① There was a massive sale of ultra-long bonds when opening in the morning, which is related to the rumored sell-off of small and medium-sized banks; ② (April 1-5), agricultural and commercial banks drastically increased their interest rate bonds, with a net purchase of 188.9 billion yuan; ③ the impact on bond supply did not determine the direction of interest rates; what determined the direction of interest rates was expectations for the future economy.
Financial Services Association, April 11 (Reporter Liang Kezhi) In early trading today, bond market yields fell across the board, but then rebounded rapidly and slowly declined after noon trading. As of 18 points, the yield on 30-year treasury bonds was 2.507%, and the yield on 10-year treasury bonds was 2.312%, up 0.99% and 0.41%, respectively.
On April 11, a number of institutional sources told the Financial Federation that today's bond market performance is related to market-related rumors. This rumor includes information requiring some small and medium-sized banks to “invest prudently in long-term bonds and not participate in ultra-long bond transactions.”
On April 11, the head of fixed income at a brokerage firm in Shenzhen told the Financial Federation that the central bank recently paid attention to long-term interest rates twice, which had a great direct impact on institutions, particularly the provincial associations and agricultural commercial banks that were keen to buy ultra-long bonds some time ago. Coupled with rumors of restrictions on trading in the past two days, the impact on today's bond market performance is quite direct.
An institutional trader in Shanghai told the Financial Federation that a large number of ultra-long bonds were sold at the opening in the morning, which was related to the rumored sell-off of small and medium-sized banks in the market, but due to abundant market capital, they were soon digested, and yields declined again.
According to the data, treasury bond futures closed mostly flat on April 11. The 30-year main contract fell 0.68%, the 10-year and 5-year main contracts were basically flat, and the 2-year main contract fell slightly by 0.02%.
Institutions continue to buy, and ultra-long bonds are named
According to the April 7 institutional behavior tracking report of Huafu Securities, agricultural and commercial banks still significantly increased their interest rate bonds (April 1-5). Agricultural commercial banks, insurance, funds and financial management were all net purchases, amounting to 188.9 billion yuan, 6 billion yuan, 68.3 billion yuan, and 21 billion yuan respectively. Among them, the net purchasing power of agricultural banks and financial management increased.
Among interest rate bonds, agricultural and commercial banks made net purchases of treasury bonds for all maturities. They mainly purchased 7-10 year treasury bonds and treasury bonds under 1 year, making net purchases of 23.205 billion yuan and 34.475 billion yuan respectively.
On April 3, the announcement of the first quarter regular meeting of the Central Bank's Monetary Policy Committee showed that the committee was concerned about “changes in long-term yields during the economic recovery process.”
Recently, according to relevant sources, the central bank held discussions with three policy banks to discuss the long-term interest rate bond market situation. Judging from the disclosed bond issuance plans, the three policy banks plan to drastically increase the issuance of long-term bonds.
In response, Zhang Wei, head of fixed income at China Merchants Securities, believes that if the supply of long-term bonds of policy banks increases and the supply of long-term government bonds increases, interest rates on long-term bonds may fluctuate. Therefore, the central bank's statement is ahead of schedule, indicating the possibility that interest rates on long-term bonds may change.
On April 10, Zhou Guannan, chief analyst at Huachuang Securities, predicted that in 2024, ultra-long-term government bonds may be issued at 420 billion dollars, on a scale or quarterly basis. Q2-Q4 will be 80 billion, 160 billion, and 160 billion, respectively.
However, Zhou Guannan believes that even if short-term special treasury bonds land, supply shocks dominated by government bond volume, or drive a phased increase in 30-10 year treasury bond yields, after the peak of supply, since the monetary easing window has not yet been closed, it is not ruled out that the fermented trading sentiment will once again drive interest spreads on 30-10 year treasury bonds to shrink.
How long will the bond market stay bullish? Institutions tend to keep the trend unchanged
On April 11, a researcher at a bank in Beijing told the Financial Federation that if the conflict between supply and demand continues, they are worried that this wave of bullish dividends will be overdrawn.
According to data from Guohai and Zheshang Securities, the volume of ultra-long-term credit bonds issued in the first quarter of 2024 reached 178.12 billion yuan, accounting for 4.98% of the total amount of current credit bonds issued, and the share of ultra-long credit bonds issued by central state-owned enterprises increased to 48%; the turnover of ultra-long credit bonds was 125.442 billion yuan, which is close to the total transaction amount for the full year of last year.
Another head of a major brokerage research institute said that at present, the allocation needs and strength of banks and insurance institutions are still very large. Increasing supply is a solution, but it is also necessary to consider the ability of the government and enterprises to withstand the expansion of balance sheets to achieve balance.
However, Zhang Wei of China Merchants Securities analyzed that the impact on bond supply does not determine the direction of interest rates; what determines the direction of interest rates is the expectation of the future economy. Since the real estate industry is still in the bottom zone, the positive economic recovery trend still needs to be consolidated. At this time, monetary policy will also maintain a loose tone, making it difficult to actively tighten capital and guide long-term interest rates upward.
In other words, Zhang Wei believes that the logic for the bond market to continue to be bullish has not changed.
On April 11, an institutional bond trader in Shanghai told the Financial Federation that guidance and optimization of ultra-long bonds can reduce risk concentration, but since market capital is very abundant, demand for short-term bond transactions will increase, and liquidity will also be better. As a result, the entire market will remain dynamic and stable.