The Bond Market Under Shock: 70% Debt Basis, May Earnings Were Issued, The Cold Offering Was Issued.

After many days of adjustment, the bond market has seen a slight rebound.

In May 12th, treasury bond futures closed for the first time in a series of consecutive days. The 10 year Treasury futures T2006 contracts and T2009 contracts rose by 0.23% and 0.29% respectively. The TF2006 and TF2009 contracts of the 5 year Treasury futures rose 0.06% and 0.17% respectively, while the interbank spot rate of return was in a slight downward trend.

In fact, since May, the bond market has continued to decline, compared with the first quarter, the change is "unprepared". As of May 11th, the yield of the 10 - year treasury bonds was over 10BP, and the yield of the 5 - year treasury bonds was over 20BP.

Under the adjustment of the debt market, the debt risk of the first quarter was a callback. From the current feedback from all sides, there is still a divergence of views on whether the market adjustment will continue and the future market trend is expected.

"Recently, the market has plummeted, and the short end and the long end have dropped, corresponding to different voices in the market. Some people may feel that the bull market atmosphere may be over, and the market has entered the turning point. But I prefer to think that from a long cycle perspective, this bull market cycle is not over yet. The overall foundation is that monetary policy does not exist on the basis of tightening, and the whole April is relatively relaxed. Celestica fund bond fund manager Liu Yang told the twenty-first Century economic news reporter.

Debt based income downward

The rapid reversal of market trend has brought the concussion of fund income.

Wind data show that 2434 of the 3368 bond funds in the whole market, from May 1st to May 11th, account for negative returns, accounting for more than 70%. China's Jin Huian interest rate debt C and Jin Huian's interest rate debt A dropped by more than 2%, to 2.05% and 2.04% respectively, followed by Galaxy A and South Korea's 7-10 year debt C C, down 1.61% and 1.55% respectively.

Compared with the whole market fund, the bond fund's decline since May is also in the front rank.

Wind data show that from May 1st to May 11th, the net value of the largest decline in the fund, in addition to investment bricks, TEDA Hongli India, China Bank Standard & Poor's global selection, ICBC Credit Suisse India market 4 U.S. dollars QDII fund, ranking fifth is the state Huian Huian interest rate debt C.

In addition, galaxy's A, southern 7-10 year debt A and South 7-10 years' national debt C, the net value decline from May 1st to May 11th ranked the top 20 of the fund.

Not only is there volatility in earnings, but also in recent years, there has been a failure or extension of bond funds. In May 9th, the Dongxing securities announcement said that the Dongxing Xinyang 66 month regular open bond fund contract could not take effect. After this, the eastern wing Yue 18 months decided to open the bond fund and announced the extension of the offer period.

Debt base income is not good, the main reason is the recent market fatigue.

In fact, since the end of April, the 10 year treasury bond futures contract has been declining for 6 consecutive trading days since April 30th, while the cash dividend yield has changed rapidly. The yield of the 10 year treasury bonds has risen since April 30th, during which the single day rise was close to 2%.

"The factors leading to the current market pullback are mainly the following points. First, the yield of the 10 year treasury bonds has reached a downward trend of 61BP since the end of April this year, which has accumulated a large increase. If the expected rate of return is difficult to achieve a new low in the short term, it will result in a strong demand for earnings. Secondly, the yield of the 10 year treasury bonds is at a low point of nearly 10 years, and the attractiveness of the allocation institutions is relatively limited. Therefore, it has accelerated the reversion; third, the recently released economic data all exceeded the market expectations and suppressed the bond market; fourthly, investors were worried that the supply pressure of special debt in May and the follow-up fiscal stimulus policies exceeded expectations. Founder Fubon fund fixed income fund investment department pointed out.

Compared with the first quarter, the market in May undoubtedly showed a sharp contrast.

In the first quarter, the global economy was under pressure due to the infection of the new crown pneumonia, and the equity market was hit by a risk appetite. At the same time, monetary policy significantly increased the intensity of counter cyclical adjustment, and increased the liquidity margin of the money market by reducing the excess reserve rate and other tools. The bond yields also dropped sharply. The yield of the 10 year treasury bonds hit a new low since 2004.

Wind data show that 2804 bond funds in the first quarter of this year accounted for more than 80% of the total 3368 bond market funds.

In terms of scale data, the net asset value of bond funds reached 4 trillion and 710 billion yuan in the first quarter of this year, an increase of 468 billion 649 million yuan compared with the end of 2019, with a growth rate of 11.06%, exceeding the scale growth rate of equity funds and mixed funds in the same period.

Differences still exist

Although there are still differences in the direction of the subsequent bond market under the conditions of the shock market, the restructuring has already been shown.

Before the May 1 holiday, we adjusted the combined leverage and duration for fear of policy uncertainty during the May 1 holiday and the economic and financial data after the holiday. The recent market trend also confirmed our previous judgement. Follow up will be based on market readjustment, high interest rates to carry out some configuration, in order to strive for thickening portfolio income through band operation. Founder Fubon fund fixed income fund investment department pointed out.

According to its analysis, the recent bond market trend will be dominated by interval shocks. It is hard to see the trend of large downward trend similar to the beginning of this year in the short term, but the rate will not immediately turn from bull market to bear market.

The reason is that on the one hand, monetary policy is still in a loose cycle, and the interest rate of funds remains low. The fundamentals of the domestic economy remain weak. The major overseas economies have not yet fully resumed their production and affected by the epidemic. They do not support the bond market turning into a bear market immediately. On the other hand, the market generally believes that the lowest period of the domestic economy has passed, and there is no more favorable debt market factors. Under the circumstances, it is hard to see the downward trend of the trend as early this year as the momentum of the low interest rate breakthrough is limited.

In terms of a long term cycle, monetary policy has not changed in the short term. From the economic point of view, although the bottom stage has passed, it will take a longer process to return to normal. This stage needs monetary policy to escort. Short term austerity is not logical, so it is more inclined to think that in the current fundamental situation, and from the perspective of policy coordination, it is still a relaxed rhythm. Liu Yang pointed out.

From the current layout of public offering institutions, the product of "solid income +" strategy is still favored.

"The most pressing period of economic growth may be over. Nominal interest rates are at the bottom level, and the probability of short-term downtrend is small. And in the medium to long term, with the further downward trend of nominal growth rate, interest rates will still have further downside. Under the current macro environment, the bond investment part of the "fixed income +" portfolio is more suitable for the bottom line of credit bonds, and it is appropriate to carry out band operation through long-term interest rate bonds, and stick to the strategy of "voting interest is king". Wang Shen, a permanent fund manager, said.