Core Viewpoint - The global capital markets are experiencing volatility due to ongoing policy disturbances and structural changes, with a focus on the relationship between transformation and balance, as well as risk and return [1][2]. Policy Environment - A series of incremental policies have been introduced to stabilize market expectations and boost investor confidence, covering fiscal, financial, consumption, and investment areas [2][3]. - Since September 2022, the Shanghai Composite Index has risen over 20%, indicating a recovery in market sentiment [2]. Market Dynamics - The current macro environment is favorable for both equity and bond markets, with ongoing policy support and a positive economic structural transition [3][4]. - Investors are encouraged to consider "fixed income plus" products, which combine stable fixed income assets with some equity exposure to enhance returns [3][5]. Investment Strategies - For bond funds, the overall performance has been weaker compared to previous years, necessitating new strategies to enhance fund returns [5][6]. - Investors should adjust their portfolios based on their risk tolerance, with options ranging from cash-like assets for low-risk tolerance to "fixed income plus" products for moderate risk tolerance [6][7]. Fund Selection - Different types of fixed income funds exist, including pure bond funds categorized by duration and credit quality, which exhibit varying levels of volatility [7][8]. - Investors should prioritize funds with a history of stable performance and consider factors such as lock-up periods and fees when selecting products [8].

Market Overview - The bond market remains stable with an overall balanced and loose funding environment, with the weighted average of DR007 at 1.50% and the 10-year government bond yield at 1.64% [2] - The A-share market experienced declines due to the Israel-Palestine conflict, with the Shanghai Composite Index, Shenzhen Component Index, and CSI 300 Index dropping by 0.25%, 0.6%, and 0.25% respectively [2] - The non-ferrous metals, oil and petrochemical, and agriculture sectors showed the highest weekly gains [2] Product Performance - As of June 15, 2025, there are 24,038 public wealth management products, with 136 products having a cumulative net value below 1, resulting in a comprehensive break-even rate of 0.57% [3] - The break-even rates for equity and mixed products are 51.28% and 6.51% respectively, while fixed income products have a break-even rate of 0.15% [3] - The break-even rates for fixed income products across various maturities remain low, all below 1%, with the 2-3 year and 6-12 month products having slightly higher rates of 0.35% and 0.2% respectively [3] New Product Issuance - A total of 447 wealth management products were issued by 32 wealth management companies from June 9 to June 13, 2025, with joint-stock banks leading in issuance [4] - New products are primarily R2 (medium-low risk), closed-end net value type, and fixed income public products, with only 10 mixed products issued, accounting for 2.2% [4] - Short-term products with maturities of 6 months or less saw an increase in pricing, with 1-3 month products rising by 0.31 percentage points [4] Yield Performance - All categories of RMB public wealth management products recorded positive returns last week, with fixed income products showing an average net value growth rate of 0.0772% [6] - The average weekly net value growth rates for mixed, equity, and commodity and financial derivative products were 0.2038%, 0.8588%, and 0.942% respectively [6] - Cash management products in RMB, USD, and AUD had average annualized yields of 1.421%, 3.936%, and 3.01% respectively [7] Industry Trends - The total scale of bank wealth management products reached a record high of 31.5 trillion yuan as of the end of May 2025, an increase of 0.19 trillion yuan from April and 1.58 trillion yuan from the end of the previous year [8] - The product structure has significantly changed, with fixed income products becoming the core asset driving the rebound in wealth management scale [8]

Core Insights - The trend of deposit replacement is emerging as interest rates decline significantly, leading to a shift in investment strategies among savers [1][6][9] Group 1: Interest Rate Changes - Major state-owned banks collectively lowered deposit rates, with one-year fixed deposit rates dropping below 1% for the first time, now at 0.95%, and savings account rates at 0.05% [2][3] - Several national joint-stock commercial banks followed suit, with one-year fixed deposit rates now averaging around 1.15% and two-year rates at 1.2% [2][3] - Smaller banks have also adjusted their rates, with many now offering one-year fixed deposit rates between 1.1% and 1.2% [2][3] Group 2: Decline of High-Interest Products - The once-popular large-denomination certificates of deposit (CDs) have seen a decline in demand, with rates dropping significantly; for example, the average one-year rate was 1.719% in March 2025 [4][5] - Many banks have removed two-year and longer-term CDs from sale, with current rates for shorter terms not exceeding 1.4% [4][5] - The attractiveness of large-denomination CDs has diminished compared to other investment products, leading to a decrease in discussions and interest among savers [5] Group 3: Shift to New Investment Strategies - With declining deposit rates and the fading popularity of large-denomination CDs, savers are increasingly seeking alternative investment options [6][9] - Young investors are gravitating towards a new investment strategy termed "new three golds," which includes money market funds, bond funds, and gold funds, as they seek to achieve higher returns and mitigate risks [8][9] - Data shows a significant number of younger investors are diversifying their portfolios, with many allocating a substantial portion of their income to bond funds, indicating a shift in financial behavior [9][10] Group 4: Impact on Banking Sector - The trend of deposit migration is becoming evident, with a reported decrease of 1.39 trillion yuan in household deposits in April, while non-bank deposits increased significantly [10] - Analysts suggest that this shift could impact the stability of bank liabilities and increase liquidity risk, as the absolute interest levels for one-year fixed deposits are now lower than cash management product yields [10]