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【TF Research·Fixed Income】Sun Binbin/Meng Wanlin

summary

Recently, credit bonds have seen a significant correction.

Why?

First, in early August, due to the increased supervision of the central bank, interest rates rose significantly. Although interest rates fell rapidly afterwards, credit bond liquidity was weak, and the interest rate correction still had a certain impact on credit bonds. Second, before the adjustment, the credit bond market sentiment was at a relatively high level in history, and the cost-effectiveness of credit bond investment was significantly reduced. Third, the non-bank liability side is facing certain correction pressure, and bank wealth management is facing redemption pressure at the end of the quarter. The market may make liquidity reserves in advance.

Is the decline over? Will there be any negative feedback?

From the perspective of the adjustment process, the current adjustment range of short-term credit bonds is weaker than that of long-term credit bonds. However, compared with 7/19 (before the July rate cut), we believe that ultra-long credit bonds still face certain adjustment pressure, but the overall range is limited. Of course, the possibility of the market further reserving liquidity at the end of the quarter in advance cannot be ruled out, but the adjustment space is also expected to be relatively limited.

This time, whether it is short-term bond funds or long-term bond funds, the retracement range is still quite far from the negative feedback redemption wave in the fourth quarter of 2022, and the possibility of negative feedback is expected to be low.

How to invest in credit bonds?