Government bond ETF
- 1047.383
- +0.129+0.01%
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A-shares and Hong Kong stocks rose, the GEM increased by 0.59%, flying Autos surged, and government bond Futures collectively rose.
The concept of flying cars has seen a surge, with Wolong Electric Group hitting the limit up, followed by Citic Offshore Helicopter, Zhejiang Jindun Fans, Zhejiang Wanfeng Auto Wheel, Shangluo Electronics, and Hebei Jianxin Chemical also rising. On the news front, the General Office of the CPC Central Committee and the State Council issued "Opinions on Accelerating the Construction of a Unified and Open Transportation Market," aiming to deepen the reform of low-altitude airspace management and develop General Aviation and the low-altitude economy.
What does the Federal Reserve's "Skip" mean for the market?
Citi Research found that during the period when the Federal Reserve pauses interest rate cuts, the U.S. stock market usually performs well, but the sustainability of the rise depends on whether economic weakness leads to a restart of policy easing; U.S. Treasury rates usually rise at the pause or end of the cycle; for the dollar, if the interest rate cuts are only paused, the dollar performs laterally, if it is the last interest rate cut, the dollar will rise; after the pause, regardless of whether the easing cycle continues, Gold prices usually rise.
A-shares and Hong Kong stocks are rising, interbank bond yields are generally declining, and the yield on 10-year government bonds has fallen to 1.6645%.
The yield of the 1-year government bond 200013 decreased by 7.5 basis points to 0.94%, the yield of the 10-year government bond 240011 decreased by 3.05 basis points to 1.6645%, and the yield of the 30-year government bond 2400006 decreased by 2.75 basis points to 1.92%.
In October, China's holdings of US Treasury bonds hit their lowest level in over 15 years! Is the trend of reducing US Treasury bonds beginning to spread Global?
① On Thursday local time, the USA Treasury released the International Capital Flow Report (TIC) for October 2024; ② The report showed that the amount of US Treasury bonds held by foreign investors ended five consecutive months of growth in October; ③ Led by Japan and China, as many as seven of the top ten "creditors" of the USA chose to reduce their Shareholding that month. Meanwhile, China's US Treasury Hold Positions further hit a new low since 2009.
The central bank's discussions with some "aggressive trading" Institutions have shaken the market; who are the Block Orders in this round of bond bull market? State-owned large banks have received the most "attention".
① The central bank's morning consultations mainly involved Institutions based in Beijing, with very few Institutions from other cities attending the meeting, including cities like Shanghai where asset management Institutions are concentrated. ② In the past two weeks, the Block Buy Institutions for 10-year government bonds have shifted from Fund to Banks. ③ As incremental policies come into effect, the likelihood of economic stabilization increases, necessitating a reduction in expectations for the bond market in 2025.
Is the market too conservative? Bond traders expect the Fed to cut rates four times in 2025.
In terms of interest rate Options, some traders bet that the market's view is too hawkish, and the Federal Reserve will be closer to its September forecast: four rate cuts in 2025, each by 25 basis points, which would bring the implied federal funds target rate down to 3.375%. Some analysts believe that if Powell adopts a hawkish tone during the press conference, the rise in Bonds yields may be disrupted.
After breaking three barriers, the 10-year government bond hovers around the 1.7% integer mark, and multiple Institutions have begun to issue "warnings": the downward space is limited.
① On one hand, previous Trades have fully realized expectations such as interest rate cuts, and on the other hand, the market mostly anticipates that 1.7% is the latest intervention threshold by the regulators. ② At the end of the year, with the recovery of the economic fundamentals, some Institutions have changed their expectations for a strong ramp-up of stimulus policies in the short term. ③ A further significant decline in interest rates may require the new expectations for a round of MMF easing after the interest rate cuts are implemented.
FOMC Likely to Cut Rates by 25bps
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 Nasdaq fell to 0.02 million points, Adobe plummeted more than 13%, the China concept Index rose against the trend, and Bitcoin dropped below 0.1 million dollars.
In November, USA PPI inflation exceeded expectations, with the market betting on a pause in interest rate cuts in January next year. The Dow has fallen for six consecutive days, with NVIDIA experiencing the largest drop of 2.5%. Tesla, Meta, Google, and Amazon have moved away from their highs, uranium mining stocks have declined, but Apple reached a new high. Broadcom rose nearly 5% in after-hours trading, and Chinese stocks Baidu and PDD Holdings increased by over 1%. Bond yields in Europe and the USA have risen significantly, and after the European Central Bank cut interest rates, the euro fell to a one-week low, before rebounding. The dollar reached a two-week high, while the offshore yuan once rose over 200 points, breaking through 7.26 yuan. Commodities generally fell, with spot gold down over 2% and spot silver down over 4% during the session.
The Nasdaq hits 20,000 points! Besides US bonds, US investors are buying everything.
After the release of USA's November CPI data on Wednesday, investors seem to have finally "confirmed" that the Federal Reserve's interest rate cut next week is a done deal; financial markets across asset classes on Wednesday also appeared quite uplifting; apart from the decline in USA Treasuries, investors are buying everything else - USA stocks are rising, Gold is rising, the dollar is rising, Crude Oil Product is rising, and Cryptos are rising...
Wall Street interprets the CPI: no change to the Fed's "gradual easing," core inflation remains strong supporting the pause in interest rate cuts in January.
Analysis suggests that the CPI, which meets expectations, demonstrates that the cooling of inflation has basically stagnated in recent months. While this is not enough to disrupt the year-end bull market in U.S. stocks, it also means that an interest rate cut next week is not guaranteed, especially with the potential inflation upward risks brought by Trump's tariffs and fiscal expansion next year drawing attention. The yield on 10-year U.S. Treasuries first fell and then rose.
Here's the Breakdown for November CPI, in One Chart
Tonight! The last piece of potentially market-exploding data from the USA in 2024 is here.
① The USA's November CPI data, which will be released tonight at 21:30 Beijing time, can be metaphorically described as "the last heavyweight economic Indicator of the USA for 2024", which does not seem exaggerated. ② With the Federal Reserve's December monetary policy meeting scheduled for next week, tonight's CPI is expected to serve as an important basis for the Fed's critical decision on whether or not to cut interest rates...
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.
Imminent! A giant has once again issued a warning to the governments of Europe and the United States regarding debt, this time it is the central bank of central banks!
This week, major players intensively warned about the debt issues in Europe and the United States. Following bond giant Pimco and Bridgewater's Dalio, the Bank for International Settlements (BIS), known as the central bank of central banks, recently stated that government borrowing habits pose the greatest danger to Global economic stability. The surge in government debt supply could exacerbate instability in financial markets, and the recent changes in market sentiment should be viewed as warning signals.