© Reuters. Sentiment turns sharply, bond market cools!The volume of pledged repurchase fell below 7 trillion yuan, and the duration of debt base was further shortened
News from the Financial Associated Press, June 21 (Editor Zhang Wei)After the interest rate cut in June, the domestic bond market weakened sharply under the pressure of institutions to take profits and policy expectations, and at the same time, market sentiment was also cooling down rapidly. Before the Dragon Boat Festival holiday, the pledged repo transaction volume fell below 7 trillion yuan, and it was 6.8 trillion yuan on June 21. At the same time, according to agency estimates, the median duration of public offering bond bases has also dropped from a high of 2.87 years to 2.62 years. Standing at the current point in time, facing the increasing dependence of funds on the central bank and the market is still gaming the strength of policies, how do you view the follow-up trend?
Since the beginning of this year, the bond market as a whole has been improving.The transaction volume of pledged repos hit new highs repeatedly. According to previous statistics from the Financial Associated Press, the pledged repo transaction volume hit a new high of nearly 8.6 trillion in early June, and it has been above 8.5 trillion for many days, accounting for nearly 92% overnight. However, in the first two trading days of this week, the volume of pledged repurchase fell back to around 7 trillion yuan, and the overnight ratio fell back to around 85%.
It is worth mentioning that, according to data from GF Securities, inter-bank leverage has dropped from a previous high of over 110% to below 109%. Other observation indicators have also declined. According to statistics from Founder Securities, the duration of public bond funds has dropped from 2.87 years at the beginning of June to 2.62 years this week, and the bond market trading sentiment diffusion index has also dropped from 69% to this week. 31%.
In addition, the turnover rate of 30-year government bonds has increased rapidly, with a weekly average of 2.12%. In the past, there has been a view that the overheating of ultra-long bonds may point to the tail end of the bond market’s phased strengthening. However, the fall of some indicators is closely related to the tax period, holidays and the end of the first half of the year. At the current time, the bond market may have a trend of weakening.
From the perspective of funds, under the care of the central bank’s open market, the interest rate of funds dropped sharply after the end of the tax period. As of June 21, R001, R007 and R014 were 1.81%, 2.22% and 2.56% respectively. In terms of bank financing, data from GF Securities shows that the net supply of the banking system has begun to decline rapidly since June 15, from 4.85 trillion yuan to 3.79 trillion yuan on the 19th. During the following 20-21 days, or due to the impact of the Dragon Boat Festival holiday, market liquidity was not restored as scheduled after the end of the tax period, and the net supply of the banking system remained at the level of 3.75 trillion yuan.
At the same time, the fluctuation of the fund interest rate in this month’s tax period has made the market realize again that the market’s dependence on the central bank’s investment has increased. Cinda Securities pointed out in the report that the interest rate cut is a confirmation of the easing of funds in the previous period. The central bank’s requirements for the center of funds interest rates around policy interest rate fluctuations may not have changed, but “strengthening counter-cyclical adjustments” may still take care of funds in traditional ways. the opinion of.
Regarding the liquidity situation at the end of the first half of the year, Cinda Securities further pointed out that it is expected that the central bank will continue to increase the scale of investment to protect the cross-season funds, and the net repayment of government bond payments will also supplement a certain amount of liquidity, and considering the weakening pressure on credit issuance in the second quarter , the pressure on banks to meet regulatory assessment indicators may be reduced, and non-bank institutions have not seen a sharp increase in repurchase before cross-quarters, indicating that redemption pressure may be relatively limited.
Standing at the current point of time, some institutional researchers are cautious in their judgment on the bond market, and the market is still waiting to see the introduction of policies in July and August. Previously, the National Standing Committee mentioned “studying a batch of policy measures to promote a sustained economic recovery”. Before the policy is implemented, the market is still in a game about the strength of the policy. For example, the reduction in the five-year LPR was less than expected, which triggered a slight warming in the market.
Chuangjin Hexin Fund believes that the current bond market should maintain a cautious but positive attitude. From the perspective of macro, supply and demand, and market sentiment, the bond market has supporting factors. The current bond market still has investment value and attractiveness, but needs Be cautious and flexible.
Industry insiders also said that the current bond market yield level has reached a low position again, and the future trend of the bond market depends more on macroeconomic trends. If the economy recovers better than expected in the second half of the year, the bond market may be under pressure as a whole; if the economic recovery falls short of expectations, the bond market is expected to continue its bull market in the future after recent adjustments.
However, CITIC Securities still pointed out in the report that looking back, the process of repairing the fundamentals will not be accomplished overnight, and it is expected that the long-term bond interest rate center will still return below the MLF interest rate. After the festival, we will mainly focus on the relevant statements of various ministries and commissions on the deployment of loose fiscal and stable growth tools, as well as the adjustment of funds at the end of the month; It has been reduced, and there may still be some allocation opportunities in the range of 2.65% to 2.75%.
Guosheng Securities said that the current bond market is still in a bull market, and the overall downward trend of interest rates has not changed. In the downward process of the overall interest rate spectrum, the adjustment of the policy interest rate is only a matter of time. It is expected that the central bank may cut interest rates in the second half of the year, while the 10-year treasury bond interest rate is expected to break through the record low and drop to the level of 2.4%-2.5%.