Core Viewpoint - The bond market sentiment has improved due to weak performance in risk assets and central bank support for liquidity, leading to a stronger overall performance in government bond futures [1] Group 1: Market Sentiment - There is an increase in the willingness of institutions to "hold bonds over the holiday" due to a backdrop of easing risk aversion, calendar effects, and stable liquidity [1] - The bond market is expected to maintain a strong trend leading up to the Spring Festival holiday [1] Group 2: Future Outlook - Post-holiday, there is a high probability of divergence in bond market trends and an increase in volatility [1] - Key focus areas include changes in the macroeconomic environment and movements in risk assets [1]

Core Viewpoint - The seminar emphasized that development is the foundation for solving all problems in China, and economic growth is essential for high-quality development, necessitating a balance between qualitative improvement and quantitative growth [1] Group 1: Economic Policy Recommendations - Experts suggested that fiscal policy should play a larger role this year, with a deficit rate higher than or at least not lower than the previous year, and an increase in the scale of national debt issuance to expand total expenditure [1] - A recommendation was made for a significant overall interest rate cut of at least 50 basis points throughout the year to stimulate investment and consumption, alongside better utilization of reserve requirement ratio (RRR) cuts [1] - There is a call for enhanced coordination between fiscal and monetary policies to effectively leverage new financial policy tools and appropriately expand their scale to achieve a leverage effect on investment [1] Group 2: Real Estate and Credit Market Stability - To stabilize investment and boost consumption, it is crucial to restore the foundational conditions for effective credit issuance, which includes increasing efforts to stabilize the real estate market [1]

Core Viewpoint - The bond market is signaling a potential rise in inflation, which may influence the Federal Reserve's decisions, particularly following President Trump's nomination of Kevin Warsh as the next Fed chair [1][3]. Bond Market Insights - Shorter-duration U.S. Treasury bond yields have decreased, while longer-dated yields have increased, resulting in a bear steepening yield curve [2]. Investment Opportunities 1. Berkshire Hathaway - Berkshire Hathaway is well-positioned to handle increased market volatility under Warsh's leadership, with a record cash position of approximately $382 billion, primarily in short-term U.S. Treasuries [5][6]. - The company can continue to earn attractive yields on its Treasury holdings if short-term rates remain steady while long-term rates rise [6]. - Berkshire's insurance businesses could benefit from higher long-term yields, as they invest collected premiums in bonds [9]. 2. Vertex Pharmaceuticals - Vertex Pharmaceuticals is an exception to the negative impact of rising long-term bond yields on growth stocks, as it generates significant cash flow and does not require borrowing for operations [10]. - The company had a cash stockpile of $12 billion as of September 30, 2025, providing financial stability [10]. - Vertex's unique position in the cystic fibrosis market and potential drug approvals could drive stock performance, independent of broader market conditions [12][13]. 3. Walmart - Walmart is recognized as a safe haven during market volatility, benefiting from increased consumer focus on spending due to rising long-term Treasury yields [14]. - The company could see increased foot traffic as consumers seek lower prices amid inflationary pressures, despite potential cost increases [16].

Core Viewpoint - The recent sharp decline in gold prices, particularly affecting the SPDR Gold Trust (GLD), has raised questions about the role of gold in retirement portfolios, especially after a significant rally earlier in the year [1]. Group 1: Gold Market Dynamics - SPDR Gold Trust (GLD) reached record prices in late January before experiencing a rapid decline triggered by President Trump's nomination of Kevin Warsh as Federal Reserve chair, which was interpreted as a signal for a more hawkish monetary policy [1]. - The selloff was exacerbated by speculators heavily investing in leveraged gold futures, leading to forced liquidations when prices fell, further accelerating the decline [1]. - The Chicago Mercantile Exchange's increase in margin requirements over the weekend contributed to additional selling pressure, transforming a policy shift into a leverage-driven rout [1]. Group 2: Investment Considerations for Retirees - Gold does not generate income, dividends, or cash flow, which poses a challenge for retirees who typically seek stable income sources; it relies solely on price appreciation [1]. - Current Treasury bond yields stand at 4.24%, offering predictable cash flow, making them more attractive compared to non-yielding gold for conservative investors [1]. - While a modest allocation of 5% to 10% in gold can provide diversification against risks like currency crises, retirees needing income may view GLD more as a hedge than a foundational investment [1].

Core Viewpoint - The bond market is expected to maintain a volatile trend ahead of the holiday, with the 10-year government bond yield approaching the critical level of 1.8%, leading to increased profit-taking pressure [1] Market Performance - Government bond futures closed mostly higher, with the 30-year main contract down 0.10% at 111.96, the 10-year main contract up 0.02% at 108.26, the 5-year main contract up 0.06% at 105.905, and the 2-year main contract up 0.03% at 102.414 [2] - The interbank major interest rate bonds showed narrow fluctuations, with government bonds performing slightly better than policy bank bonds [2] Overseas Bond Market - In the Asian market, Japanese bond yields rose across the board, with the 10-year yield increasing by 2.8 basis points to 2.263% [3] - In North America, U.S. Treasury yields collectively rose, with the 2-year yield up 4.71 basis points to 3.572% and the 10-year yield up 4.39 basis points to 4.279% [3] Primary Market - The Ministry of Finance's weighted average winning yields for 28-day and 182-day government bonds were 1.0959% and 1.2755%, respectively, with bid-to-cover ratios of 3.49 and 2.72 [4] - The China Development Bank's three-term financial bonds had winning yields below the market valuation, with 2-year, 5-year, and 10-year yields at 1.4944%, 1.7258%, and 1.9501%, respectively [4] Funding Conditions - The central bank conducted a 7-day reverse repurchase operation of 105.5 billion yuan at a rate of 1.40%, with a net withdrawal of 296.5 billion yuan for the day [5] - Short-term Shibor rates mostly increased, with the overnight rate down 4.8 basis points to 1.317% and the 7-day rate up 0.3 basis points to 1.488% [5] Institutional Insights - Huatai Securities noted that offshore bonds issued in the Shanghai Free Trade Zone are primarily aimed at foreign investors, with no new non-financial corporate bonds issued as of January 2026 [6] - CITIC Securities expects that the ongoing promotion of high-dividend insurance products and the influx of funds from bank deposits will continue to support premium income in 2026 [7]

Core Viewpoint - The developments have not altered the calculations regarding interest rates, but this situation may change in the future [1] Group 1 - The current economic developments are not influencing the existing interest rate calculations [1]

Group 1 - The Government Debt Management offered 10% of the nominal value sold in the auction on January 23 at the price of accepted bids [1] Group 2 - The additional issuance of RIKB 28 1115 is 260,000,000 [2] - The total outstanding nominal value for RIKB 28 1115 is 129,667,301,519 [2] - The total outstanding nominal value for RIKS 37 0115 is 72,262,600,000 [2]

Summary of Key Points from the Conference Call Industry Overview - **Focus**: Global macroeconomic outlook, interest rates, commodities, currencies, and emerging markets Core Insights US Rates - Yields are expected to remain stable in the short term, with a forecast for 2-year yields around 3.60% and 10-year yields at 4.25% by 1H26, and 3.85% and 4.35% by YE26 respectively [10][33] - The Federal Reserve is anticipated to implement two rate cuts in 1H26, with a target range for the funds rate of 3.25-3.5% by 1Q26 [10][44] - The unemployment rate is projected to peak at 4.5% in 1Q26 before easing to 4.3% by 4Q26 [10] International Rates - Growth in developed markets (DM) is expected to remain at or above potential, with inflation gradually declining but remaining above target in some areas [4] - Central banks in DM are likely to pause or conclude easing cycles in 1H26, with specific forecasts for 10-year yields: 4.35% for UST, 2.75% for Bunds, and 4.75% for gilts by 4Q26 [4][36] Commodities - The oil market is expected to stabilize due to rising demand and production cuts, with a bullish outlook for gold projected to reach $5,000/oz [6] - Agricultural stock-to-use ratios are expected to remain low, indicating potential supply constraints [6] Currencies - A bearish bias on the USD is anticipated, driven by positive growth in the rest of the world (RoW) and US twin deficits [52] - Preference for high beta/yielding currencies, with key themes including global procyclicality and synchronized central bank pauses [53] Emerging Markets - Emerging markets (EM) are expected to experience lower macro volatility, supporting local markets in 2026 [6] - Growth and inflation in EM are projected to remain stable, with limited central bank easing [6] Additional Important Insights - The Treasury is well-funded through FY25, but a significant funding gap is expected to emerge in FY26, with coupon size increases anticipated starting in November 2026 [17][20] - The demand for Treasuries is shifting towards more price-sensitive investors, which may help keep long-term yields anchored at higher levels [29] - The passage of the OBBBA raised the debt limit by $5 trillion, expected to last until the second half of 2027 [23] - Seasonal patterns suggest a gradual decrease in bill sizes into December, followed by a rebound as corporate taxes lift the Treasury General Account (TGA) [21][23] Conclusion - The macroeconomic outlook indicates a cautious but stable environment for interest rates, commodities, and currencies, with specific attention to the evolving dynamics in emerging markets and the implications of fiscal policies on Treasury demand and yields.

Core Viewpoint - The diplomatic and financial repercussions of President Trump's actions regarding NATO allies and Greenland have led to a decline in the dollar and a reassessment of U.S. asset exposure by European investors [1][2]. Group 1: U.S. Debt and European Investment - European investors hold approximately $8 trillion in U.S. stocks and bonds, with $3.6 trillion specifically in Treasury debt [2]. - Europe accounts for about one-third of U.S. government bonds held overseas, nearly doubling its holdings since 2019, which represents roughly 10% of the overall Treasury market [3]. - The significant amount of U.S. Treasuries held by Europe makes it unlikely for them to sell off these assets suddenly, as it would disrupt financial markets [3]. Group 2: Financial Implications of Selling Treasuries - If Europe were to sell its Treasuries, bond prices would drop sharply, causing negative spillover effects in the eurozone, including increased borrowing costs [7]. - The euro would likely appreciate significantly, creating challenges for eurozone exports and overall economic growth [7]. - European banks' reliance on dollar funding, which is supported by the Federal Reserve, complicates the situation further, as any retaliatory measures could have reciprocal financial costs [5].

Disinflationary Forces - Concerns over accelerating inflation in 2025 were unfounded as wage and price increases slowed due to eight influential factors suggesting disinflation will persist into 2026 [4] - Labor markets weakened broadly despite claims of resilience, with the unemployment rate rising to 4.4% by late 2025 from 4.1% at the end of 2024 [8] - Real disposable income growth slowed sharply to 1.4% in the first three quarters of 2025, down from 2.5% in 2024, indicating eroding consumer spending power [11] - Monetary conditions were more restrictive than recognized, with commercial bank loans remaining virtually unchanged in nominal terms despite Federal Reserve rate cuts [13] - The U.S. budget deficit decreased to $1.7 trillion in 2025 from $2.0 trillion the previous year, with tariff revenues contributing significantly to this reduction [21] - Idle manufacturing plants outside the AI sector increased, and major economies like China, Japan, Germany, and the UK faced stagnation [26] - A study indicated that tariff hikes initially boost inflation but have a longer-term effect of suppressing demand and contributing to disinflation [27][28] - The shift towards AI is considered disinflationary, potentially leading to excess capacity and compressing margins, which could further restrain income growth [29][31] Labor Market Dynamics - The broader unemployment rate increased from 7.5% in January to 8.4% in December 2025, indicating a serious deterioration in the labor market [8] - The ratio of part-time to full-time jobs surged, reflecting a lack of full-time employment opportunities [8] - Payroll employment growth was significantly overstated, with the Bureau of Labor Statistics revising job gains down to 1.524 million from an initial 1.923 million for the year [9] Consumer Spending and Financial Health - Real disposable personal income remained unchanged in Q3 2025, a concerning sign for a supposedly robust economy [11] - The personal saving rate dropped to 4.2% in Q3 2025, financing the increase in real personal consumption expenditures [11] - Consumers entered 2026 with weak financial health, relying on large tax refunds to repair their balance sheets [12] Monetary Conditions and Credit Availability - Loan rates for lower-risk consumers declined but remained high, with delinquencies and bankruptcies increasing, limiting credit availability [14] - Real world dollar liquidity fell by 8.3% in 2025, marking a fourth consecutive year of decline [20] Economic Indicators and Future Outlook - The divergence between GDP and GDI suggests a potential structural problem in income and expenditure flows [10] - The Fisher equation indicates that ongoing disinflationary forces may lead to a decline in long-term Treasury bond yields [32]