2024-07-01 12:53:00
Financial Observer Community reporter Cai Yuekun and Hu Yanming On July 1, the Open Market Operations Workplace of the Folks’s Financial institution of China (hereinafter known as the “PBOC”) issued an announcement. In an effort to keep the steady operation of the bond market, and primarily based on cautious statement and analysis of the present market scenario, the Central Financial institution determined to open some open markets within the close to future. Enterprise main sellers perform treasury bond borrowing operations.
As of the shut on July 1, treasury bond futures closed down throughout the board. The principle 30-year contract fell 1.06% to shut at 108.44 yuan/piece; the principle 10-year contract fell 0.37% to shut at 104.98 yuan/piece; the 5-year contract fell 0.37% to shut at 104.98 yuan/piece; The principle contract fell 0.24% to shut at 103.77 yuan/piece; the principle 2-year contract fell 0.08% to shut at 101.88 yuan/piece.
The central financial institution could promote authorities bonds within the close to future
Wang Qing, chief macro analyst of Oriental Jincheng, and Feng Lin, director of the R&D Division, consider that after the central financial institution borrows treasury bonds from some main sellers within the open market enterprise, it could actually promote these treasury bonds within the secondary market, thereby reducing the market value of related treasury bonds. Pushing up associated authorities bond yields. That is the explanation why bond yields elevated considerably after this announcement.
At current, the central financial institution has determined to hold out treasury bond borrowing operations within the close to future – Oriental Jincheng judges that the central financial institution will primarily borrow medium and long-term treasury bonds with a maturity of greater than 10 years. As for the borrowing scale, whether or not or when to promote, will probably be decided by the central financial institution primarily based on the bond market scenario. Definitely.
Oriental Jincheng mentioned that the background of this announcement is that since April, the central financial institution has repeatedly warned of the chance of low mid- and long-term public bond yields.
Ming Ming, chief economist of CITIC Securities, instructed the Financial Observer Community that the central financial institution’s transfer signifies that it could promote public bonds within the open market within the close to future. At a time when the 10-year authorities bond yields have dropped to historic lows, promoting authorities bonds will assist stabilize long-term bond rates of interest and stop rate of interest dangers.
Some students additionally consider that the central financial institution’s announcement accommodates a higher threat warning element.
Wanting again on the primary half of 2024, bond market yields continued to say no, bond costs continued to rise, and the bond market staged a loopy “bond bull” pattern.
On June 28, treasury bond futures closed with beneficial properties throughout the board. The principle 30-year contract rose 0.08% to shut at 109.49 yuan, and the principle 10-year contract rose 0.01% to shut at 105.320 yuan. Each continued to hit file highs in the course of the session; the 5-year contract The principle contract rose 0.01%, and the principle 2-year contract rose 0.01%.
Throughout the session on July 1, the principle 30-year contract continued to rise and hit a brand new file excessive. It as soon as rose to 110.10 yuan per piece. The principle 10-year authorities bond contract additionally hit file highs.
In line with knowledge launched by China Cash Community, as of July 1, the 1-year and 10-year authorities bond yields to maturity had been 1.54% and a couple of.18% respectively, down roughly 54 and 36 foundation factors respectively from the start of 2024.
Orient Securities believes {that a} assessment of the market situations within the first half of this 12 months exhibits that expectations and lifelike logic have collectively promoted the bullish pattern within the bond market. The logic of expectations primarily refers to an surroundings the place the endogenous financing momentum of the non-public sector is weak, the extent of inflation continues to be low, the extent of actual rates of interest is passively rising, and the market’s expectations for rate of interest cuts are comparatively robust. The logic on the sensible stage primarily refers back to the failure of insurance policies to drive the non-public sector to extend leverage. Even when rate of interest reduce expectations are by no means realized, the logic of asset scarcity and powerful demand for institutional bond purchases can promote the bond market to strengthen.
The central financial institution has repeatedly warned of dangers
Confronted with the continued decline in long-term authorities bond yields, the central financial institution has repeatedly warned of dangers.
On April 18, at a press convention held by the State Council Info Workplace, the central financial institution additionally clearly talked about “stopping rates of interest from being too low.”
On April 23, the top of the related central financial institution division acknowledged that long-term authorities bond yields will usually function inside an inexpensive vary in keeping with long-term financial progress expectations.
On June 19, Pan Gongsheng, President of the Central Financial institution, clearly acknowledged on the 2024 Lujiazui Discussion board: “At current, we should pay particular consideration to the maturity mismatch and rate of interest dangers of huge quantities of medium and long-term bonds held by some non-bank entities, and keep a traditional upward sloping yield curve. , to take care of the optimistic incentive impact of the market on funding.
On June 28, the Central Financial institution’s Financial Coverage Committee common assembly for the second quarter of 2024 talked about that “in the course of the financial restoration, we should additionally take note of adjustments in long-term yield charges.”
Oriental Jincheng mentioned that the “rate of interest threat” talked about right here primarily refers to the truth that as soon as the economic system and value ranges rebound considerably within the later interval, the yields on medium and long-term bonds will rise sharply, and non-bank entities akin to insurance coverage establishments holding these bonds will undergo higher losses. Big losses. This announcement signifies that the central financial institution will subsequent use precise operations to have an effect on the stability of provide and demand for bonds within the secondary market. When it comes to guiding market expectations and stopping medium- and long-term authorities bond yields from deviating considerably from the corresponding coverage rate of interest middle, will probably be more practical than earlier threat warnings.
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