Report Industry Investment Rating - Not provided in the content Core Viewpoints of the Report - The bond market lacks its own driving factors this year, with its fluctuations mainly influenced by external factors. The "endogenous" fluctuations of the bond market are converging, and it's difficult to change the "meager fluctuations" of this year's bond market. In the second half of the year, the bond market is expected to have narrow - range oscillations each month, and neither excessive short - nor long - positions are advisable [5][10][35] Summary by Relevant Catalogs 1. 6 - month Bond Market's Expected "Old Script" - Since June, interest rates have been consolidating and oscillating, and fund durations have gradually increased, anticipating a downward trend in interest rates in July. The market was skeptical about the economic outlook despite good Q2 GDP data, expecting a neutral tone from the July Politburo meeting. As a result, in early July, the overall fund duration increased, and there was an expansion of credit - bond ETFs. In June, the net inflow of market - making credit - bond ETFs was 6.3314 billion yuan, a 146% increase from May. In mid - July, the Sci - tech Innovation Bond ETF took over the market, with an average duration of about 4.3 years and 3.9 years for the tracked indices [13] 2. New Developments in the Equity and Commodity Markets - Starting from June, the commodity and equity markets showed a completely opposite trend to the bond market, entering a trading mode with rapidly increasing risk appetite. Commodity prices rebounded from lows and then rose across the board, fully recovering the gap caused by the April tariff shock by July 22. The equity market reached new highs and continued to rise, spreading from bank dividends to low - valuation sectors in the technology sector and then to the cyclical sector. The bond market's expected scenario did not occur, and it started to adjust rapidly on July 21 [4] 3. Bond Market's Rise and Fall Driven by External Factors - The bond market has been in a narrow - range technical oscillation, with interest rates fluctuating around the central level by about 10 BP. Two major factors causing significant adjustments in the bond market are external: the unexpected escalation of trade frictions in April led to a sharp decline in bond interest rates, with the 10Y Treasury bond rate dropping from over 1.8% to 1.61% on April 7; the resonance of the equity and commodity markets in late July led to an accelerated upward movement of the 10Y interest rate, breaking through 1.70% [5][21] 4. The "Positive and Negative" Sides of the Convergence of Bond Market's Endogenous Fluctuations - On one hand, the yields of bond - based funds have declined, and the expected returns of bond - related assets need adjustment. As of August 1, the performance of pure - bond funds this year has been weaker than in 2024. On the other hand, the market's attention to bonds has significantly decreased. The trading volume of Treasury bond futures has not changed significantly, while the trading volume of coking coal contracts has increased. The "asset shortage" narrative in the bond market is also weakening, as insurance premium growth has slowed, rural commercial banks' trading volume has decreased, and the buying power of wealth management products for long - term bonds has weakened [24][25][26] 5. Main Themes in the Second Half of the Year - The market needs to find factors beyond the "stock - bond seesaw" effect. When the equity market stabilizes above 3500 points, it's necessary to consider the factors jointly influencing the stock and bond markets. The expectations, verifications, and adjustments of "anti - involution" will continue, and the market's understanding will change. The underestimated overseas and tariff factors may resurface. The most important factor for the bond market may be its own asset - liability changes. If the average annualized returns of bond funds and wealth management products are less than 1.5% by the end of the year, there may be a shift of deposits to riskier assets [8][30][33]