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【Guide】The bond market is adjusting. We should pay attention to policy and fundamental changes in the future and maintain rational investment

China Fund News reporter Cao Wenjing

Since August, the bond market has experienced wide fluctuations. As for the future market, many industry insiders said that it is necessary to pay attention to multiple factors such as changes in central bank policies, macroeconomic trends, geopolitical situations, and fluctuations in global financial markets.

Focus on central bank policies, geopolitics, overseas markets, etc.

Uncertainty

Since the beginning of this year, long-term government bond yields have continued to decline, and the central bank has repeatedly warned of bond market risks.

Regarding the future market, the Fixed Income Research Department of Bosera Fund believes that the bond market needs to pay attention to the following uncertainties and risks: First, changes in policies and fundamentals; second, liquidity risk. Under interest rate fluctuations, if there is a large range of liability pressure, the asset management products may have to sell assets, causing the price of funds to fall further; third, credit risk. Under the background of weak economic operation, the probability of corporate default increases. Once a bond defaults, it will affect the market's confidence in related bonds and bonds of the same type. The recent convertible bond default has caused the market to re-price the valuation of low-priced convertible bonds. In addition, attention should also be paid to changes in overseas economic fundamentals and monetary policies.

Wells Fargo Fund believes that finance is the core focus in the future, and its impact is mainly reflected in two logics. One is the impact of fiscal effectiveness on fundamental expectations and the supply and demand pattern of bonds. Specifically, in the second half of the year, fiscal acceleration is the general trend to help achieve the annual economic and social growth goals. Whether new large-scale incremental policies will be introduced in the future is worthy of attention, which is also the core of the bond market trend pricing. The other side of finance is the change in the bond supply pattern. The Political Bureau meeting in July emphasized that "it is necessary to speed up the issuance and use of special bonds and make good use of ultra-long-term special government bonds", which sent an important signal.

Second, the impact of monetary and fiscal coordination on the funding side and bond maturity structure. When the supply of bonds increases, it will inevitably have an impact on the short-term funding side. How the central bank responds will directly affect the actual state of the funding side.

Wells Fargo Funds pointed out that from the current situation, the disturbance to the capital side may be relatively limited. The reason is that: from the recent open market operations of the central bank, the intention to protect the capital side is obvious; from the policy tone, in the context of stabilizing growth, more emphasis is placed on the consistency of macroeconomic policy orientation. Previously, the central bank emphasized gradually increasing the purchase and sale of treasury bonds in open market operations and improving monetary policy tools. If the scale, term, rhythm of subsequent bond issuance and the coordination of monetary policy are further improved, the bond yield curve can be better priced.

"Against the backdrop of our unswerving commitment to completing the annual economic and social development goals and tasks, we need to pay attention to the impact of more counter-cyclical and cross-cyclical adjustment policies on the bond market. In addition, we must also pay attention to the sustainability and strength of the recovery in economic fundamentals. If the economic fundamentals improve significantly, this will put great pressure on the bond market. Fluctuations in the funding sector are also very important. The third quarter is a period of intensive issuance of local government bonds, which can easily cause periodic disturbances in the funding sector and will also have a certain impact on the bond market." said Liu Hao, fund manager of Minsheng Jiayin.

Stay rational

Avoid blindly following the trend or panic selling

Affected by the wide fluctuations in the bond market, the returns on fixed-income financial products with bond assets as the main component of their allocation have fallen.

Many industry insiders said that the fluctuation of net value is a normal phenomenon of market operation, and investors should remain calm and not blindly follow the trend or panic sell. On the contrary, at this time, they should formulate reasonable investment strategies based on their own investment goals and risk tolerance and adhere to the concept of long-term investment.

Bosera Fund Fixed Income Research Department said that when the net value fluctuates greatly, investors should remain calm, not be too sensitive to the short-term fluctuations of the product net value, and focus on the long-term investment value. Asset management products have ups and downs. To obtain a higher rate of return, you need to bear a higher price volatility risk. You must carefully assess your own risk tolerance and make reasonable allocations.

In addition, investors should pay attention to portfolio diversification and diversify risks by investing in different types of asset management products, thereby reducing overall volatility.

Wells Fargo Funds suggests that investors can adapt to changes in the investment environment as soon as possible from two aspects: First, understand the pricing logic of assets. Focusing on bonds, there are two main sources of income, namely coupon income and capital gains. The capital gains part is prone to fluctuate to a certain extent in the short-term time dimension, but as the investment time lengthens, on the premise that the bond issuer does not default, the coupon will gradually smooth out the fluctuations caused by the capital gains part. In more popular terms, if you look at bond investment from a medium- to long-term time dimension, you will be much more relaxed.

Second, we should establish certain trading disciplines based on our actual situation. Specifically, we should first realize that in the era of net value, it is normal for products to fluctuate. The key is the amplitude and duration of the fluctuation. Investors can consider setting a stop loss line for themselves, and take corresponding stop loss operations when the stop loss line is reached.

Guotai Fund believes that the long-term logic of the bond market fundamentals has not changed, and bond funds are still an important part of asset allocation in the low-interest era. Moreover, bond funds have stable coupon income, which is upward in the long run, and short-term fluctuations may be a good time to enter the market. Short-term bonds still have allocation value, so there is no need to panic when choosing the timing. For long-term products, you can be more cautious.