Core Viewpoint - The recent surge in the A-share market has led to a significant decline in bond funds, with many experiencing losses that have wiped out their annual gains, indicating a strong negative correlation between the stock and bond markets during this period [1][2][7]. Market Performance - Since August 4, the A-share market has seen a continuous rise, with the Shanghai Composite Index reaching a nearly ten-year high and the total market capitalization of A-shares hitting a historical peak [1]. - As of August 20, over 600 bond funds reported negative returns for the month, with 86 funds experiencing a net loss exceeding 1% [1][7]. Bond Market Dynamics - The bond market has faced significant volatility, particularly on August 18, when 10 bond funds recorded daily losses exceeding 1%, with the highest loss reaching 1.6% [1][5]. - The yields on 10-year and 30-year government bonds have been on an upward trend since August 8, with the 30-year yield rising from approximately 1.95% to over 2.1% [3]. Investor Behavior - The strong performance of the stock market has attracted many investors to shift their focus from bond funds to equities, exacerbating the stock-bond "see-saw" effect [8]. - Institutional behaviors have diverged, with funds and brokerages reducing their long-duration bond holdings, while major banks and insurance companies have increased their allocation to various durations of government bonds [8]. Future Outlook - Experts suggest that while the most severe adjustments in the bond market may have ended, full stabilization will require signals of eased liquidity or a cooling of stock market enthusiasm [9]. - Recommendations for investors include focusing on short-duration bond funds and considering "fixed income plus" funds to enhance yield and reduce risk exposure [9][10].

Report Investment Rating - The operation rating for the CITIC five-style - Cycle is ★☆☆ [4] Core Viewpoints - As of the week ending August 8, 2025, the weekly returns of Tonglian All A (Shanghai, Shenzhen, Beijing), ChinaBond Composite Bond, and Nanhua Commodity Index were 1.94%, 0.03%, and -0.36% respectively. In the public fund market, index enhancement strategies led in returns with a weekly increase of 1.65%. In the equity product segment, market neutral strategies generally had more gains than losses. For bonds, convertible bond returns rebounded, but the growth of short - and medium - to long - term pure bond funds slowed compared to the previous week. Among commodity funds, energy and chemical ETFs remained weak, while precious metals saw a rebound in returns, with the net value of silver ETFs rising significantly by 3.84% [4] - In the CITIC five - style, the style index closed up last Friday, with the cycle style leading in returns, rising 3.49%. The style rotation chart showed a slight recovery in the relative strength of the financial and cycle styles, and all five styles strengthened in terms of indicator momentum. Among the public fund pools, the excess returns of consumer - style funds recovered in the past week, with a weekly excess return of 1.06%, while the average return of cycle - style funds did not outperform the benchmark. From the trend of fund style coefficients, some consumer - style funds shifted towards the growth style. Currently, the market congestion is in the historically high - congestion range [4] - In terms of Barra factors, the ALPHA factor had a better return performance in the past week, with a weekly excess return of 0.34%. The returns of the valuation and residual volatility factors weakened. In terms of win - rate, the reversal - type factors strengthened marginally, while the profitability and liquidity factors declined slightly. This week, the cross - sectional rotation speed of factors increased compared to the previous week and is currently in the historically low - quantile range [4] - According to the latest scoring results of the style timing model, the cycle and financial styles recovered this week, while the consumer style declined. The current signal favors the cycle style. The return of the style timing strategy last week was 0.77%, with an excess return of - 1.02% compared to the benchmark balanced allocation [4] Summary by Relevant Catalogs Fund Market Review - In the public fund market, index enhancement strategies led in returns with a weekly increase of 1.65%. Market neutral strategies in equity products generally had more gains than losses. Convertible bond returns rebounded, but the growth of short - and medium - to long - term pure bond funds slowed compared to the previous week. Energy and chemical ETFs remained weak, while precious metals saw a rebound in returns, with the net value of silver ETFs rising significantly by 3.84% [4] Equity Market Style - The CITIC five - style index closed up last Friday, with the cycle style leading in returns, rising 3.49%. The relative strength of the financial and cycle styles slightly recovered, and all five styles strengthened in terms of indicator momentum. The excess returns of consumer - style funds recovered in the past week, with a weekly excess return of 1.06%, while the average return of cycle - style funds did not outperform the benchmark. Some consumer - style funds shifted towards the growth style, and the market congestion is in the historically high - congestion range [4] Barra Factors - The ALPHA factor had a better return performance in the past week, with a weekly excess return of 0.34%. The returns of the valuation and residual volatility factors weakened. The reversal - type factors strengthened marginally, while the profitability and liquidity factors declined slightly. The cross - sectional rotation speed of factors increased compared to the previous week and is currently in the historically low - quantile range [4] Style Timing Model - The cycle and financial styles recovered this week, while the consumer style declined. The current signal favors the cycle style. The return of the style timing strategy last week was 0.77%, with an excess return of - 1.02% compared to the benchmark balanced allocation [4]

Core Viewpoint - The article discusses the current state of long-term pure bond funds, highlighting their underperformance in 2025 due to low interest rates and the shift towards "fixed income plus" products that combine bonds with equities for better returns [10][12][35]. Summary by Sections Types of Bond Funds - Common types of bond funds include short-term pure bond funds, long-term pure bond funds, and "fixed income plus" funds [1][4][6]. - Short-term pure bond funds have minimal volatility, typically with a drawdown of less than 1% [1]. - Long-term pure bond funds, such as 7-10 year government bonds, exhibit greater volatility, potentially comparable to low-volatility stock funds [2][3]. - "Fixed income plus" funds combine bonds with a small portion of equities or convertible bonds, aiming for higher returns [4][5]. Performance Trends - In 2021, long-term pure bond funds had interest yields of over 3%-4%, but entered a declining interest rate cycle thereafter [7][8]. - A bull market for long-term pure bond funds lasted from 2021 to 2024, but by 2025, these funds faced significant declines due to low yields [9][10][12]. - As of late 2024, the yield on 10-year government bonds was around 1.6%-1.7%, making long-term pure bonds less attractive [12]. Factors Influencing Bond Fund Performance - Interest rate fluctuations are a primary factor affecting bond fund performance, with declining rates typically leading to rising bond prices [15][16]. - The long-term trajectory of interest rates is influenced by economic growth rates and inflation [20][21]. - In 2025, the performance of long-term pure bond funds was negatively impacted by rising interest rates and a strong stock market [13][20]. Shift to "Fixed Income Plus" Products - Due to low yields on traditional bond funds, investors are increasingly turning to "fixed income plus" products, which offer a mix of stable bond returns and higher-risk equities [35][36]. - "Fixed income plus" funds typically consist of a defensive bond component and a more aggressive equity component, aiming to enhance overall returns [36][37]. - The performance of "fixed income plus" products has been strong, with indices for these funds reaching new highs in 2025, contrasting with the decline in pure bond fund indices [38][39]. Characteristics of "Fixed Income Plus" Products - These products leverage the negative correlation between stocks and bonds, allowing for reduced volatility and improved long-term returns [39][40]. - The risk profile of "fixed income plus" products is significantly influenced by the proportion of equities they hold [43][44]. - They benefit from declining deposit rates, as traditional savings accounts offer lower returns, prompting investors to seek better alternatives [46][48]. Investment Considerations - Investors should assess the equity proportion in "fixed income plus" products based on their risk tolerance [51]. - The bond component should focus on mid to short-term bonds, which currently offer more stability [51]. - Selecting funds with automatic rebalancing strategies can help mitigate risks associated with market volatility [51][60]. Examples of "Fixed Income Plus" Products - The 365-day and monthly salary investment combinations are highlighted as effective "fixed income plus" options, with varying equity and bond ratios [52][55]. - These products have shown resilience and recovery in performance, with the 365-day combination achieving historical highs since its inception [55][58].

Market Overview - The overall market experienced a slight decline, closing at 4.7 stars [1] - Large-cap stocks like the CSI 300 fell, while small-cap stocks saw minor gains [2] - Value style stocks showed relative resilience against the downturn [3] Pharmaceutical Sector - The pharmaceutical sector has remained strong over several trading days [4] - Hong Kong's pharmaceutical stocks have outperformed A-share pharmaceutical indices by nearly 50% this year [5] - After a recent rise, Hong Kong pharmaceutical stocks have reached a high valuation [6] - A-share pharmaceutical stocks have begun to recover recently [7] - Despite a recent overall decline, Hong Kong stocks managed to reduce their losses by the end of the trading day [8][9] Bond Market Insights - The stock market has been strong this year, while bonds have been relatively weak [13] - Different types of bond funds exhibit significant performance variations [13] - Short-term pure bond funds, such as 90-day combinations, show minimal volatility with long-term returns slightly higher than money market funds [16] - Long-term pure bond funds, like 7-10 year government bonds, have greater volatility [17][20] - "Fixed income plus" funds, which include a mix of bonds and stocks, have performed well this year [26] Investment Strategies - The performance of long-term pure bond funds has declined recently, while "fixed income plus" strategies have thrived [24][26] - The shift in performance is attributed to lower interest rates affecting long-term bonds, which previously benefited from higher yields [28][32] - The current low-interest environment has led to increased investment in income-generating assets, including dividend and cash flow index funds [36] - The attractiveness of long-term pure bonds is closely tied to the yield of 10-year government bonds, with yields below 2% being less appealing [40][42] Valuation Metrics - Various indices and their valuation metrics are provided, including P/E ratios, dividend yields, and ROE percentages for different sectors [11][55] - The valuation data indicates a range of investment opportunities across sectors, with some indices showing high P/E ratios and others indicating potential undervaluation [55]

Core Viewpoint - The A-share market has been on the rise, with the Shanghai Composite Index closing above 3600 points on July 24, reflecting a rebound of over 16% since its year-to-date low in early April. In contrast, the bond market is experiencing significant adjustments, leading to a "stock-bond seesaw" effect driven by liquidity changes rather than traditional growth expectations [1][2]. Group 1: Stock Market Performance - The stock market has shown strong performance, with the Shanghai Composite Index reaching 3600 points, indicating a notable recovery since April [1]. - The rise in the stock market is attributed to strong performance in cyclical sectors, particularly driven by bank stocks and small-cap stocks [7]. Group 2: Bond Market Adjustments - The bond market has faced rare adjustments, with significant declines in various government bond futures, including a 0.92% drop in the 30-year bond contract [1]. - A large number of medium- and long-term pure bond funds have reported declines, with 2905 out of 3182 funds experiencing downturns during the week of July 21 to July 23 [2]. - The bond market's recent adjustments are linked to concerns over rising commodity prices and tightening short-term liquidity as the month-end approaches [2]. Group 3: Fund Redemption Trends - There has been a notable occurrence of large redemptions in bond funds, with over ten funds announcing significant redemptions to ensure net asset value accuracy [3][4]. - Despite the redemption trends, some fund managers indicate that the overall impact on the bond market is limited, as the majority of investors remain stable in their allocations [3]. Group 4: Liquidity and Market Dynamics - The current "stock-bond seesaw" is primarily driven by liquidity rather than economic growth expectations, suggesting a unique market dynamic compared to typical scenarios [6][7]. - The bond market is expected to see increased allocations from institutional investors following adjustments, indicating a potential for rebound opportunities [6][7].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints - The short - term pure bond funds in Q2 2025 showed an increase in both quantity and scale driven by performance recovery. The average net value growth rate of short - term pure bonds in Q2 2025 was 0.66%, with the growth rate recovering compared to the previous quarter. The two funds with the highest returns in Q2 both had heavy positions in financial bonds and corporate bonds, and their durations at the end of Q2 decreased quarter - on - quarter, achieving net value returns of 1.36% and 1.30% respectively [1][2]. 3. Summary by Related Catalogs 2025 Q2 Short - term Pure Bond Fund Basic Situation - **Number of Bond Funds**: As of the end of Q2 2025, there were 363 short - term pure bond funds issued, accounting for 2.80% of the entire fund market. In Q2, 17 short - term pure bond funds were issued, showing a recovery compared to the same period last year [1][9]. - **Bond Fund Scale**: As of the end of Q2 2025, the total assets and net assets of short - term pure bond funds that had disclosed semi - annual reports were 12,345 billion yuan and 10,770 billion yuan respectively, an increase of 2,002 billion yuan and 1,536 billion yuan from the end of the previous quarter. The average total assets and net assets were 37 billion yuan and 32 billion yuan respectively, an increase of 6.2 billion yuan and 4.7 billion yuan from the end of the previous quarter [1][10]. - **Leverage Ratio**: At the end of Q2 2025, the average leverage ratio of short - term pure bond funds under the overall method was 1.15, an increase of 0.04 from the end of the previous quarter. Under the average method, it was also 1.15, an increase of 0.03 from the end of the previous quarter [1][14]. - **Net Value Growth Rate**: In Q2 2025, the single - quarter average net value growth rate of short - term pure bonds was 0.66%, with the growth rate recovering compared to the previous quarter. Among the 336 funds that disclosed performance, 335 had positive net value growth rates, accounting for 99.7%, and the proportion increased compared to the previous quarter. The net value growth rates in Q2 were mainly distributed between [0,1) and [1,2), accounting for 92.9% and 6.5% respectively [1][20]. 2025 Q2 Short - term Pure Bond Fund Asset Allocation - **Large - scale Asset Allocation**: At the end of Q2 2025, bond assets accounted for the highest proportion of 97.9%, an increase of 0.5% from the previous quarter; repurchase assets accounted for 0.9%, a decrease of 0.4% from the previous quarter; bank deposits and other assets accounted for 0.7% and 0.5% of total assets respectively, with the proportions changing by 0.0% and - 0.1% respectively compared to the previous quarter [2][26]. - **Bond Type Allocation**: As of the end of Q2 2025, the main bond types held by short - term pure bond funds were interest - rate bonds, financial bonds (excluding policy - related financial bonds), and corporate - issued bonds, accounting for 14.0%, 19.2%, and 62.8% of the total bond assets respectively. The proportions of inter - bank certificates of deposit, asset - backed securities, and other bonds in total assets were 3.3%, 0.4%, and 0.3% respectively. Compared with the end of the previous quarter, the proportions of interest - rate bonds, financial bonds, and corporate - issued bonds in bond assets changed by 1.0%, 3.8%, and - 4.8% respectively, and the proportion of inter - bank certificates of deposit changed by - 0.1% [2][29]. 2025 Q2 Analysis of Outstanding Funds - **Fund A with the Highest Net Value Return**: Fund A's duration and leverage decreased quarter - on - quarter in Q2 2025. Its net value growth rate in Q2 was 1.36%. It mainly allocated corporate bonds, financial bonds, and policy - related financial bonds, with a small amount of treasury bonds. Its duration decreased from 3.5 in the previous quarter to 2.5 at the end of Q2, and its leverage ratio decreased from 133.2% at the end of the previous quarter to 124.1% [38]. - **Fund B with the Second - highest Net Value Return**: Fund B's duration decreased quarter - on - quarter in Q2 2025, but it still adopted a relatively aggressive leverage strategy. Its net value growth rate in Q2 was 1.30%. It mainly allocated financial bonds, corporate bonds, policy - related financial bonds, and a small amount of inter - bank certificates of deposit, and slightly increased its allocation of financial bonds to 57.1%. Its leverage ratio increased slightly from 137.7% at the end of the previous quarter to 139.9% at the end of Q2 [46].

1. Report Industry Investment Rating No relevant content provided. 2. Core View The report analyzes the second - quarter report of short - term pure bond funds, indicating that the performance recovery has driven an increase in both the number and scale of these funds. The bond market showed certain fluctuations in the second quarter, and the economic fundamentals continued to grow steadily. The two funds with the highest returns both heavily invested in financial bonds and corporate bonds, and their durations decreased quarter - on - quarter [1][53]. 3. Summary by Related Catalogs 2025 Q2 Short - term Pure Bond Fund Basic Situation - **Number of Bond Funds**: As of the end of Q2 2025, there were 363 short - term pure bond funds issued, accounting for 2.80% of the entire fund market. 17 new short - term pure bond funds were issued in Q2, showing a recovery compared to the same period last year [1][9]. - **Bond Fund Scale**: As of the end of Q2 2025, the total assets and net assets of short - term pure bond funds that had disclosed semi - annual reports were 1,234.5 billion yuan and 1,077 billion yuan respectively, an increase of 200.2 billion yuan and 153.6 billion yuan from the end of the previous quarter. The average total assets and net assets were 37 billion yuan and 32 billion yuan respectively, an increase of 6.2 billion yuan and 4.7 billion yuan from the end of the previous quarter [1][10]. - **Leverage Ratio**: At the end of Q2 2025, the average leverage ratio of short - term pure bond funds was 1.15 under the overall method and the average method, an increase of 0.04 and 0.03 respectively from the end of the previous quarter [1][14]. - **Net Value Growth Rate**: In Q2 2025, the single - quarter average net value growth rate of short - term pure bonds was 0.66%, showing a recovery compared to the previous quarter. Among the 336 funds that disclosed performance, 335 had positive net value growth rates, accounting for 99.7% [17][20]. 2025 Q2 Short - term Pure Bond Fund Asset Allocation - **Large - scale Asset Allocation**: At the end of Q2 2025, bond assets accounted for 97.9% of the total assets, an increase of 0.5% from the previous quarter; buy - back assets accounted for 0.9%, a decrease of 0.4% from the previous quarter; bank deposits and other assets accounted for 0.7% and 0.5% respectively, with changes of 0.0% and - 0.1% respectively from the previous quarter [2][26]. - **Bond Type Allocation**: As of the end of Q2 2025, the main bond types held by short - term pure bond funds were interest - rate bonds, financial bonds (excluding policy - based financial bonds), and corporate - issued bonds, accounting for 14.0%, 19.2%, and 62.8% of the total bond assets respectively. Compared with the end of the previous quarter, the proportions of interest - rate bonds, financial bonds, and corporate - issued bonds in bond assets changed by 1.0%, 3.8%, and - 4.8% respectively [2][29]. 2025 Q2 Analysis of High - performing Funds - **Fund A (First in Net Value Return)**: In Q2 2025, Fund A's net value growth rate was 1.36%. It mainly invested in corporate bonds, financial bonds, and policy - based financial bonds, with a small amount of treasury bonds. Its duration decreased from 3.5 in the previous quarter to 2.5, and its leverage ratio decreased from 133.2% at the end of the previous quarter to 124.1% [38]. - **Fund B (Second in Net Value Return)**: In Q2 2025, Fund B's net value growth rate was 1.30%. It mainly invested in financial bonds, corporate bonds, policy - based financial bonds, and a small amount of inter - bank certificates of deposit, and slightly increased its investment in financial bonds to 57.1%. Its duration decreased from 3.6 in the previous quarter to 3.0, and its leverage ratio increased slightly from 137.7% at the end of the previous quarter to 139.9% [46].

Report Investment Rating No investment rating information is provided in the report. Core Viewpoints - In June, the bond market generally rose, with ultra-long bonds showing prominent gains. Without considering coupon income, from an industry perspective, bonds in the transportation industry had a relatively high net price increase, with a monthly increase of 0.12%, indicating a certain alpha. In terms of maturity, there was positive alpha in government bonds and local government bonds with a maturity of over 10 years in June. From a subordinated perspective, commercial bank subordinated bonds had obvious alpha in June [1][10]. Summary by Directory 1. Overview of Yields of Various Bond Types - In June, the bond market generally rose. For interest rate bonds, the yields of all interest rate bonds declined. The average yields of government bonds, policy bank bonds, and local government bonds declined by 7BP, 5BP, and 5BP respectively. For credit bonds, the yields of almost all credit bond types declined. Among them, the 20-year urban construction investment bonds with an implied rating of AA+ had the largest decline in yield, with an average decline of 17BP [1][11]. - As of June 30, the historical percentile levels of interest rate bond yields were relatively high, with most interest rate bond types having a three-year historical percentile level of over 6%. The 30-year policy bank bond had the highest three-year historical percentile level of 9.6%. For credit bonds, the historical percentile levels of most credit bond yields were low, below 3%. However, some credit bond types had relatively high historical percentile levels, such as the 7-year AA- second-tier capital bonds and 7-year AA securities company bonds, with historical percentiles of 15.2% and 14.7% respectively [14]. 2. Industry Alpha Tracking - In June, all industry credit bonds rose, with an average net price increase of 0.07%. Among them, bonds in the transportation industry had a relatively high net price increase, with a monthly increase of 0.12%, indicating a certain alpha. Urban construction investment bonds and real estate bonds had an average net price increase of 0.03%, which were relatively small increases [1][15]. - In the real estate bond sector, in June, AAA-rated and public enterprise real estate bonds had obvious positive alpha, while AA+-rated real estate bonds had negative alpha. Specifically, the average net price increase of AAA real estate bonds was 0.04%, significantly higher than other real estate bond types. Public enterprise bonds had an average increase of 0.12%, higher than real estate bonds of other enterprise types. AA+ real estate bonds had an average net price decline of 0.01%, the only declining real estate bond type. In terms of specific bonds, the bonds of Longfor Group had a net price increase of over 2%, while the bond H20 Hejing 6 had a net price decline of 3.79% [19]. - For urban construction investment bonds, in June, different types of urban construction investment bonds had different price movements. Regionally, urban construction investment bonds in Guangxi declined by 0.07% in a single month, the most significant decline, indicating obvious negative alpha. Urban construction investment bonds in Hebei and Xinjiang had relatively high increases, with an average increase of 0.14%. In terms of ratings, AA- urban construction investment bonds had negative alpha, with an average net price decline of 0.13%, significantly lower than other rated urban construction investment bonds [26]. - In the financial bond sector, in June, private enterprise financial bonds had a relatively significant net price decline, with an average monthly decline of 0.03%, the only declining financial bond type, indicating negative alpha. The bonds with relatively high increases in June were 24 Kunpeng Investment MTN003, 25 Kunpeng Investment MTN001B, and 23 CATIC Finance 08, with net price increases of 3.06%, 3.06%, and 2.36% respectively. The bonds with relatively high declines were 21 Shenzhen Jusheng 01 and 20 Shenzhen Jusheng 01, with net price declines of 7.2% and 10.59% respectively [28]. 3. Maturity Alpha Tracking - In June, government bonds and local government bonds with a maturity of over 10 years had positive alpha. Data showed that government bonds with a maturity of over 10 years rose by 1.1% and local government bonds rose by 0.93%, significantly higher than other interest rate bond types. The main reason was that ultra-long interest rate bonds had the advantage of duration leverage, and the decline in yields led to a more significant increase in prices [2][33]. - Among long-term representative bonds, the ultra-long credit bond 24 Chengtong Holdings MTN009B had the highest monthly increase of 3.63% [37]. 4. Subordinated Alpha Tracking - In June, commercial bank subordinated bonds had positive alpha. Data showed that commercial bank subordinated bonds had an average increase of 0.05%, higher than commercial bank ordinary bonds and subordinated bonds. The alpha of commercial bank subordinated bonds mainly came from the significant decline in the yields of 7-year and 10-year commercial bank second-tier capital bonds and perpetual bonds. Although the yields of 20-year and 30-year commercial bank ordinary bonds declined more significantly, due to the small scale of ultra-long commercial bank bonds, the decline in yields had little impact on the overall price movement [2][39]. 5. June Public Bond Fund Ranking - In June, hybrid bond funds of the second category had the highest average increase among public bond funds. The average increase of hybrid bond funds of the second category was 1.04%, followed by hybrid bond funds of the first category with an average increase of 0.57%, medium- and long-term pure bond funds with an average increase of 0.29%, and short-term pure bond funds with an average increase of 0.18% [2][40]. - The top five medium- and long-term pure bond funds in terms of increase in June were Huarun Yuanda Runxiang Three-Month Fixed-Term Open A, Pengyang Chunxi One-Year Fixed-Term Open, Huataibaoxing Zunyi Interest Rate Bond 6-Month Holding A, Pengyang Chunli Regularly Open A, and Minsheng Jiayin Hengyu [46]. - The top five short-term pure bond funds in terms of increase in June were Tianhong Yueyuebao 30-Day Holding A, Baoying Ansheng Medium- and Short-Term Bond A, Zheshang Huijin Shuangyuexin 60-Day Rolling Medium- and Short-Term Bond A, Great Wall Short-Term Bond A, and Zheshang Huijin Yuexiang 30-Day Rolling Holding A [47]. - The top five hybrid bond funds of the first category in terms of increase in June were Great Wall Active Income Enhancement A, Everbright Medium- and High-Grade A, Tianhong Tianli E, Golden Eagle Add Interest Medium- and Long-Term Credit Bond A, and Minsheng Jiayin Xinxiang A [48]. - The top five hybrid bond funds of the second category in terms of increase in June were Golden Eagle Yuanfeng C, Huabao Enhanced Income A, China Merchants Anrui Enterprising C, Caitong Income Enhancement C, and Minsheng Jiayin Enhanced Income A [49].

Core Viewpoint - The bond market is experiencing a strong rebound due to the central bank's signals of maintaining a supportive monetary policy, leading to a significant decline in interest rates and a surge in bond fund net values [1][2][3] Group 1: Market Performance - Nearly 90% of short-term pure bond funds and over 40% of medium to long-term pure bond funds reached historical net value highs in June [1] - Approximately 98% of open-end short-term pure bond funds achieved positive returns this year, with 126 funds exceeding a 1% return [2] - About 95% of open-end medium to long-term pure bond funds also realized positive returns, with 991 funds surpassing a 1% return [2] Group 2: Investment Strategies - Many bond funds are adopting a "lengthening duration" investment strategy, reflecting optimism about the central bank's potential resumption of bond purchases and expectations for continued moderate monetary policy [1][2] - The trend towards bond fund toolization is accelerating, with bond ETF assets increasing from 801.52 billion yuan at the end of 2023 to 3635.85 billion yuan in mid-2024, indicating a doubling in size within six months [2] Group 3: Market Outlook - Analysts suggest that while the current liquidity environment is supportive, a full bond bull market has not yet formed, and stronger signals are needed for a definitive trend reversal [3][4] - Key factors to monitor include the actual performance of funding rates during the end of the quarter, the sustainability of institutions' duration extension behaviors, and the timing of any potential resumption of bond purchases by the central bank [4]

Report Industry Investment Rating - Not provided in the given content Core View - In May, the bond market showed differentiation. Interest rate bonds mostly had rising yields, while credit bonds generally had falling yields. There was no obvious α in the industry dimension of credit bonds, a significant negative α in 10 - year - plus treasury bonds, and a certain α in insurance company bonds. Among public bond funds, hybrid bond - type secondary funds had the leading average increase in May [1][2][10]. Summary by Relevant Catalogs 1. Each Variety Yield Panorama - In May, the bond market performance was differentiated. For interest rate bonds, the yields of treasury bonds and China Development Bank bonds increased by an average of 4BP, and the yields of local government bonds decreased by an average of 1BP. For credit bonds, almost all credit bond varieties had falling yields, with the 7 - year, AA + and below implicit - rated commercial bank ordinary bonds having the largest yield decline of 19BP on average [11]. - As of May 31, the historical percentile levels of interest rate bond yields were relatively high, especially for short - term varieties. Most interest rate bond varieties had a three - year historical percentile level of over 8%, and the 1 - year treasury bond had the highest three - year historical percentile of 20%. For credit bonds, low - grade long - term financial bond varieties had relatively high historical percentile levels of yields, with the 7 - year, 10 - year, and 5 - year AA - bank secondary capital bonds having the top three percentile levels of 18%, 17%, and 15% respectively [13]. 2. Industry Alpha Tracking - In the industry dimension, credit bonds in various industries generally rose in May, with an average net - price change of 0.14%. The increases in each industry were relatively balanced, and there was no obvious α. The mining and financial industries had relatively small increases of 0.09% and 0.07% respectively [17]. - In the real - estate bond sector, AAA - rated and public - enterprise real - estate bonds had obvious positive α in May. The average net - price increase of AAA real - estate bonds was 0.18%, significantly higher than other real - estate bond varieties. Public - enterprise bonds had an average increase of 1.38%, far higher than other enterprise - type real - estate bonds. The top - rising bond was Vanke Bond with a net - price increase of about 4%, while the top - falling bonds were 24 Lianfa MTN004 and 22 Longhu 03, with net - price decreases of 0.56% and 4.48% respectively [21]. - In the urban investment bond sector, all regional urban investment bonds had rising net prices in May, with an overall increase of 0.15%. Hebei and Tianjin had obvious positive α, with average increases of 0.23% and 0.22% respectively. Guangxi had the smallest increase of 0.06%. AA - urban investment bonds had negative α, with an average net - price decrease of 0.02% [28]. - In the financial bond sector, there was little difference in the net - price changes of financial bonds of various ratings and types in May, and no obvious α appeared. The top - rising bonds were 24 Yuandong IV, 24 Yuandong Leasing MTN005, and 25 Ganzhou Leasing 01, with net - price increases of 1.03%, 1.03%, and 0.84% respectively. The top - falling bonds were 21 Shenzhen Jushenghua 02 and 21 Shenzhen Jushenghua 01, with net - price decreases of 6.55% and 6.69% respectively [31]. 3. Term Alpha Tracking - In May, 10 - year - plus treasury bonds had a significant negative α. The change rate of 10 - year - plus treasury bonds in May was - 1.5%, significantly higher than other interest rate bond varieties. The reasons were that the yield increase of ultra - long - term interest rate bonds in May exceeded other term varieties, and the yield increase of ultra - long - term treasury bonds was significantly higher than that of local government bonds [37]. - Among long - term representative bonds, the ultra - long - term credit bond 23 Sanxia K2 led the increase in May, with a monthly increase of 0.49% [42]. 4. Sub - Alpha Tracking - In May, insurance company bonds had a certain α. The average increase of insurance company bonds in May was 0.1%, 0.03% higher than that of commercial bank ordinary bonds and sub - bonds. The α of insurance company bonds mainly came from the fact that the yield decline of insurance capital supplementary bonds within 7 years in May was greater than that of commercial bank bonds and sub - bonds, and the long - term bond scale of these three varieties was relatively small, so short - and medium - term interest rate fluctuations had a more significant impact on the overall price [44]. 5. May Public Bond Fund Ranking - In May, hybrid bond - type secondary funds led other types of public bond funds in average change rate. The average change rate of hybrid bond - type secondary funds was 0.41%, that of hybrid bond - type primary funds was 0.27%, that of short - term pure - bond funds was 0.18%, and that of medium - and long - term pure - bond funds was 0.12% [47].