After long-term bonds, how much room is there for short-term bond interest rates?
1. Weekly market review and investment highlights
Since April, the interest rates on 1-year, 10-year, and 30-year Treasury bonds have fallen by 14.75bp, 0.64bp, and 2.76bp respectively, with the short-end outperforming the long-end. There are two reasons behind it: First, after the cross-quarter, the interest rate bonds have not been significantly increased, and the capital side has returned to a relatively loose state. At present, DR007 has fallen back to around 1.7%, the 1-year interbank certificate of deposit rate has fallen below 2.1%, and R007 has fallen to 1.9%. Second, the downward trend of ultra-long-term interest rates is limited. At present, the ultra-long-term interest rate has fallen to a historical low, and the market is worried about the subsequent supply of ultra-long-term treasury bonds, and the further downside is limited.
Last week, domestic inflation and financial data were released one after another, and the inflation level was still low, with CPI and PPI in March being 0.1% and -2.8% year-on-year respectively. Credit performance was weak in March, with new RMB loans of 3.09 trillion yuan, down from 3.89 trillion yuan in the same period last year. From the perspective of structure, medium and long-term loans to households increased by 451.6 billion yuan in March, a year-on-year decrease of 183.2 billion yuan. On the enterprise side, medium and long-term loans increased by 470 billion yuan year-on-year. The two data may jointly point to the fact that domestic demand still needs to be further repaired, and the basic support logic for the bond market has not yet been reversed. In terms of liquidity, on the one hand, combined with the current position of real interest rates, in the context of steady growth, the economy's demand for reducing financing costs is still there. On the other hand, with the release of the US CPI data for March, coupled with the resilience of the current US economy, the opening of the Fed's interest rate cut channel is likely to be postponed, which makes the market's expectations for the domestic MLF interest rate cut to be postponed. Compared with the change of "price", the impact of the adjustment of "volume" on the exchange rate is relatively small. R007 is currently above the 7-day reverse repo rate, considering that the scale of subsequent bond supply is likely to increase, it is not excluded that the central bank will hedge the impact of the capital side by cutting the reserve requirement. However, in the context of "air defense transfer" at home and "stabilizing the exchange rate" externally, it may be difficult for the fund interest rate to be significantly lower than the policy interest rate.
Under the "asset shortage", the underallocation pressure continues, and the allocation focus has changed to a certain extent. Previously, when the ultra-long-term interest rate was at a relatively high level, institutions represented by rural commercial banks chose to use the power of duration to amplify the benefits of downward interest rates. Now, as the interest rate of ultra-long bonds has reached a historical low, there is more consideration for ultra-long bonds. From the perspective of trading entities, after the cross-quarter, the scale of wealth management rebounded as scheduled. As of April 14, the scale of wealth management increased by 1.79 trillion yuan month-on-month, which was significantly stronger than in previous years. From the perspective of secondary market transactions, wealth management is biased towards the allocation of interbank certificates of deposit and short-duration credit bonds.
。 On the one hand, short-term interest rates have also experienced a certain degree of decline recently, and considering the current overseas environment, the expected pace of substantial monetary easing has shifted back, and the further downside may be relatively limited. On the other hand, before the rhythm of supply is clear, the long end may continue to have narrow fluctuations. Taking into account profitability and safety, the bullet strategy may be relatively dominant, that is, long, medium and short varieties with different maturities can be paid attention to. However, the ultra-long end is due to its long duration, so you need to be wary of volatility. In addition to the traditional short-end varieties, 3-5 years as a transitional variety still has a certain cost performance. In terms of US dollar bonds, due to the strong stickiness of inflation in the United States, it is difficult to decline quickly, so it is necessary to pay attention to the maturity matching of investment funds. In the short term, short-duration US dollar bond funds with a hold-to-maturity strategy may be more noteworthy. The opportunity for US dollar bond funds based on long-term strategies in the hope of reaping trading returns still needs to wait.
2. Graphic review - details of the bond market last week
(1) Review of secondary market performance
Interest rate market review
In the past week, under the influence of weak economic data, the bond market has fluctuated and strengthened, and the short end is better than the long end. Over the week, the 1-year Treasury rate fell by 2.67bp and the 10-year Treasury rate fell by 1.00bp.
Credit Market Review
Short and medium notes: The downward range of short-term is relatively large, with the downward range of 1Y, 3Y, and 5Y varieties being more than 10BP, and the downward range of 10Y varieties being slightly smaller. Urban investment bonds: 3Y maturity varieties have the largest downward range, reaching 13BP. The 5Y and 10Y downsides are relatively small. Short and medium-term bills: 5Y maturity varieties narrowed the least, while urban investment bonds: 5Y maturity varieties widened slightly, while the rest of the varieties narrowed, with 1Y and 3Y narrowing more than 10Y.
There were no bond defaults last week.
Review of changes in funding
(2) Primary market review
Focusing on last week, specifically, a total of 637.232 billion yuan of interest rate bonds were issued, with a total repayment of 776.729 billion yuan, and net financing was -139.497 billion yuan, a decrease of 210.553 billion yuan from the previous week. Among them, the issuance of government and financial bonds increased, with a net financing of 104 billion yuan, and the issuance of credit bonds was 400.861 billion yuan, with a total repayment of 4,680.33 yuan and a net financing of 67.172 billion yuan, a decrease of 122.075 billion yuan from the previous week.
3. Review and outlook of the "fixed income+" strategy
(1) Review of the performance of "fixed income+" strategy products
In the past week, the pure bond market continued to warm up, the convertible bond market rebounded, and the equity market fell. The net value of secondary debt base and flexible allocation fund products with a weight of less than 30% was basically the same. The median return of the market-wide related fund products was 0.05%, and the median return of the top 25% products was 0.36%, while the CSI 300 fell by 2.58%, the China Bond Composite Wealth Index rose by 0.2%, and the CSI Convertible Bond Index rose by 0.34%.
(2) "Fixed income +" strategic investment logic
"Fixed Income +" Seeks Progress in Stability:
On the one hand, it is currently in a state of low valuation of equity by policy increase to boost the market + equity, and there are expectations for equity. On the other hand, bonds grasp coupons, stocks and bonds are matched to smooth fluctuations, and "fixed income +" may be a good tool to participate in the current market.
Investment is risky, and fund investment should be cautious.
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The above information is for reference only, if you need to purchase relevant fund products, please pay attention to the relevant regulations on investor suitability management, do a good risk assessment in advance, and purchase fund products with matching risk levels according to your own risk tolerance.