Group 1: Report's Industry Investment Rating - No information provided Group 2: Report's Core View - The opportunity to flatten the 30Y - 10Y spread has emerged, and currently, betting on the convergence of the 30Y - 10Y Treasury bond spread has a high probability of success. Similarly, the probability of success in betting on the convergence of the 30Y local government bond and 10Y Treasury bond spread is also high [1][2][3] Group 3: Summary Based on Related Catalogs 30Y - 10Y Treasury Bond Spread Analysis - The 10Y is the most - watched maturity on the Treasury yield curve. The spread between 30Y and 10Y Treasury bonds is used as an indicator to compare the investment cost - effectiveness of the two maturities. The higher the spread's historical quantile, the higher the investment cost - effectiveness of 30Y relative to 10Y [1][7] - In the medium - term, the 30Y - 10Y Treasury bond spread has a significant mean - reversion characteristic. From January 2010 to December 2022, the spread was generally in the range of 40 - 80bp, with a median of 57bp [1][7] - After December 2022, the spread trended downward, but has risen rapidly in the past six months. As of March 31, 2026, the spread is 53.5bp, at the 52% quantile since January 2010, at least at a historical neutral level [1][7] - The current spread is higher than the fitted value calculated from the 10Y Treasury yield. The spread and the 10Y Treasury yield are positively correlated, with a Pearson correlation coefficient of 0.44. An OLS model can be established: 30Y - 10Y Treasury bond spread = 10.23×10Y Treasury yield + 19.00. The actual spread has the motivation to revert to the fitted value [1][7] 30Y and 10Y Treasury Bond Yield Ratio Analysis - The ratio of 30Y and 10Y Treasury bond yields focuses on measuring the investment cost - effectiveness of the two assets from the perspectives of static yield and holding - period coupon income. It also has a mean - reversion characteristic [2][10] - Currently, the 30Y and 10Y Treasury bond yields are 2.35% and 1.82% respectively, and their ratio is 1.29, the highest since June 2020. The future decline of the ratio is only a matter of time, indicating that betting on the convergence of the 30Y - 10Y Treasury bond spread has a high probability of success [2][10] 30Y Local Government Bond and 10Y Treasury Bond Spread Analysis - The current spread between 30Y local government bonds and 10Y Treasury bonds is 79.3bp, at the 82% quantile since January 2021. The spread has basically returned to the level of March 2022 [3][12] - The current ratio of 30Y local government bond and 10Y Treasury bond yields is 1.39, the second - highest since January 2021. Betting on the convergence of the 30Y local government bond and 10Y Treasury bond spread has a high probability of success [3][12]

Core Viewpoint - The article emphasizes the importance of adapting to market conditions, likening investment strategies to agricultural practices where timing and natural cycles are crucial for success [1]. Group 1: Economic Indicators - The March PMI data slightly exceeded expectations at 50.4, up from the previous value of 49, indicating a modest improvement in manufacturing activity [5]. - The overnight market saw a decline in U.S. stocks, influenced by geopolitical tensions, particularly warnings from Trump regarding Iran, which contributed to a stable bond market with the 10Y government bond yield fluctuating around 1.8038% [5]. Group 2: Market Dynamics - The funding environment is described as balanced and slightly loose, with the central bank conducting a 325 billion yuan reverse repurchase operation, resulting in a net injection of 150 billion yuan [3]. - The overnight rates showed minor fluctuations, with DR001 at approximately 1.27% and DR007 at around 1.42%, reflecting a slight decrease in funding rates [3]. Group 3: Investment Strategy - The article outlines a strategic approach for investors aiming for over 20% annual returns, advocating for a diversified portfolio across global markets, including U.S., Hong Kong, and A-shares, as well as gold [6]. - The first quarter performance was noted to be down by 10%, with a renewed focus on recovering losses [6].

Report Information - Report Date: March 29, 2026 [1] - Analysts: Yan Ziqi, Hong Ziyan [2] - Report Title: Bond Research Weekly - Big Banks Step In to Buy Long - Term Bonds Again [3] Industry Investment Rating - Not provided in the report Core Views - This week, the performance of treasury bonds was remarkable. The yields of 10Y treasury bonds, 10Y China Development Bank bonds, and 30Y treasury bonds' active bonds decreased by 2.25bp, 0.6bp, and 1bp respectively. This was closely related to the actions of large - scale banks. Large - scale banks net - bought 51 billion yuan of 10Y treasury bonds this week, compared with a net - selling of 36 billion yuan in the previous week (March 16 - 20). If the current trend of large - scale banks buying bonds continues, there is still about a 2bp downward space for 10 - year treasury bonds, which may stabilize the market before the upcoming special treasury bond issuance plan [6][11]. - Insurance institutions sold a large amount of 30 - year treasury bonds this week but still increased their holdings of the active bond 2500006. They mainly net - sold three old bonds: 210005, 200012, and 190010, possibly for quarter - end statement adjustment and realizing floating profits [6][12]. - For the bond market approaching the quarter - end, the yield curve is likely to remain steep under the influence of inflation expectations. Therefore, investors' mainstream choice is medium - and short - duration coupon assets and cautious attitude towards ultra - long - term bonds. In the short term, this phenomenon will continue. Without a tightening signal from monetary policy, the yield curve is likely to be repaired from short - to long - term, and the next target may be 10Y China Development Bank bonds. For 30 - year treasury bonds, note that the liquidity of 2500002 has significantly improved recently. If the active bond is switched, 2500006 may weaken relatively, and investors can transfer part of their positions from 2500006 to 2500002 and 230023 [6][12]. Section Summaries This Week's Bond Market Review - The performance of treasury bonds was excellent this week. The yields of 10Y treasury bonds, 10Y China Development Bank bonds, and 30Y treasury bonds' active bonds decreased. The actions of large - scale banks were the main reason. Large - scale banks' net - buying of 10Y treasury bonds increased, and if the trend continues, 10 - year treasury bonds may have a 2bp downward space and play a role in stabilizing the market before the special treasury bond issuance [11]. - Insurance institutions sold a large amount of 30 - year treasury bonds but increased their holdings of the active bond 2500006, mainly net - selling three old bonds, possibly for quarter - end adjustment. The bond market yield curve is likely to remain steep, and investors prefer medium - and short - duration coupon assets and are cautious about ultra - long - term bonds. The yield curve may be repaired from short - to long - term, and the next target may be 10Y China Development Bank bonds. Attention should be paid to the liquidity change of 30 - year treasury bonds and the possible active bond switch [12].

Core Viewpoint - The article emphasizes the importance of transforming past experiences into an objective investment system that can overcome human biases, rather than allowing those experiences to hinder progress [1]. Group 1: Market Overview - The central bank conducted a 175 billion yuan reverse repurchase operation, with 510 billion yuan of reverse repos maturing, resulting in a net withdrawal of 335 billion yuan [3]. - The central bank announced a 500 billion yuan MLF operation with a one-year term, indicating a balanced and slightly loose liquidity environment [3][5]. - The interbank funding rates remained stable, with DR001 around 1.32% and DR007 around 1.41% [3]. Group 2: Interest Rate Movements - The weighted average rates for various interbank funding instruments were reported, with R001 at 1.40% (unchanged), R007 at 1.48% (unchanged), and R014 at 1.53% (unchanged) [4]. - The 10-year government bond yield opened at 1.8375% and fluctuated slightly, closing at 1.8310%, reflecting a minor decrease [5][6]. Group 3: Market Reactions - Following Trump's announcement to delay the electric grid strike plan, various asset classes experienced a rebound, contributing to a positive sentiment in the stock market [5]. - The article notes significant trading activity in the S&P 500 futures and crude oil futures, indicating market participants' reactions to geopolitical developments [6].

Group 1: Market Overview - The bond market has shown some recovery this year, with the 10Y government bond yield decreasing from 1.8427% to 1.8143% (-2.84bp) and the 10Y government-backed bond yield falling from 1.9862% to 1.9646% (-2.16bp) [7] - The 10Y government-backed bond and government bond spread widened from 14.35bp to 15.03bp (+0.68bp), remaining at a historical high [7] - Institutional behavior indicates that the compression of the government-backed bond spread is constrained by large banks selling pressure, unstable support from smaller banks, and strong trading activity from funds [7] Group 2: Institutional Behavior - Large banks have net bought approximately 246.5 billion yuan in government bonds and net sold about 139.2 billion yuan in government-backed bonds, creating a cumulative preference gap of -385.8 billion yuan [10] - Smaller banks have net sold about 162.6 billion yuan in government bonds while net buying approximately 34.3 billion yuan in government-backed bonds, indicating a temporary support for the government-backed bond market [10] - Funds have shown a slight net sell of about 34 million yuan in 7-10Y government-backed bonds and a significant net sell of approximately 481 million yuan in 7-10Y government bonds, failing to create sustained allocation to long-term interest rate bonds [14] Group 3: Future Outlook - The ability of the 10Y government-backed bond spread to compress will depend on the supply strength and continuity of support from the government-backed bond market [18] - Historical spread percentiles have decreased significantly, indicating that the spread may enter a "repairable" range, but the 10Y spread remains sensitive to marginal forces [18] - If large banks' selling pressure on government-backed bonds decreases and smaller banks provide more consistent support, the 10Y government-backed bond spread may shift from "dull and repetitive" to a trend of compression [18]

Group 1 - The report indicates that the 10Y National Development Bank (NDB) yield spread is currently under pressure due to large banks selling, unstable support from smaller banks, and strong trading behavior from funds [1][7][10] - Since the beginning of the year (January 4 to March 13), the bond market has shown some recovery, with the 10Y government bond yield decreasing from 1.8427% to 1.8143% (-2.84bp) and the 10Y NDB yield falling from 1.9862% to 1.9646% (-2.16bp), yet the yield spread has widened from 14.35bp to 15.03bp (+0.68bp) [7][10] - The behavior of large banks has been characterized by a preference for buying government bonds while selling policy financial bonds, resulting in a net purchase of approximately 246.5 billion yuan in government bonds and a net sale of about 139.2 billion yuan in policy financial bonds [10][14] Group 2 - The report highlights that the funds have shown a slight net sell of about 34 million yuan in 7-10Y policy financial bonds and a significant net sell of approximately 481 million yuan in 7-10Y government bonds, indicating a lack of sustained allocation to long-term interest rate bonds [14][15] - The report notes that the incremental funds have been concentrated in credit bonds, with net purchases of about 213.2 billion yuan in 3-5Y "other" bonds and approximately 148.5 billion yuan in 1-3Y medium-term notes, reflecting a defensive strategy overall [14][15] - The historical spread data shows that the yield spread has significantly retreated from its peak, indicating that the overall spread may be entering a "repairable" range, although the 10Y spread remains relatively high and sensitive to marginal forces [18][21] Group 3 - In the primary market, the report mentions that the marginal multiples for policy financial bonds have decreased, with the overall multiples and the spread between primary and secondary markets showing differentiation [30][31] - The report indicates that in the secondary market, large banks and smaller banks have shifted to increasing their allocations, while funds and securities companies have predominantly reduced their allocations [41][42] - The report also notes that the trading activity in the current bond market has increased, with significant buying from smaller banks in the long-end and super long-end bonds, while large banks and securities companies have been major sellers [41][42]

Summary of Key Points from Conference Call Industry Overview - The focus is on the bond market, particularly the trading structure of 30-year government bonds and the behavior of financial institutions in this context [1][2][3]. Core Insights and Arguments - **30-Year Government Bonds**: The trading structure is imbalanced, with brokerages holding over 200 billion in short positions. The concentration of bond loans has risen to 48%, nearing the 50% threshold, indicating a significant portion of active bonds are held short [1][3]. - **Yield Resistance Levels**: The yield on 30-year government bonds is approaching a critical resistance level of 2.30%. If this level is breached, it may trigger intervention from stabilizing forces, leading to increased market volatility [1][4]. - **Short-Term Rate Dynamics**: Short-term rates have shown a notable decline, particularly in three-year credit bonds and policy financial bonds, driven by defensive positioning and a preference for carry returns [4][5]. - **Industry Self-Regulation**: The upgrade in industry self-regulation is expected to lower the comprehensive funding costs for banks by 1-2 basis points, with a potential decrease in interbank deposit rates by 10-20 basis points [5]. - **Issuance Trends**: There has been a rebound in net issuance of interbank certificates of deposit by joint-stock banks, indicating liquidity pressure as they seek to bolster their balance sheets [6]. Additional Important Content - **Market Volatility**: The current yield increase is primarily driven by trading structure rather than external factors. The presence of significant short positions means that any upward movement in yields could lead to strong short covering, amplifying market fluctuations [3][4]. - **Future Yield Predictions**: Predictions for key bond products include a stabilization of the 10-year government bond around 1.8%, with the 5-year secondary capital bond expected to remain near 2.08%. The interbank certificate of deposit rates are anticipated to hover around 1.55%, with potential upward pressure as the quarter-end approaches [6]. - **Macro Events to Watch**: Key macroeconomic data releases and central bank communications are critical this week, particularly in light of geopolitical tensions that may influence monetary policy [7][8]. This summary encapsulates the essential insights and trends discussed in the conference call, providing a comprehensive overview of the current state and future outlook of the bond market and related financial instruments.

Group 1 - The article emphasizes the importance of cutting losses and letting profits run, contrasting with the common behavior of traders who tend to cut profits and let losses accumulate [1] Group 2 - The market is currently observing geopolitical situations, with stock markets showing slight fluctuations and bond market rates experiencing a minor increase [5] - The issuance of 300 billion savings bonds was successful, with yields of 1.63% for 3-year bonds and 1.7% for 5-year bonds, attracting significant sales [6] - A report from Goldman Sachs indicates that a small number of vessels are navigating the Strait of Hormuz, with the current traffic being less than one-fifth of pre-conflict levels [8]

Group 1: Report Industry Investment Rating - No investment rating information provided for the industry in the report Group 2: Core Views of the Report - The 2026 Government Work Report emphasizes promoting economic stability and reasonable price recovery as important considerations for monetary policy, which is consistent with the economic work conference in December last year and highlights the importance of promoting a reasonable and moderate increase in consumer prices and a virtuous economic cycle [1] - Since the fourth quarter of 2025, positive factors for price recovery have been accumulating. The year-on-year increase in CPI in December last year reached 0.8%, 1.2 percentage points higher than in August. In January this year, due to factors such as the lunar new year and international oil price changes, the year-on-year increase in CPI declined. The report believes that the expected target of a 2% increase in consumer prices is achievable through policy measures to improve the total supply and demand relationship [1] - Traditionally, bond yields are generally positively correlated with CPI. However, this year's real GDP growth is likely to be lower than last year, with prominent supply-demand imbalances, downward pressure on overall investment, and insufficient consumption growth, which put downward pressure on bond yields. Bond yields follow monetary policy, and the policy rate is more likely to respond to the downward pressure on the economy rather than inflation [2] - Recently, internal and external factors restricting interest rate cuts have significantly eased, and the implementation of policies depends on economic conditions. The average manufacturing PMI in January and February this year was 49.15%, lower than the 1/4 quantile of the 16 months from September 2024 to December 2025. The average values of the non-manufacturing business activity index, construction business activity index, and composite PMI output index in January and February were the lowest since September 2024 [3] - After the expectation of a 7D OMO interest rate cut is formed, the central value of the 10Y Treasury bond yield will decline. The 10Y Treasury bond yield has been oscillating in the range of 1.8% - 1.9% since the end of August 2025. After the interest rate cut expectation is formed (especially after implementation), the operating range of the 10Y Treasury bond yield may decline to 1.7% - 1.8% [3] - The current spread between the 10Y Treasury bond and 7D OMO is less than 40bp, which is still at a relatively low level historically and has limited room for further compression. The next 7D OMO interest rate cut is likely to result in a parallel shift of the short and long ends of the yield curve, with the interest rates of DR001, DR007, 1Y AAA - grade CD, and 10Y Treasury bond all declining by approximately 10bp [4] Group 3: Summary by Related Catalog 1. Price Recovery and Long - Term Bond Yields - The 2026 Government Work Report emphasizes promoting price recovery as an important consideration for monetary policy, and positive factors for price recovery have been accumulating since the fourth quarter of 2025. The expected target of a 2% increase in consumer prices is achievable [1] - There is a conflict between the upward pressure on bond yields from price indicators and the downward pressure from economic growth indicators. Bond yields follow monetary policy, and the policy rate is more likely to respond to the downward pressure on the economy [2] - The implementation of interest rate cut policies depends on economic conditions. After the expectation of a 7D OMO interest rate cut is formed, the central value of the 10Y Treasury bond yield will decline. The next 7D OMO interest rate cut is likely to result in a parallel shift of the short and long ends of the yield curve [3][4]

Group 1: Report Industry Investment Rating - No information provided Group 2: Core Viewpoints of the Report - The 7D OMO rate cut in March and April this year is worth expecting, and the next 7D OMO rate cut is likely to lead to a parallel downward shift in the short - and long - ends of the yield curve. If the central bank cuts the reserve requirement ratio in the next quarter, investors should not be surprised [2][12][13] Group 3: Summary by Relevant Catalogs 1. Enjoy the Decline in Yields - From the end of August 2025 to the present, the 10Y Treasury bond yield has fluctuated between 1.8% - 1.9%. After a long - term narrow - range shock, the market will choose a direction. With the formation of the 7D OMO rate cut expectation, the 10Y Treasury bond yield will shift downward. Recently, the 10Y Treasury bond yield has been slightly lower than 1.80% for three consecutive trading days [1][8] 2. Reasons for the Expected Rate Cut - CD interest rates are affected by both financial institutions and the central bank, and their long - term trend depends more on the central bank's attitude. Since the end of the Central Economic Work Conference in December 2025, the interest rates of 3M, 6M, and 1Y AAA - rated CDs have decreased by 7.3bp, 7.8bp, and 9.5bp respectively compared to the high points in December 2025, indicating that the central bank may increase the counter - cyclical adjustment [2][10] - Recently, the internal and external factors restricting the rate cut have been significantly alleviated. The implementation of the policy mainly depends on the economic situation. The nominal GDP growth rate in the fourth quarter of last year dropped from 4.8% in the third quarter to 4.5%, lower than 5.4% in the first quarter [3][12] 3. Other Notes - The spread between the 10Y Treasury bond and 7D OMO is currently less than 40bp, which is still at a relatively low level in history, with limited room for further compression [3][12] - The MLF balance at the end of February this year reached 7.25 trillion yuan, close to the historical high. When the MLF balance is high, the central bank usually cuts the reserve requirement ratio to release long - term liquidity [3][13]