[Introduction] The 10-year government bond yield hit a new low, what’s the future? Many institutions are studying and judging
China Fund News reporter Maureen
On the first trading day of December, the 10-year government bond yield broke the 2% mark in early trading, setting a new low since April 2002.
The decline in Treasury bond yields means that bond prices rise, and Cffex 10-year Treasury bond futures hit a record high.
Wanjia Fund, Cinda Securities and many other institutions believe that the two self-regulatory initiatives released by the market interest rate pricing self-regulatory mechanism last Friday have become the catalyst for the "bond market bull", and at the same time, the expectation of interest rate cuts and reserve requirement ratios has become a grab for institutions. An important driver of the New Year's Eve market.
Dai Kang, managing director of GF Securities Development Research Center, believes that the experience of the debt cycle suggests that long-term and short-term interest rates have entered a downward channel, and interest rate bonds will usher in a long bull. From a strategic level, the "barbell strategy" is the best response to global asset allocation under anti-fragility. China's interest rate bonds are an important component of deterministic assets, maintaining the trend judgment of the new paradigm bond bull market.
Is the bond market taking advantage of the “New Year’s Eve market”?
htmlWhy do the 010-year Treasury bond yields continue to fall? Vanguard Fund believes that the main short-term catalyst is the two self-regulatory initiatives released by the market interest rate pricing self-regulatory mechanism last Friday. Both self-regulatory initiatives will take effect on December 1. The two self-discipline initiatives will help drive down interest rates on interbank demand deposits and corporate deposits, which will help alleviate pressure on bank interest margins and reduce financing costs. In response, interest rates on certificates of deposit and overall bond market interest rates both responded positively, and in particular, interest rates on certificates of deposit showed a significant decline.The layout of the New Year’s Eve market is also an important driving force for the recent decline in interest rates. Vanguard Fund further pointed out that in the past five years, bond yields in December have declined. In view of historical laws and the asset shortage in the market, market investors tend to actively go long.
Li Yishuang, chief analyst of fixed income at Cinda Securities , believes that the reduction in interbank demand deposit interest rates is an important factor driving the current market strength. This initiative requires that interbank time deposits can be withdrawn in advance if agreed upon, and the interest rate on early withdrawal should in principle not be higher than the interest rate on excess reserve deposits. This may cause commodity funds and financial management companies to identify relevant deposits as liquidity-restricted assets and face upper limit constraints ranging from 5% to 20%. Considering their current high allocation ratio of cash assets, this measure may significantly increase their demand for bond assets.
Li Yishuang also mentioned that on the one hand, the current certificate of deposit interest rate may have fully priced in the reduction of interbank demand deposit interest rates, and the space for further decline in the short term is relatively limited; on the other hand, the possibility of further reductions in policy interest rates in the first quarter of 2025 It also exists that there is a possibility of front-running in the bond market.
How will the bond market go in the future?
html The 10-year government bond yield has hit a 22-year low. What’s the future?CICC Fixed Income Research Report pointed out that in terms of the bond market during this year and next year, under the background of economic structural transformation, mild stimulus from fiscal policy, and the support of loose monetary policy, the bond market interest rate center may move further downward. By the end of next year, 10 years The yield on future government bonds may fall to 1.7%~1.9%, and the bond bull market may continue.
Guolian Investment Research believes that in terms of liquidity in this round, the central bank's level of financial protection has exceeded market expectations, which is very beneficial to the bond market. Judging from future trends, there is still room for decline in government bond yields.
Wanjia Fund believes that from a financial perspective, with the large fiscal expenditure in December, a RRR cut is expected, and during the New Year period, the central bank will obviously protect the funding aspect as usual, and the loose liquidity environment will provide better conditions for the bond market. A good foundation; from the perspective of supply and demand, the peak supply of government bonds has passed during the year, and the end of the year and the beginning of the year are the peak seasons for allocation. The current asset shortage pattern has not fundamentally changed, and investors’ allocation needs are still in the process of being released. It is expected to support the bond market.
Zheshang Securities pointed out that the bond market conditions driven by the game between strong policy expectations and weak economic reality this round are relatively similar to those in 2023. The New Year's Eve market may start early, and it is expected that the yields on government bonds of all maturities will move into a downward range in the future.
CITIC Construction Investment is firmly bullish on the bond market. They believe that there has not yet been an inflection point change in the sales of third- and fourth-tier real estate, and the bond bull market will continue. Although the ten-year Treasury bond interest rate has reached a historical low (2.03%), we still firmly believe that the market will witness a historic bull market.
However, some institutions expressed caution about the bond market. Li Yishuang believes that the direction of the bond bull market has not changed and investors can still maintain a bullish mindset. However, in the context of important meetings that have not yet taken place, relevant information may cause disturbances to the bond market. It is not ruled out that the subsequent increase in demand for profit taking may cause interest rates to rebound again. There is also a certain degree of uncertainty in the 10-year government bond yield.
Tianfeng Securities analysis believes that due to the rush of institutions, the 10-year government bond yield has reached a new closing price low. In December, the Central Economic Work Conference had a greater impact on the bond market. It is recommended to wait for the announcement of the Central Economic Work Conference to be implemented before making any judgment.
Page production: Captain
Editor in charge: Zhao Xinliang
-
-
-
-
-
-
-
-
-
-