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recently, the yield of government bonds has been falling, and the 10-year government bond yield has reached 2.1191%, approaching the key point of 2.1%. experts pointed out that at this point in time, facing the low yields in the bond market, it is necessary for the central bank to buy and sell government bonds. securities analysts also pointed out that the central bank has a strong ability to guide the long end of the interest rate curve, and it is expected that the 10-year government bond may be more significantly affected by the central bank's bond selling operations.

recently, market expectations for policy cuts such as reserve requirement ratio cuts and interest rate cuts have increased. experts said that overall, the reduction in the interest rate of existing loans is conducive to stabilizing economic growth and supporting the stable operation of the bond market. analysts also pointed out that under the weak fundamentals, the bond market is expected to remain strong and volatile this week, and the 10-year treasury bond yield will fluctuate between 2.0% and 2.2% in the short term. industry insiders reminded that they should pay close attention to the significance of the signals sent by the central bank through the operation of treasury bonds and pay attention to the changes in risk-free interest rates.

yields are approaching critical points, and it is necessary to buy and sell government bonds

treasury yields continued to fall, approaching the key point of 2.1%. the latest data from the csi index shows that today's 10-year treasury yield has reached 2.1191%, and the 5-year treasury yield has also dropped to 1.7528%. previously, many industry scholars believed that the reasonable range of 10-year treasury yields is about 2.5% to 3%.

regarding the reasons for the downward trend in treasury bond yields, ding xiaofeng, general manager of jianyuan trust research department, told a reporter from cailianshe that in a low-interest rate environment, when risky assets have not shown a clear upward trend, risk-free interest rate products, as safe-haven assets, are the target of investors' pursuit. treasury bonds, as the market benchmark for risk-free interest rate products, have a more stable trend than other safe-haven assets, and can easily become the first choice for institutions such as insurance and wealth management that have absolute return requirements. the rush to buy treasury bonds has led to a continued decline in the treasury bond yield, even to new lows.

"at the current point in time, facing the low yields in the bond market, it is necessary for the central bank to buy and sell treasury bonds," lou feipeng, a researcher at china post savings bank, told a cailian reporter. the current bond market interest rates are low, and the central bank can increase bond supply and stabilize bond market yields by borrowing bonds and then selling them.

guosen futures pointed out that the central bank has already carried out operations in terms of reducing the reserve requirement ratio and interest rates this year, and has newly established treasury bond trading as a monetary policy tool for base currency injection. in the later period, compared with the interest rate cut of price-based monetary policy tools, the possibility of reducing the reserve requirement ratio of quantity-based monetary policy tools is relatively greater. of course, treasury bond trading is also in the central bank's monetary policy toolbox.

"the current market's consistent risk-averse behavior already has certain irrational factors, which is also an important reason why treasury yields continue to hit new lows. once risk preferences change suddenly, there will be a stampede risk in the risk-free interest rate market, leading to a sharp rise in treasury yields and causing huge losses to investors. therefore, management needs to intervene in the market," said ding xiaofeng.

according to zheshang securities, the central bank's balance sheet shows that the scale of its claims on the central government is about 1.524 trillion yuan. the long-term bonds held by the central bank are concentrated in 9-10 years and 14-15 years, and the scale of its 9-10 year treasury bonds is about 466.357 billion yuan, which has a strong guiding ability on the long end of the interest rate curve.

"from the data, the scale of sales of 5-7 year treasury bonds by major banks gradually converged on september 5 and 6. at the same time, the scale of sales of 7-10 year treasury bonds increased slightly. the impact of the previous sales of 5-7 year treasury bonds on key term interest rates has gradually decreased. therefore, we judge that the subsequent 10-year period may be more significantly affected by the central bank's bond selling operations," zheshang securities also pointed out.

pay close attention to the significance of the central bank's treasury bond operation signals

this year, the central bank cut the reserve requirement ratio by 0.5 percentage points in january 2024, guided the lpr of more than 5 years to be reduced by 25 basis points in february, and guided the 1-year lpr and the lpr of more than 5 years to be reduced by 10 basis points respectively in july; in august, it bought short and sold long again, with a net purchase of 100 billion yuan of treasury bonds. it is worth noting that the market's expectations for the central bank to reduce the reserve requirement ratio and interest rates have heated up again recently. what impact will this have on the bond market?

recently, the market expectation of a reduction in the interest rate of existing mortgage loans has become stronger. mingming, chief economist of citic securities, told cailianshe reporters that a reduction in the interest rate of existing loans will help ease residents' debt pressure, increase their disposable income, stimulate consumption, and support economic recovery. at the same time, it is possible to reduce deposit rates in the future to stabilize bank interest rate spreads. as the cost of liabilities decreases, banks can increase bond allocations. overall, a reduction in the interest rate of existing loans is conducive to stabilizing economic growth and supporting the smooth operation of the bond market.

qu rui, an analyst at orient securities, pointed out that although major banks are still selling long bonds under the guidance of the central bank, the bond market is expected to remain strong and volatile this week as fundamentals are weak and market expectations of reserve requirement ratio and interest rate cuts are rising. it is expected that the 10-year treasury yield will fluctuate between 2.0% and 2.2% in the short term.

"we should pay close attention to the significance of the signals sent by the central bank through the operation of treasury bonds," ding xiaofeng reminded. the market's excessive risk aversion expectations have led to an irrational downward trend in treasury bond yields, and risk-free rates are also accumulating. from the perspective of trading volume, the active period of 10-year treasury bonds has shrunk from a daily trading volume of more than 400 billion this year to the current daily trading volume of about 20 billion. it can be seen that many institutions have already carried out rational operations. once the equity market rebounds in stages, the risk-free interest rate will change at any time.

"the central bank may cut the reserve requirement ratio in the near future, but the purpose of the cut is to expand credit, not money, so it will only lead to a temporary decline in yields," ding xiaofeng also said. the expectation of a reserve requirement ratio cut has been reflected in the changes in bond yields in advance, and it is necessary to prevent a pullback after the yield falls after the reserve requirement ratio cut.