The Penghua CSI 0-4 Year Local Government Bond ETF (159816.SZ) rose by 7 basis points, and local bonds may be entering a participation window.

Gelonghui, March 31 | Today, bond ETFs generally showed positive performance, with the Penghua CSI 0-4 Year Local Government Bond ETF (159816.SZ) rising by 7 basis points. Trading activity was active, with a transaction amount of 0.45 billion yuan and a Turnover Ratio of 24.58%. The main reason for the continuous adjustment of local bonds in the early stages is the ongoing tightening of liquidity since the beginning of the year, causing significant funding pressure on the liabilities of large banks. The bond market has been in a continuous adjustment phase, and sentiment has been relatively weak. Recently, there have been changes in the above reasons: ① The issuance of government bonds is expected to continue to increase, with the Ministry of Finance set to issue special treasury bonds to supplement the capital of large banks, which will relieve the pressure on bank liabilities, reduce the pressure on asset expansion, ease the liability drought, and with increased supply and demand, the weakened supply of government bonds is expected to have a neutral impact on the bond market. ② After the end of the quarter, the pressure on banks from assessments will ease, and the behavior of banks selling bonds to realize floating profits will also decrease. ③ Considering the return of financial management funds in April, the demand for bond allocations in financial management will also rise, which is expected to be beneficial for the bond market. The latest Research Reports from Minsheng Securities indicate that local bonds may welcome a participation window. Currently, the secondary yield spreads of most local bonds have adjusted to high levels, and the bearish factors in the bond market have also begun to gradually diminish in the short term. Subsequently, as the concentrated issuance of replacement bonds approaches its end, the historical percentile levels of medium to long-term and ultra-long-term local bonds have risen to relatively high levels, which may warrant consideration for participation. Industry insiders believe that the central bank clearly stated in the first-quarter regular meeting, 'From a macro-prudential perspective, observe and assess the operating conditions of the bond market.' This indicates that the central bank does not want interest rates to rise too quickly, but also needs to prevent rates from being too low, thereby signaling a volatile market. Short-term opportunities under improved liquidity at the beginning of the month can be focused on; local bonds, due to higher spread protection, have certain defensive properties in a volatile market, and compared to some credit bonds, they offer more coupon value, thus making them worth considering for allocation. The latest scale of the Penghua CSI 0-4 Year Local Government Bond ETF (159816) is 1.834 billion, with an average daily transaction amount of over 0.8 billion yuan since the beginning of the year, mainly investing in short-term local bonds, which offer low volatility and stable earning opportunities, suitable for short-term fund management and investors with low-risk preferences.