Report Investment Rating - No information provided on the industry investment rating Core View - Due to the escalation of tariff games and heightened expectations of monetary easing, as well as the influence of risk aversion, the bond market has risen significantly. Short - term risk aversion still favors the bond market, and the Treasury bond futures market may be strong. However, as bond yields approach the previous low of the year and the downward trend of capital interest rates has stalled, it may restrict the decline of long - term bond yields. Attention should be paid to the central bank's capital injection and subsequent pro - consumption and loose fiscal policies, which may bring fluctuations to the bond market [1][6][13] Summary by Directory 1. Tariff Game Escalation, Rising Expectations of Monetary Easing - The US announced a "reciprocal tariff" plan, increasing tariffs on China by 34%, with cumulative tariffs potentially exceeding 60%. China imposed a 34% tariff on all US imports in response. The tariff game and trade friction may enter a deeper stage [1] - In the previous round of trade frictions in 2018, China's exports to the US declined rapidly. This time, with higher tariff increases, short - term net exports are likely to fall. In Q1 2025, the contribution rate of net exports to China's GDP reached 45.8%. Under the pressure of external demand, the market's expectation of looser monetary policy has increased. Short - term reserve requirement ratio cuts may be relatively mature, while interest rate cuts still need fundamental signals [2] 2. Risk Aversion Drives the Stock - Bond Seesaw to Favor the Bond Market - The current trade game has entered a deeper stage, and there is great uncertainty about the actual implementation of tariffs, negotiation conditions, and time, which may suppress risk appetite in the short term. The stock market declined significantly today, which is favorable for the bond market from the perspective of the stock - bond seesaw. In the medium term, domestic policies are sufficient, and the domestic economy has resilience, but the short - term decline in global risk appetite will continue to support the bond market [6] 3. Capital Interest Rates Have Not Declined Further, Need to Pay Attention to the Impact of Subsequent Growth - Stabilizing Policies on the Bond Market Rhythm - Since early April, capital interest rates and certificate of deposit rates have declined, which has boosted the bond market. However, the decline of capital interest rates has stalled. On April 7, the central bank conducted a net withdrawal of 301.7 billion yuan in the open market, and the 7 - day capital interest rate of depository institutions was around 1.75%, and the non - bank capital interest rate was around 1.8%, not lower than before the Tomb - Sweeping Festival [7] - As of April 7, the yield of the 10 - year Treasury bond has dropped to around 1.64%, only 4BP away from the January low. Currently, the decline in bond yields is mainly due to risk aversion and easing expectations. Considering the short - term pressure of RMB depreciation, it is uncertain whether capital interest rates can decline further. As bond yields approach the previous low, a 35 - 40BP interest rate cut is gradually being priced in, but the policy rhythm is still uncertain. Fiscal policies are likely to be strengthened in Q2, and subsequent capital interest rate trends and growth - stabilizing policies will determine the bond market rhythm [8] 4. Outlook for Treasury Bond Futures - Affected by expectations of monetary easing, risk aversion, and the stock - bond seesaw effect, Treasury bond futures opened higher and closed up today. Short - term risk aversion still favors the bond market, but the lack of further decline in capital interest rates may restrict the decline of long - term bond yields. Attention should be paid to the central bank's capital injection and bank - to - bank capital. Subsequent pro - consumption and loose fiscal policies may bring fluctuations to the bond market. It is recommended that investors hold long positions in the short term and stop profits in a timely manner if capital interest rates rise marginally [13]