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The central bank has repeatedly called for "control of the situation", and the game in the bond market continues.

On August 14, all treasury bond futures closed higher, with the main 30-year contract up 0.69%, up nearly 1% in the morning, and the main 10-year contract up 0.17%. The yields of major interbank interest-bearing bonds generally fell, with the yield of the 30-year active bond "23 Interest-bearing Treasury Bond 23" down 1.0BP, and the yield of the 10-year active bond "24 Interest-bearing Treasury Bond 11" down 2.25BP.

However, looking back over the past week, the medium- and long-term treasury bond yield curve as a whole showed a steepening upward shift, with a considerable correction. The situation of a continued downward trend in long-term treasury bond yields since the beginning of this year has eased.

A market expert told China Business News that my country's long-term treasury bond yields have continued to decline this year, and the central bank has repeatedly warned of bond market risks.BondsThe issuance has obviously accelerated and short-term speculation in the market has also decreased. These all indicate that the supply and demand in the bond market is expected to further move towards balance, and the financial management departments' successive risk warnings have taken effect.

The reporter learned from the interview that the central bank's recent frequent calls to the market are not mainly aimed at suppressing the bond market, but are more intended to prevent the market from forming unilateral expectations and thus triggering systemic risks. This is mutually reinforcing and not contradictory to the regulation and development of the bond market as an important financing channel for the real economy.

The long and short sides repeatedly pulled

After the government bond yields collectively fell slightly on August 13, the bond market continued the previous day's trend on August 14. The July financial data was lower than expected and the central bank's open marketReverse repoThe increase in trading volume continued to boost the bond market's bullish sentiment, with current bond and futures prices strengthening overall.

In the long run, long-term bond yields have fallen by 60BP since 2023, showing a one-sided market trend for a time, attracting a large amount of capital inflows and some leveraged transactions.

From the beginning of the year to date, the main contract of 30-year Treasury bond futures has increased by more than 10%, and the main contract of 10-year Treasury bond futures has increased by nearly 3%.

Judging from the situation in August, the long and short sides of the bond market have been pulling each other back and forth. When long-term interest rates hit a new low, the selling of bonds by major banks triggered a rapid correction in yields.

On the 5th, the 10-year and 30-year Treasury bond yields fell below the key levels of 2.1% and 2.3% respectively, setting new historical lows, but staged a "V"-shaped reversal in the late trading, reversing the trend of the whole day.

On the 8th, under the warning of the National Association of Financial Market Institutional Investors' investigation reports, the bond market as a whole weakened significantly. On that day, the yields of major interbank interest rate bonds generally rose sharply, with the yield of 10-year treasury bonds rising by 3.96BP; the main contracts of treasury bond futures of all maturities closed down, with the main 10-year contract falling by 0.27%.

CITIC SecuritiesChief Economist Mingming believes that this reflects the fragility of the bond market in a low interest rate environment. Factors that trigger the bond market correction include institutional behavior, regulatory guidance, and fundamental data.

Zheshang SecuritiesChief Economist Li Chao believes that the trend of treasury yields this year is driven by relatively pessimistic fundamental expectations, low risk appetite and an "asset shortage".

From a comprehensive market analysis perspective, the current macroeconomic situation continues to show a weak recovery trend, which provides support to the bond market. The central bank's combination of interest rate cuts has pushed broad-spectrum interest rates further downward. In addition, the logic of the "asset shortage" continues to deepen, long-term interest rates have fallen, and the market's bullish sentiment remains.

"my country's overall economy will continue to maintain rapid growth, and inflation is expected to rebound moderately. Previously, long-term bond yields were too low, and there was a certain deviation between market expectations and economic fundamentals." The above-mentioned market experts said that the recent rebound in long-term bond yields to reasonable levels will help maintain a normal upward-sloping yield curve and prevent the formation of a negative cycle of "yield declines - economic expectations weaken - yields continue to decline", and can also avoid the risk of self-fulfilling weak expectations.

Preventing the formation of unilateral expectations

In fact, the central bank has repeatedly "spoken" to the market to remind it of the risks of long-term bond interest rates. Its policy intention is to continue to pay attention to and remind the market of bond market risks from a macro-prudential perspective to prevent the formation and continuous strengthening of unilateral expectations.

From the perspective of systemic risk, the unilateral decline in long-term bond yields will accumulate greater financial risks. Once the market turns, the rapid liquidation of leveraged positions will exacerbate the market's downward spiral and may also spread to other financial markets, creating systemic risks.

Some market analysts believe that the U.S.Silicon Valley BankRisk events are revelations. The central bank should, from a macro-prudential perspective, continue to pay attention to market operations, promptly alert to risks in order to prevent systemic risks and maintain financial market stability, and block unilateral market conditions from amplifying risks.

Investors should also carefully assess the risks and returns of the bond market. The wave of bank wealth management redemptions in 2022 once reflected investors’ concerns about the bond market.Investment RisksLack of awareness.

An industry expert believes that while bond market investors make independent decisions, they must also be aware of the risks they bear. Bond prices will not only rise but not fall, so they must carefully assess the risks. Moreover, if there is unilateral and consistent behavior in bond market investment, the trend change may bring spillover effects and contain systemic risks. Bond investment should adopt a rational and stable investment strategy to avoid excessive short-term investment behavior, chasing high speculation, and blindly following the trend. There is interest rate risk in the bond market. Investing in the bond market does not mean that stable expected returns can be achieved. When making independent investment decisions, buyers must be aware of the risk at their own risk.

Institutional investors should always be vigilant about the risk of maturity and asset-liability mismatch. The above-mentioned market expert told China Business News that long-term bonds have a longer duration and are more sensitive to interest rate fluctuations. The large-scale increase in long-term bonds held by wealth management and other products is not only due to the need for asset allocation, but also due to the idea of ​​betting on the central bank's interest rate cut expectations and speculation for profit.

Industry insiders also pointed out that institutional investors all hope to sell the long-term bonds they bought in the short term when the price is high. In fact, this is difficult to achieve in convergent trading. Once the price reverses sharply, it will be difficult for the institutions to sell the large amount of long-term bonds they already hold at a reasonable price in the market in the short term.

The loose monetary policy remains unchanged

Looking back on the beginning of this year, the central bank has taken frequent actions, from warning of long-term debt risks on various occasions and in reports, to announcing that it will gradually increase the buying and selling of treasury bonds in open market operations, and to conducting temporary reverse repurchase operations.

Since April, the central bank has repeatedly warned that low long-term bond interest rates may contain risks. On June 19, Pan Gongsheng, governor of the People's Bank of China,LujiazuiAt the forum, it was stated that at present, special attention should be paid to the maturity mismatch and interest rate risk of some non-bank entities holding a large number of medium- and long-term bonds, maintaining a normal upward-sloping yield curve, and maintaining the market's positive incentive effect on investment.

In July, the central bank announced that it had signed a treasury bond borrowing agreement with some banks, and later announced the sale ofLong-term bondsFor banks with limited liquidity, the medium-term lending facility (MLF) collateral will be exempted on a phased basis. It also said that if necessary, it will choose to sell in the open market to balance the supply and demand of the bond market and correct and block the accumulation of risks in the financial market.

On July 8, the central bank issued an announcement stating that from now on, it will carry out temporaryPositive BuybackOr temporary reverse repurchase operations.

On August 9, the central bank released the second quarter monetary policy report, which introduced the impact of the net value mechanism of asset management products on public investors in a special column. Regarding the yield of treasury bonds, the central bank continued to emphasize "strengthening the guidance of market expectations and paying attention to the changes in long-term bond yields during the economic recovery process", and proposed "conducting stress tests on the risk exposure of bond assets held by financial institutions to prevent interest rate risks", strengthening institutional supervision and preventing risks in advance.

Market experts said that the risk warnings issued by financial management departments have worked. The market is also paying attention to whether the current bond market adjustment is in place and how the central bank will further operate.

existChina Minsheng BankIn the view of Chief Economist Wen Bin, it is not ruled out that the bank will continue to use expectation management, window guidance, buying and selling of treasury bonds, regulatory constraints and other methods to reduce interest rate risks, timely correct and block the accumulation of financial market risks, and prevent the further strengthening of unilateral expectations of interest rates, thereby forming potential risks such as Silicon Valley Bank.

Tan Yiming, chief fixed income analyst at Minsheng Securities, said that the core logic of the current market game may still lie in the attitude of the central bank and changes in the funding side under subsequent operations. Whether it is the sale of bonds by large banks, the warning of violations in treasury bond trading by the Securities and Futures Association, or the possible sale of bonds by borrowing securities by the central bank, under the supportive monetary policy stance, they are all aimed at stabilizing long-term interest rates and creating a good monetary and financial environment, rather than forming a trend reversal. It reflects more signal significance and expectation guidance, exchanging time for space and waiting for the time point to cooperate with the fiscal policy.

Mingming also believes that the recent actions of the regulatory authorities are more for the purpose of "risk prevention", and the monetary policy remains stable and loose. It is expected that the issuance of government bonds will accelerate significantly, and the possibility of reducing the reserve requirement ratio is increasing. The release of medium- and long-term liquidity by reducing the reserve requirement ratio can support the issuance of national and local bonds, avoid excessive impact of fiscal supply on the market and increase government financing costs. At the same time, it can also boost investor confidence, thereby stabilizing the capital market, especially the performance of the equity market.

(This article comes from China Business Network)