① Today, both futures and cash securities strengthened, and short-term treasury bonds declined sharply. The central bank ended four consecutive working days of net returns and significant net investment. ② In the short term, long-term bond yields will continue to fluctuate due to central bank regulation, and the fluctuation range of 10-year treasury bond yields will be between 2.1% and 2.3%.
Financial Services Association, August 23 (Reporter Cao Yunyi) Treasury bond futures continued yesterday's market. By the close, the 30-year main contract had risen 0.15%, the 10-year main contract had risen 0.09%, the 5-year main contract had risen 0.11%, and the 2-year main contract had risen 0.09%.
The industry pointed out that the central bank is alerting financial institutions to medium- to long-term treasury debt risks, macroeconomic data is stable overall, monetary policy is stable overall, and more macroeconomic support policies are gradually being implemented. Currently, treasury bond interest rates are at the lower end of the central bank's reasonable range, and there is limited room for treasury bond futures to rise. A number of institutions pointed out that the short-term central bank is firm in its attitude towards stabilizing long-term interest rates, and the fluctuation range of 10-year treasury bond yields will fluctuate between 2.1% and 2.3% for some time to come.
The trading volume of the bond market showed that it was cool, and the market remained cautious and wait-and-see
From a financial perspective, the central bank ended four consecutive working days of net returns. Today, taking care of the capital side, the 7-day reverse repurchase made a significant net investment of 241.5 billion. Today, there are market rumors that MLF interest rates will drop next week, futures and cash will both strengthen, short-term treasury bonds will decline sharply, and 2-year interest rates will drop 4 bps. The 10-year and 30-year active securities trading sentiment is still weak, with daily fluctuations of less than 1bp.
A recent research report by Societe Generale Securities pointed out that under the long-term logic, the underlying logic of this round of debt bulls is that credit growth has changed from supply constraints to demand constraints, and the decline in broad-spectrum interest rates has led to a downward trend in the yield curve. However, in August/October, we need to pay attention to the potential disturbances that “short logic” such as broad finance, short-term interest rates, and exchange rates may cause to the bond market.
“The ultimate cause of these disturbances is capital. The core variable that will influence the trend of the bond market for some time to come will also be capital. At a stage where fluctuations in the bond market are likely to increase, it is recommended to respond by “rising and reducing positions, falling and increasing positions.” Societe Generale Securities Research Report said.
Regarding the financial trend at the end of the month, Wang Qing, chief macro analyst at Dongfang Jincheng, told the Finance Association reporter earlier that considering that the central bank already operated an additional 200 billion yuan MLF on July 25, and that interest rates on interbank deposits were relatively low, it is expected that the MLF operation scale on the 26th will be less than the 401 billion dollar maturity scale in August. Based on the above, it is expected that DR007 will rise slightly next week, and market capital will stabilize and tighten, but the volatility of capital interest rates at the end of the month may continue to be low at the end of July
Both the volume and price of the bond market were low this week, but after Xu Zhong, Deputy Secretary General of the Association of Dealers, made a statement, the bond market rebounded, but the volume of cash transactions was still lackluster. Xu Zhong said that after being alerted to risk by the central bank, some financial institutions went from one extreme to the other and suspended “one-size-fits-all” treasury bond transactions. This is not only a reflection of their weak risk management capabilities, but also a misinterpretation of the central bank's intentions.
“There are three misunderstandings about the current bond market, which need to be clarified. First, I think the factors affecting interest rates on short-term and ultra-long-term treasury bonds are the same. Second, I think the central bank recently warned of interest rate risks on long-term treasury bonds, but this year it cut interest rates. The two actions are in conflict. Third, I think the central bank should control and determine the level of interest rates in the treasury bond market.” Xu Zhong pointed out.
The central bank stabilizes long-term interest rates and is firm, and 10-year treasury bonds may fluctuate between 2.1%-2.3%
Currently, the central bank has a firm attitude towards the long term, and the long and short term trends are divided. The Huatai Securities Research Report points out that the short- and long-term treasury bond yield curves are diverging. Some slopes of the treasury bond yield curve within a 10-year period are at a reasonable level, but the yield curve for treasury bonds over 10 years is flatter.
“The central bank's attitude towards stabilizing long-term interest rates is quite firm in the short term. Currently, under the double pressure of the RMB exchange rate and driving the economy, maintaining a reasonable interest rate corridor and maintaining an upward sloping yield curve is still the central bank's policy goal. At the same time, in the context of increasing probability of US dollar interest rate cuts, the room for domestic interest rate cuts is also gradually increasing, and stable long-term bond interest rates will increase the central bank's policy space to cut interest rates.” Dongxing Foundation thinks so.
In line with the monetary authorities' statement, Huatai's fixed income believes that the upward slope of the yield curve may have the following considerations. The first is to guide the market to form “long-term economic improvement” expectations; second, to provide positive incentives for economic agents to save and invest; third, to maintain the global competitiveness of RMB assets; and fourth, to maintain the level of net interest spreads and continuous operation of banks.
Dongfang Jincheng Research Report pointed out that in the short term, long-term bond yields will continue to fluctuate due to central bank regulation. Financial data for July continued to decline. Coupled with the July macro data showing that the current economy is characterized by “strong supply and weak demand”, it is still generally friendly to the bond market. From a medium- to long-term perspective, the overall trend in the bond market has not been fundamentally reversed. The adjustment is viewed as an opportunity to increase positions. Combined assets are still scarce, and the bond market still has strong buying support. The 10-year treasury yield is expected to fluctuate between 2.1% and 2.3% over the next period.
Jiang Yishan, a fixed income analyst at Western Securities, also believes that the strengthening of central bank supervision is aimed at blocking risk accumulation in the bond market and regulating the interest rate curve structure, and is not intended to cause a sharp correction in interest rates. In the short term, under the influence of alternating factors, 10-year treasury bonds may continue to fluctuate within the 2.1%-2.3% range. As the subsequent period of broad monetary policy such as interest rate cuts approaches, the room for declining interest rates may open up again. September will be a critical time point.
