Since the Fed’s policy meeting on September 21-22, U.S. bond yields have been rising sharply. Last Friday, the 10-year U.S. Treasury bond yield closed at 1.615%, the highest level since June.
We believe that there are several reasons for the recent rise in U.S. debt: First, the US fundamental data shows signs of a steady recovery; second, the Federal Reserve has released hawkish comments, and the official announcement of TAPER in November is imminent; third, commodity prices Upward, boosting inflation expectations.
However, the upward trend of U.S. debt has not yet ended. The main reason is that the fundamentals of the U.S. economy and inflation expectations are still negative for U.S. debt. From this perspective, it will also have a certain negative impact on domestic bonds.
Nevertheless, looking at the overall situation at home and abroad, we believe that the domestic bond market is still dominated by domestic fundamentals, and the impact of U.S. bonds is relatively limited. From a domestic perspective, monetary policy and economic fundamentals are still beneficial to the bond market, but the main contradiction in the domestic bond market is still that the absolute yield level is too low, the odds for long bonds are limited, and it is more difficult to obtain returns.
1. Funding
In terms of funds, in order to maintain stable liquidity at the end of the quarter, the central bank carried out a total of 500 billion 14-day reverse repurchase operations from September 26 to September 30. At the same time, 170 billion reverse repurchases expired, achieving a net investment of 330 billion. Yuan. On October 8 and October 9, the central bank carried out a total of 20 billion 7-day reverse repurchase operations. On October 8, 340 billion reverse repurchases expired, achieving a net return of 320 billion yuan. At the end of the month, due to the dual pressure of transnational festivals and cross-seasons, the overall capital surface has fluctuated and pressured.
2. The bond market
Certificates of deposit: The rate of return on certificates of deposits before the holiday was relatively stable, and the rate of certificates of deposits after the holiday showed a significant decline. Among them, the rate of return on 3-month certificates of deposit fell by 10bp to 2.34%, and the rate of return on 1-year certificates of deposit fell by 3bp to 2.69%.
Spot bonds: The long-term interest rate remained volatile a week before the holiday, and the long-term interest rate rose significantly on the first trading day after the holiday. The reasons for the rising rate of return include several aspects: strengthening expectations of stable growth, rising inflationary pressures, and marginal easing of Sino-US relations. In the five trading days since September 27, the 10-year active treasury bond 210009 went up by 3bp, and the 10-year China Development Bank active bond 210210 went up by 2.8bp.
3. Convertible bond market
The market performance was weak in the four trading days before the holiday, and the indexes rebounded slightly on the trading day after the holiday. The Shanghai Composite Index fell by 1.57% in the four trading days before the holiday, and the ChiNext Index continued to rebound, with a cumulative increase of 1.15%. In terms of style, large-cap stocks continued to outperform small- and medium-cap stocks, with SSE 50 and CSI 300 rising 1.65% and 0.35%, respectively, while CSI 500 and China Securities 2000 fell sharply by 3.75% and 4.57%, respectively. The China Securities Convertible Bond Index fell 1.57% to 407.65 points.
On a trading day after the holiday, the indexes opened higher and lowered lower. The Shanghai Composite Index rose by 0.67%, and the ChiNext Index fell slightly by 0.04%. Large-cap stocks continued their strength, with the Shanghai Stock Exchange 50 and CSI 300 rising 1.85% and 1.31%, respectively, China Securities 500 fell 0.17%, and China National Securities 2000 rose 0.81%. The China Securities Convertible Bond Index rose slightly by 0.03%.
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