Key Information Summary 1. Report Industry Investment Rating No information about the industry investment rating is provided in the given content. 2. Core Viewpoints of the Report - Both domestic and international markets are experiencing a risk - on trend. Overseas, the risk sentiment is positive with the extension of tariff exemptions and agreements, while inflation needs to be observed in the next two months. Domestically, although the GDP growth in the first half of the year was strong, the high - frequency PMI data in July showed a decline in production and domestic and foreign demand. The bond market sentiment was suppressed, and the yield curve was bear - steep. [2] - The concept of "anti - involution" has been repeatedly mentioned at the central level and by official media. Currently, the supply - side focuses on directional deployment and industry self - discipline, and the demand - side includes the continuation of previous consumption policies and new measures such as birth subsidies and large - scale project investments. Compared with the supply - side reform in 2015, there are still uncertainties in the current "anti - involution" policy. [3] - Since July, the 10 - year Treasury bond rate has risen by a maximum of 10BP, improving the odds. Considering the current fundamentals and capital situation, the 10Y Treasury bond above 1.70% still has investment value. Attention should be paid to the continuation of the risk - preference improvement in the equity and commodity markets and the implementation of demand - side policies. [4] 3. Summary by Relevant Catalogs PART1: Overseas and Domestic Risk - on Trends - **Overseas Market** - The risk sentiment is positive, with the extension of tariff exemptions and agreements with the EU and Japan. The US stock market continued to rise, and the US dollar rebounded from a low level, although affected by the issue of the Fed's independence. [7] - In June, the year - on - year inflation of US core commodities rebounded from 0.3% to 0.7%, and the next two months are the inflation observation window. The labor market remained resilient, with the number of initial jobless claims falling for many consecutive weeks and the unemployment rate dropping by 0.1 percentage points in June. [13] - **Domestic Market - Fundamental Aspects** - The GDP growth in the first half of the year was strong, and the proportion of domestic demand components increased. However, high - frequency PMI data showed a decline in production, domestic and foreign demand in July. [15] - **Domestic Market - Bond Market and Institutional Behavior** - Since late April, the capital has been running smoothly, but the bond market sentiment was suppressed by the strong performance of the commodity and equity markets, resulting in a bear - steep yield curve and a decline in the inter - bank leverage ratio. [17] - Different institutions showed different investment behaviors in July. Large banks significantly increased their bond allocation, especially short - term Treasury bonds; rural commercial banks actively bet on duration; funds faced pressure on the short - term liability side, reducing duration and positions; wealth management products continued to have a relatively stable liability side and maintained a high allocation of inter - bank certificates of deposit; insurance companies maintained a certain level of bond - buying in July and are expected to increase their net inflow in August. [24][29][32][37][43] PART2: Understanding the Impact of "Anti - Involution" on the Bond Market - **Background and High - level Deployment of "Anti - Involution"** - Since the concept of "involution - type competition" was first proposed in July 2024, it has been repeatedly mentioned at the central level and by official media. As of June 2025, the year - on - year PPI growth has been negative for 33 consecutive months, reflecting the problem of excessive price - cutting competition among enterprises. After the Sixth Meeting of the Central Financial and Economic Commission on July 1, 2025, more industries have responded. [49] - **Supply - side and Demand - side Measures** - The supply - side focuses on directional deployment and industry self - discipline, with multiple industries such as steel, cement, photovoltaic, and coke issuing self - discipline mechanisms or holding seminars. The demand - side includes the continuation of previous consumption policies and new measures such as birth subsidies and large - scale project investments. [52] - **Comparison with the 2015 Supply - side Reform** - In 2015, after the supply - side reform was proposed, the 10 - year Treasury bond rate bottomed out in January 2016, and there was an adjustment period of about 5 - 6 months, with the 10 - year Treasury bond rate rising by a maximum of about 30BP. Compared with the current "anti - involution" policy, there are differences in terms of quantitative targets, demand - side stimulus intensity, and the central bank's attitude towards the capital. [59] PART3: Bond Market Strategy - **Policy Stance in the July Politburo Meeting** - The Politburo meeting in July showed stronger policy determination. It positively evaluated the economic performance in the first half of the year, and the expression of monetary and fiscal policies was mostly about continuation or emphasis on implementation, with a relatively mild tone. [61] - **Investment Value of the 10 - year Treasury Bond** - Since July, the 10 - year Treasury bond rate has risen by a maximum of 10BP, improving the odds. Considering the current fundamentals and capital situation, the 10Y Treasury bond above 1.70% still has investment value. Attention should be paid to the continuation of the risk - preference improvement in the equity and commodity markets and the implementation of demand - side policies. [63]