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Source: WIND
Original title: Bond Market Summary: The long-mid end remains strong and the short end weakens, the curve flattens further
The Hong Kong Wind News Agency reported that on April 24, Treasury bond futures diverged and long-term performance was stronger than short-term. 10-year Treasury bond futures recovered and closed 0.19%, and rose 0.35% at the beginning of the session; Yields continued to decline and short-term yields recovered. Among them, 10-year Treasury yields reached a minimum of 2.46% at the beginning of the session, a new minimum since June 2002; funds in the interbank market did not relax, and overnight interest rates remained below 1% for seven days. It continued to recover at nearly 16BP throughout the month.
CITIC Solid Harvest clearly believes that the early reduction in IOER triggered the expectation of the monetary easing bond market, prompting lower yields in the short term. The continued decline in liquidity and differing views on the long-term trend have made the allocation power of the market short. The end is gradually transmitted to the mid-long end. At the same time, the continued relaxation of liquidity and the relatively high maturity margins will also help to lower the long-term interest rate.
For the yield curve that has flattened in the past two days, some traders believe that the scope for further flattening in the short term may be limited. It is also difficult to keep going down.
Treasury Futures Treasury futures ended mixed, the 10-year main contract was up 0.19%, the first session was up 0.35%, this week it was up 0.91%, the biggest weekly increase since Sept. 7. February; the main 5-year contract is almost unchanged. This week, it was up 0.82% and it was up five straight weeks; The 2-year main contract fell 0.01%, this week it was up 0.34%, and it was up six straight weeks.
Interbank cash returns continued to be strong on long and short term returns. At 4:50 p.m., 10-year and 30-year Treasury yields fell 1-2bp, 7-year minus to 3bp, 2-year yield recovered approximately 6bp. The yield on the 10-year Treasury note from 190015 fell 1.5 bp to 2.4825%, while the intraday downtrend fell 3.75 bp to a low of 2.46%, the lowest since June 20, 2002.
Some traders believe that long-term bonds remain strong and there is insufficient motivation. He believes that the downward pressure on the economy during the year remains very great, short-term monetary policy remains loose, the certainty of sufficient funds remains high, and the pressure to adjust short- and medium-term bonds is limited. Long-term debt is still subject to a limited decrease in the cost of long-term debt for financial institutions. Only if there is a further advance in policy can the rate of return be expected to open a gap down.
In the open market, the Central Bank renewed the medium-term loan facility (TMLF) of 267.4 billion yuan maturing on April 24, according to demand from financial institutions. The renewal amount was 56.1 billion yuan, and the winning bid rate was 2.95%. 3.15%. There is no reverse repository operation today. Wind data shows that 266.4 billion yuan of TMLF expires today, and no reverse buyback expires. Wind data shows that next week (April 25-April 30) the central bank’s open market will not have positive buybacks, reverse buybacks, and past due central bank bills.
In terms of funds, funds in the interbank market remained lenient, with overnight interest rates still below 1%, and continued to recover at nearly 16BP for seven days due to cross months. Fund traders said that although the central bank’s TMLF continues to decline, it has little impact on liquidity and the price adjustments are reasonable; and the short-term disruption of tax payments is not obvious, and liquidity is not expected to last for months. To worry
A bank operator said that today was almost the same as the previous days. Seven days due to the increase in demand between months, the price will rise. Although the amount of TMLF has been reduced but has little effect, the amount of funds remains abundant.
In terms of the primary market, the 1-year and 7-year additional fixed-rate bonds of the import and export bank have yields of 0.9113% and 2.6515%, respectively, and the supply multiples are 4.16 and 4.37, respectively. The yield on the 91-day discount national debt-weighted winning bid from the Ministry of Finance was 0.7688%, the yield on the marginal winning bid was 0.8199%, and the multiple of the bid was 2.64. Traders said the three-month discounted treasury bonds and the one-year yield on the import and export bank hit new lows, indicating that enthusiasm for short-term debt allocation is still rising.
According to the 21st Century Business Herald, many locations have begun planning to finance new infrastructure projects through special bonds, some of which are already in a pending issue state. Market participants said local bond issuance is expected to usher in a spike, and supply pressure may still cause some suppression in the long term.
CITIC Co., Ltd. clearly stated that relaxing short-term liquidity and relatively high maturity premiums can still dominate the decline in medium and long-term interest rates, and the tipping point of interest rates. may need to wait until “social economic-financial growth” goes from dividing to bridging, then the bond market is expected to have room for growth in the short term, and the maturity yield on 10-year Treasuries will enter in the range of 2.2-2.4%.
Huatai ValuesZhang Jiqiang said the urge to make the curve appear. The curve is difficult to be steep as it was in 2009, and it will not be as flat as in 2016. There are believed to be three flattening scenarios. It is expected to flatten slightly in the short term. Niu Ping watches the pace of economic restart abroad. Xiong Ping may appear in the third and fourth quarters. After rising to a certain level, the deadline extension is about to move. Under the central bank’s reduction in the excess storage interest rate, the short-term interest rate driven by the money market interest rate was significantly lower than the 16-year level, near 2009. Differentials in 10 -1 years and 30-10 years have reached relatively high positions. The reduction in tax and liquidity spreads reflects the characteristics of the market sentiment bias. Both short-term credit bonds and China-financed US dollar bonds have recently widened their spreads, although the logic of the two markets is different, they also show some relative value.
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Responsible editor: Li Tiemin
