Caixin News Agency August 13th (Reporter: Liang Kezhi) After the sharp drop on August 12th, the bond market saw a slight recovery today, with large-scale open market operations and a slight easing of interbank repo funding rates.

As of 16:30 Beijing time, the yield of the 10-year treasury bond 240011 active bill fell by 3 basis points to 2.2125%, the yield of the 30-year treasury bond 2400001 active bill fell by 3.5 basis points to 2.405%, and the yield of the 10-year policy bank 240210 active bill fell by 4.5 basis points to 2.255%.

At the same time, the treasury futures rose across the board, with the 30-year main contract rising by 0.62%, the 10-year main contract rising by 0.2%, the 5-year main contract rising by 0.22%, and the 2-year main contract rising by 0.04%.

Regarding the sharp fall in the bond market this time, Zhang Wei, Chief Analyst of Fixed Income at China Merchants Securities, believes that the catalyst for this round of bond market adjustment originated from large-scale bond selling by major banks and the initiation of self-discipline investigations into four rural commercial banks in Jiangsu. This was followed by a tightening funding situation compounded by the rise in certificate of deposit rates driving the bond market adjustment. Finally, the significant downswing in long-term interest rates since the beginning of the year led to institutions accumulating significant unrealized gains in the previous period, and profit-taking intensified this round of bond market adjustment.

Zhongtai Securities released a report on August 13th, stating that the relatively good market for bonds this year has provided a relatively thick safety net. However, investors still need to remain cautious of the recent market volatility. If interest rates continue to rise and the funding situation continues to tighten significantly, there may be increased pressure from financial redemptions and asset sales.

Zhang Wei stated that considering the difficulty of experiencing significant negative feedback from large-scale financial redemptions in this round, the return of stability to the funding position is an important factor in ending this round of adjustment. It is estimated that this comprehensive adjustment will need to wait until early September.

The sharp fall in the bond market has led to a decrease in financial returns, but no significant negative feedback has been seen so far.

According to China Merchants Securities statistics, since August 8, the bond market has experienced a sharp decline. The 10-year government bond yield has risen from 2.14% on August 7 to 2.25% on August 12, with a cumulative increase of 11 basis points. The 30-year government bond yield has risen from 2.34% on August 7 to 2.44% on August 12, with a cumulative increase of 10 basis points.

As a result, the yields of large holders' wealth management products have decreased across the board. Data shows that as of August 11, the average annualized yield of wealth management products over the past 7 days was 2.4%, a decrease of 193 basis points compared to last week, with hybrid class yields turning negative at -7.61%.

On August 13, analyst Zhang Wei of China Merchants Securities released an opinion, stating that the net asset value (NAV) of wealth management products still remains low. As of August 9, the NAV of wealth management products was 2.04%, and the scale of the products has not shrunk. As of August 9, the scale of wealth management was 29.77 trillion, the same as the previous week, and residents and enterprises did not significantly redeem their wealth management holdings.

Combining the bond market adjustment situation in April, Zhang Wei expects that this round will also be difficult to see a substantial negative impact from redemptions.

Zhongtai Securities analyst Xiao Yu released a report on August 12, stating that with the continuous warning of long-term bond risks by the central bank, major banks sold interest rate bonds last week, leading to a certain adjustment in the bond market. Wealth management product yields have decreased significantly, and the market is concerned about widespread negative feedback from wealth management. However, according to data from last week, the scale of wealth management remained stable, and there was no large-scale negative feedback for the time being.

Data from Zhongtai Securities reports that on August 11, the scale of outstanding wealth management products was 29.77 trillion, an increase of 2.2 billion yuan from last week, with fixed income products accounting for 21.19 trillion, a substantial increase of 38.9 billion yuan compared to the previous week.

The few words 'lending account' had a big impact and caused short-term volatility in the bond market.

Regarding when the adjustment will end, Zhang Wei believes that there is still short-term disturbance in the fund's liquidity; the negative feedback from wealth management redemptions in public offerings still needs to be observed; and there is still uncertainty about whether recent regulatory measures to standardize the issuance of bonds by agricultural commercial banks will be intensified. Agricultural commercial banks will be in a wait-and-see mode in the short term. Taking everything into consideration, the bond market is weakly volatile in the short term.

It is worth noting that several institutions believe that the impact of the self-disciplinary investigation of four rural commercial banks involved in this sharp decline will continue for some time.