit bonds is considered high, suggesting a cautious approach to increasing positions, with a focus on the trend of interest rate bonds and individual bond coupon values [2] Fund Research - The major indices in the Shanghai and Shenzhen markets experienced fluctuations, with active equity fund positions rising [5] - The average increase for QDII funds was 1.67%, while equity funds averaged a 1.56% increase, with 87.16% showing positive returns [6] - The ETF market saw a net inflow of 15.717 billion yuan, with cross-border ETFs attracting the largest inflow of 13 billion yuan [7] - A total of 38 new funds were issued, raising 39.740 billion yuan, indicating an increase in fundraising activity [8] Industry Research - The suspension of operations in the Ningde Jianxiawo mining area raises concerns about domestic supply disruptions in the metal industry [9] - The steel market is currently in a state of observation due to cooling speculative sentiment, with potential impacts from coal production restrictions [9] - Copper prices are expected to be supported by tight supply, while aluminum prices may fluctuate based on domestic demand and supply adjustments [11] - The gold market is influenced by U.S. employment data and interest rate expectations, with potential upward pressure on prices [11] - The lithium market faces supply disruptions due to mining suspensions, with limited upward price potential in the short term [11] - The rare earth market is experiencing price adjustments after a rapid increase, with attention needed on downstream production and demand [12]

Group 1 - The credit bond market continues to show a recovery trend, with short to medium-term bonds outperforming long-term bonds, as evidenced by a narrowing of credit spreads, particularly in 1-year and 3-year AA-rated bonds [1][4] - The overall credit spread for 1-year bonds narrowed by approximately 3-4 basis points, while 5-year and longer bonds saw a reduction of 1-2 basis points [1][9] - Specific sectors such as urban investment bonds and financial bonds experienced significant spread compression, with 1-year AA-rated urban investment bonds showing a notable decrease of 4 basis points [1][9] Group 2 - The overall turnover rate in the credit bond market decreased from 2.34% to 1.99%, indicating a decline in market trading activity [2] - The weighted average transaction duration for all credit bonds fell from 3.4 years to 3.1 years, with urban investment bonds maintaining an average duration of around 3.0 years [2][10] - The proportion of TKN (traded notional) in various credit bond categories generally increased, reflecting a shift in market dynamics [2][10] Group 3 - Investment funds were the primary contributors to the increased allocation in credit bonds, particularly focusing on bonds with maturities of 3 years or less [3] - Insurance funds shifted from net buying to net selling in ultra-long-term secondary capital bonds, indicating a change in investment strategy [3] - The net buying scale of credit bonds by wealth management products decreased, despite a sustained increase in allocation over the past three weeks [3] Group 4 - There is a potential for further spread compression in long-term credit bonds, suggesting that investors should consider opportunities in 3-5 year non-financial credit bonds [4] - The cancellation of the value-added tax exemption on interest income from government and financial bonds has improved the relative attractiveness of non-financial credit bonds [4] - Trading accounts are advised to focus on liquid short to medium-term urban investment bonds or major bank perpetual bonds for better trading opportunities [4]

Core Viewpoints - In July, the issuance guidance rates for all maturities declined, with an overall change of -20 BP to -1 BP. The issuance scale of credit bonds slightly decreased month-on-month, with corporate bonds, medium-term notes, and directed tools seeing a decrease, while enterprise bonds and short-term financing bonds increased [2] - The net financing amount of credit bonds increased month-on-month, with medium-term notes seeing a decrease. Other varieties showed an increase, with corporate bonds, medium-term notes, and short-term financing bonds having positive net financing amounts [2] - In the secondary market, the transaction scale of credit bonds increased month-on-month, while the transaction amounts of enterprise bonds and directed tools decreased. The yield of credit bonds showed a fluctuating trend, with the monthly average lower than June [2] - The credit spread showed a similar trend to yields, initially narrowing, then widening, and finally narrowing again. Most varieties of medium-term notes, corporate bonds, and urban investment bonds saw a month-on-month narrowing of credit spreads [2] - From an absolute return perspective, insufficient supply and relatively strong allocation demand continue to support the strengthening of credit bonds. Despite inevitable fluctuations due to various factors, the long-term yield is expected to remain in a downward channel, making it feasible to increase allocations during adjustments [2] Industry Insights - The real estate market is undergoing adjustments, but with the implementation of policies to stabilize the market, it is moving towards stabilization. The recovery in sales will significantly impact bond valuations, and funds with higher risk tolerance may consider early positioning [3] - The focus for allocation remains on historically stable, high-performing central and state-owned enterprises, as well as high-quality private enterprise bonds with strong guarantees. This strategy aims to extend duration and enhance returns while also considering trading opportunities from undervalued real estate enterprise bonds [3] - Urban investment bonds are still a key allocation variety under the backdrop of stabilizing growth and preventing systemic risks, with a low likelihood of defaults. However, attention should be paid to potential valuation fluctuations during the acceleration of urban investment platform clean-up and transformation [3]