Core Viewpoint - The U.S. Treasury's increased issuance of short-term debt may be necessary to sustain the current bull market, as historical patterns indicate that high net issuance of medium to long-term debt correlates with stock market stagnation or decline [1][2][5]. Group 1: Current Market Conditions - The net issuance of medium to long-term debt is approaching 100% of the fiscal deficit, with long-term debt net issuance accounting for 80% [2][5]. - The combination of high net issuance and slowing growth in total debt issuance is creating a challenging environment for the stock market, as the liquidity squeeze from medium to long-term debt issuance is undermining upward momentum [2][5]. Group 2: Historical Context - Historical data shows that when net issuance of medium to long-term debt exceeds 85% of the fiscal deficit and total issuance growth declines, the S&P 500's performance over the next 1-12 months is significantly below average [5][7]. Group 3: Short-Term Debt as a Solution - In 2023, the former U.S. Treasury Secretary Yellen successfully revitalized the market by significantly increasing short-term debt issuance, which helped to draw down over $2 trillion in idle funds from the Federal Reserve's reverse repo (RRP) tool [10]. - Simon White suggests that to prevent a market collapse, the Treasury must reduce the net issuance of long-term debt and restart total issuance growth, implying a substantial increase in short-term debt issuance [11]. Group 4: Repo Market Dynamics - The relationship between short-term debt and the stock market is closely tied to the explosive growth of the repo market, which has become increasingly liquid and resembles a "near-money" asset [12][13]. - The growth in government debt issuance, particularly as repo collateral, has a positive correlation with stock market performance, but this relationship is more pronounced in total issuance rather than net issuance [13][14]. Group 5: Potential Challenges - Restarting short-term debt issuance may not be without consequences, as it could raise interest costs and inflation risks, complicating the Treasury's fiscal management [15]. - The current interest expenditure on U.S. debt has surpassed $1 trillion annually, and further shortening the average debt maturity could exacerbate inflationary pressures [15][17].

Group 1 - The overall trend in government bond futures since early April has been characterized by "long strong, short weak," with short-term bonds experiencing significant declines after mid-April, while long-term bonds have maintained a volatile pattern [1] - The market's expectations for interest rate cuts remain, with short-term yields appearing relatively appropriate after previous increases, indicating that the prior rise has exhausted policy space [1][2] - Concerns about the economic outlook persist, particularly regarding real estate and external demand, making long-term bonds more attractive compared to short-term bonds [1][2] Group 2 - The short-term bond market has shown signs of overvaluation, with the yield spread between short-term government bonds and funding rates at historical lows, leading to concerns about the sustainability of short-term bond prices [2] - The basic economic fundamentals are more favorable for long-term bonds, as April's economic data indicates a general decline, making long-term bonds more sensitive to these fundamentals [2] - Investors should closely monitor changes in external demand and monetary policy, particularly regarding the central bank's potential resumption of secondary market government bond transactions, which could impact bond yields [4] Group 3 - The upcoming economic performance, changes in funding conditions, and developments in US-China trade negotiations will significantly influence the bond market in June [3] - The pressure on external demand is expected to gradually affect domestic demand, which could enhance the driving force for a stronger bond market [4] - As of the end of April, foreign investors' holdings of domestic bonds reached 29,781.5 billion yuan, reflecting an increase and indicating a growing interest in Chinese assets amid global market shifts [4]

Report Summary 1. Report Industry Investment Rating No investment rating information is provided in the report. 2. Core Viewpoints - Standing at the end of April and looking forward to May, investors' preference for long - term and ultra - long - term bonds has increased, while their attention to credit products has decreased month - on - month, but there may be a characteristic of "being bullish but not taking action" [1][10]. - According to the bond market survey questionnaire results released at the end of April, six mainstream expectations of investors for the May bond market are summarized: preference for long - term and ultra - long - term bonds has increased significantly; Trump's tariff policy may promote the early implementation of reserve requirement ratio (RRR) and interest rate cut policies, and the positive impact on the bond market can continue; the current expectation of monetary easing is still strong, with most investors expecting an RRR cut in May - June and an interest rate cut more likely in the third quarter; most investors believe that the bond market will strengthen overall in May, and the probability of a bull - flattening curve is high; most investors' judgments on the operating ranges of 10 - year and 30 - year Treasury bond yields are narrow, and the market is expected to be mainly volatile; in terms of operations, most investors are neutral in practice and prefer to keep their positions basically stable, possibly showing "being bullish but not taking action" [1][10]. 3. Summary by Relevant Catalogs 3.1 Survey Background - A bond market questionnaire "What to expect from the May bond market?" was released on April 25, 2025, targeting the main concerns of the May 2025 bond market. As of 24:00 on April 27, a total of 331 valid questionnaires were received, covering various institutional investors such as bank self - operation, securities firm self - operation, public funds/special accounts, and individual investors [8]. 3.2 Expectations for Treasury Bond Yields - **10 - year Treasury Bond Yields**: 48% of investors think the lower limit of the 10 - year Treasury bond rate is below 1.60%, and 45% think it is between 1.60% - 1.70% (inclusive). 76% of investors believe the upper limit of the 10 - year Treasury bond rate may be within 1.80%, and 11% think it may be between 1.80% - 1.85% (inclusive). Most investors expect the bond market in May to trade around the tariff policy, and the 10 - year Treasury bond rate is unlikely to return to the previous high in April [11]. - **30 - year Treasury Bond Yields**: 41% of investors think the lower limit of the 30 - year Treasury bond operating range in May will be less than 1.8%, and 43% think it is between 1.80% - 1.85% (inclusive). 53% of investors believe the upper limit of the 30 - year Treasury bond operating range in May is between 1.90% - 2.00% (inclusive), and 31% think it is within 1.90%. The overall bond market in May may be volatile and slightly stronger [14]. 3.3 Expectations for the Second - Quarter Economic Trend - 62% of investors think the economic trend in the second quarter will be "both year - on - year and month - on - month weakening", a significant increase compared with the April questionnaire results. 22% of investors think it will show the characteristic of "year - on - year recovery but month - on - month weaker than the seasonal level". 10% of investors think it will be "year - on - year recovery and month - on - month in line with the seasonal level", and 5% think it will be "year - on - year recovery and month - on - month exceeding the seasonal level", a significant decrease compared with the April questionnaire results. The deviation between the economic fundamental expectation and the reality needs a certain verification period [19]. 3.4 Expectations for RRR and Interest Rate Cuts - **RRR Cut**: 66% of investors think an RRR cut will occur in May - June, and 17% think it will be in the third quarter. Investors have a high expectation for an RRR cut and expect it to happen earlier [21]. - **Interest Rate Cut**: 49% of investors think an interest rate cut will occur in the third quarter, 31% think it will be in May - June. 12% of investors think there will be no interest rate cut in 2025. Investors' expectation for an interest rate cut has further strengthened, and the proportion of those who think there will be no interest rate cut in 2025 has decreased significantly [21]. 3.5 Impact of Trump's Tariff Policy on the Bond Market - 46% of investors think it may promote the early implementation of RRR and interest rate cut policies, and the positive impact on the bond market can continue. 27% think the subsequent focus will be on the expectation of tariff policy cooling, and the positive impact on the bond market has ended. 15% think it may trigger non - US countries to impose tariffs on China, and the positive impact on the bond market can continue. 12% think it may strengthen the policy - makers' determination to stabilize the capital market, and the positive impact on the bond market has ended. Overall, investors generally think the subsequent impact of Trump's tariff policy on the bond market is still positive [23]. 3.6 Expectations for the May Bond Market行情 - 27% of investors think the interest rate curve will strengthen overall and show a bull - flattening trend in May. 26% think it will strengthen overall and show a bull - steepening trend. 16% think it is difficult to judge the trend of the interest rate curve in May. 10% think the short - end of the interest rate curve will be strong and the long - end will be weak, and 10% think the short - end will be weak and the long - end will be strong. Overall, more investors are optimistic about the May bond market, but there is some divergence between the expectations of a bull - flattening and a bull - steepening curve [25]. 3.7 Bond Market Operation Suggestions - 49% of investors think they should keep their positions basically stable. 23% think they should hold cash and wait, and then add positions after the market回调 to the expected level. 13% think they can start adding positions. 11% think they should take appropriate profits and reduce positions. 4% think they should reduce the duration to control risks. Most investors are neutral in practice, and keeping positions stable is the mainstream view [29]. 3.8 Preferred Bond Varieties in May - 18% and 17% of investors think the opportunities for long - term and ultra - long - term interest - rate bonds are relatively certain. 15%, 10%, and 10% of investors are more optimistic about medium - short - term interest - rate bonds, inter - bank certificates of deposit, and local government bonds respectively. About 9% of investors prefer medium - low - grade urban investment bonds. Investors have a higher preference for interest - rate products such as interest - rate bonds, certificates of deposit, and government bonds, and their preference for credit products has decreased month - on - month. The preferred varieties have shifted from the short - end to the long - end and ultra - long - end [32]. 3.9 Main Logic of Bond Market Pricing in May - 31% of investors think the central bank's monetary policy attitude and the trend of the capital market are still the main pricing logics for the May bond market. 16% and 15% of investors think fiscal stimulus, government bond issuance, and fundamental data such as real estate and PMI are the main pricing logics. 13% of investors think the implementation of the US tariff policy is the main pricing logic. The central bank's monetary policy attitude and the trend of the capital market are still the most concerned factors for investors [34].