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The bond market is experiencing a "super week," with the 30-year Treasury Bond ETF rising more than 20% this year, and institutions state that volatility may continue after the New Year.
① The bond market experienced a "super week" of policy and trade; ② The 30-year Treasury Bond ETF saw an increase of over 3% in a single week, with an annual ROI of 20%; ③ Institutions do not have strong profit-taking motivation in the short term, and volatility may occur after the New Year.
The interest rates of the same industry certificates of deposit are rapidly declining, and under "moderately loose" conditions, there is hope to drop to 1.30%.
1. After the improvement in MMF transmission efficiency, the CD interest rate and the 7-day OMO rate will integrate within the next year. 2. Due to the faster decline of long-term bonds, the spread between the 10Y government bond and the 1Y CD has been compressing, and is currently at 13BP.
Bonds are referred to as the "God of War" in the market, with the 30-year government bond yield breaking "2" during trading, accelerating at the end of the year.
① Although the Fund made several profit-taking operations on government bonds earlier this week, there is still a net Buy of long-term government bonds overall, and Insurance Institutions also joined in the rush to buy bonds. ② The extent of monetary easing determines the upward potential of the bond market; as long as interest rate cuts are on the way, the bond market can remain optimistic. There may be a reserve requirement ratio cut before the end of the year.
The bond market is celebrating! The 10-year government bond yield is approaching 1.81%, hitting a new low. What does this signal?
Will the "debt bull" market continue?
Shanghai Securities Journal: Do not overlook the risks behind the surge in the bond market. "OMO rate + 45 basis points" has become the "new anchor point" for government bonds.
The Shanghai Securities Journal article reminds that the market has fully anticipated the bond market trends. If future policy implementation deviates from expectations, there may be a significant potential for market adjustments. Another article from Shanghai Securities Journal cites analysis that, referring to the bond market pricing habits since July, the 10-year government bond yield is generally determined using an OMO rate plus an additional 40 to 50 basis points as a phased interest rate lower limit. In the future, it can be roughly considered that 'OMO rate + 45 basis points' will serve as the new pricing 'anchor' for the bond market.
How long can the surge in the bond market continue?
China Merchants believes that the shift in monetary policy to a "moderately loose" tone suggests that rate cuts are likely next year, opening up space for short-term interest rates to decline. Soochow states that there is a lag at the turning point for stocks and bonds, and before transitioning to a "bull market for stocks and a bear market for bonds," there will be a period of "dual bull markets" for both, expected to arrive next year, with the yield on 10-year government bonds possibly falling to 1.5%.