1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints - The bond market is insensitive to fundamentals. In the volatile period, seizing periodic opportunities is more important than speculating on one - sided trends. The current approach to credit bonds is recommended to be defensive, with duration controlled at a low level. Short - term credit bonds may have stronger certainty [1][9]. - In a low - interest - rate environment, the adjustment pattern of credit bond yields has changed. Short - end yields are more resistant to decline compared to long - end varieties. It is advisable to focus on short - term credit bonds, especially those within 3 years [1][14]. - There are many disturbing factors in the bond market in the future. During the volatile period, short - and medium - term credit bond varieties are relatively stable. It is recommended to prioritize the carry trade strategy for credit bonds within 3 years [4][26]. 3. Summaries by Related Catalogs 3.1 Bond Market Trends and Overall Strategy - Recently, the bond market has been frequently adjusted, showing a weak and volatile trend. Positive factors such as negative credit growth in July, further slowing demand in economic data, and loose liquidity have not had a substantial positive impact on the bond market. The bond market is currently dominated by risk appetite. If there is negative feedback and continuous capital outflows, there may be a possibility of the bond market rising. Therefore, the overall credit bond strategy should be defensive, with low duration [1][9]. 3.2 Characteristics of Short - Term Credit Bonds - **Yield Resistance**: In a low - interest - rate environment, the adjustment pattern of credit bond yields has changed. When negative factors emerge, investors tend to sell long - term bonds and reduce duration to maintain liquidity. Since July this year, the yields of 1 - year and 3 - year AAA - medium - and short - term notes have increased by 3BP and 11BP respectively, while those of 10 - year and 15 - year AAA - medium - and short - term notes have increased by 14BP and 16BP respectively. Credit bonds within 3 years have stronger "resistance to decline" [1][14]. - **Price Performance**: From the weekly increase of the ChinaBond full - price index, since July, the bond market has been weak. Varieties within 1 year have shown stable performance, even with upward trends. Varieties within 5 years have relatively small declines, with weekly declines generally within 0.45% in the past two months. In contrast, the longer the term of varieties over 5 years, the greater the decline. On the week of August 15, the weekly decline of the full - price index of AAA credit bonds over 10 years was 0.67%, while that of 7 - 10 years and 5 - 7 years was 0.37% and 0.35% respectively. The decline of other short - term bonds of the same grade was within 0.20%, and the index of bonds within 1 year had a small increase of 0.10% [2][15]. - **Net Value Stability**: From the net value performance of AAA medium - and short - term notes of each term, medium - and long - term credit bonds have a higher upward amplitude in net value due to higher coupon advantages, but also have greater overall net value volatility. The shorter the duration of credit bond varieties, the smoother the net value curve. For example, during the negative feedback of wealth management redemptions in November 2022 and the significant bond market adjustment in March this year, short - term credit bonds showed stronger resistance to fluctuations [19]. 3.3 Fund Behavior and Credit Spreads - Since July, funds have reduced their holdings of long - term credit bonds and have been net - selling credit bonds over 7 years in the past two months. Instead, they have increased their holdings of shorter - term credit bond varieties. As of August 19, funds have net - bought approximately 70.3 billion yuan and 57.7 billion yuan of varieties within 1 year and 1 - 3 years respectively since July. Currently, the credit spreads of long - term credit bonds are still at a relatively high level since 2023, and there is a possibility of further widening. It is recommended to remain cautious about long - term credit bonds [3][23]. 3.4 Future Bond Market Outlook and Investment Suggestions - There are many disturbing factors in the bond market in the future. Although the current relatively loose liquidity provides room for carry trade with leverage, the possibility of further significant loosening of liquidity is low. Coupled with insufficient protection space for credit spreads of each variety, any negative factor may amplify market sentiment and lead to further market adjustments. - It is recommended to prioritize the carry trade strategy for credit bonds within 3 years. As of August 20, the maturity yields of various 2 - year credit bonds (including financial bonds) are basically above 1.85%. Institutions with high coupon requirements can appropriately lower their credit quality requirements [4][26].

1. Report Industry Investment Rating No industry investment rating information is provided in the report. 2. Core Viewpoints of the Report - Long - term credit bonds have different performance characteristics in different market conditions. In a bear market, long - term credit bonds have better anti - decline performance, while in a bull market, they have higher comprehensive returns. In a volatile market, 5 - 7Y bonds perform better in terms of returns [2][3][25]. - Different types of institutional investors can choose different long - term credit bond investment strategies according to their own needs. For example, institutions with higher requirements for subject qualifications and liquidity management can focus on medium - term notes, while institutions with stable liability ends can consider increasing long - term credit bonds [5][6][61]. 3. Summary According to the Directory 3.1 Long - term Credit Bond Advantages 3.1.1 Yield Fluctuation Range - In a bull market, short - term credit bonds perform better, while in a bear market, long - term credit bonds have stronger anti - decline performance. This is affected by liquidity and investor structure [2][16]. - Among different credit bond varieties, long - term general credit bonds have stronger anti - decline performance than long - term secondary perpetual bonds [3][17]. 3.1.2 Interval Return - In a bull market, long - term credit bonds have outstanding comprehensive returns, while in a bear market, their returns are slightly lower than short - term varieties. In a volatile market, 5 - 7Y bonds have better returns [25]. - Among different credit bond varieties, 5 - 7Y secondary capital bonds are more likely to underperform general credit bonds in a bull market, and since 2021, secondary capital bonds have mostly underperformed general credit bonds in a bear market [26]. 3.1.3 Liquidity Perspective - In terms of maturity, the 9 - 10Y long - term credit bonds have relatively better liquidity among long - term bonds. In terms of variety, medium - term notes have higher turnover rates regardless of market conditions or maturity, and short - term (within 5Y) secondary perpetual bonds are more sensitive to market conditions [4][43][45]. 3.1.4 Institutional Trading Behavior - Insurance companies are the main stable net buyers of long - term credit bonds, and other product - type institutions such as securities asset management, social security funds, and pension funds can also form a liquidity cushion with insurance companies [4][51]. 3.2 How to Invest in Long - term Credit Bonds - Due to the expected volatile bond market in May, short - term varieties have higher short - term certainty. However, long - term credit bonds have certain allocation value for institutional investors with stable liability ends who want to increase returns through duration strategies [5][54]. - Institutions with higher requirements for subject qualifications and liquidity management can focus on medium - term notes, and consider 9 - 10Y secondary perpetual bonds in certain market conditions. Institutions with stable liability ends can increase the allocation of long - term credit bonds and consider using riding strategies for urban investment bonds [5][61][62].