We see that although there is no obvious incremental capital entry in the trading volume of the two markets of the A-share market today, except for the ChiNext index, the performance of the Shanghai Composite Index is still very good, and the increase has basically stabilized at about 0.7% so far. On the news side, we see that the current central bank has issued an announcement: it has decided to carry out treasury bond borrowing operations for some primary dealers in the open market in the near future.
As a result, after the release of this news, we saw that the current Treasury bond futures fell in response, with the 30-year main contract down 0.6%, the 10-year main contract down 0.15%, the 5-year main contract down 0.06%, and the 2-year main contract down 0.02%. On the contrary, the A-share market is like a stimulant, and the Shanghai Composite Index has shown a continuous upward trend in the absence of significant incremental funds.
So what is central bank borrowing of Treasury bonds? Why do treasury bonds intervene in the bullish capital investment market and bearish the bond market?
In layman's terms, the central bank borrows treasury bonds, which means that the central bank needs funds in the short term to borrow treasury bonds from investors who hold treasury bonds through reverse repurchase of treasury bonds, and agrees to return the treasury bonds to the original holders at an agreed price at a certain date in the future, and at the same time pay a certain amount of interest as the cost of using treasury bonds.
We can understand two meanings at the core: the borrowing of central bank bonds, which is good for capital investment in the market, such as today's A-shares, but bearish for the current bond market, because liquidity is partially extracted. The lending of central bank bonds is bullish for the bond market and bearish for capital investment in the market.
Can the central bank's borrowing of treasury bonds be seen as a knock on the current bond market?
The answer is yes, the central bank has repeatedly hammered the current bond market funds, don't blindly do long-term bonds, don't blindly hold together to do long-term bonds with high interest rates. It is necessary to pay attention to the volatility risk of the short-term bond market. We can also see it as a game between the central bank and the bond market, because we see that the interest rate on the 30-year ultra-long-term Treasury bond is 2.57%, while the interest rate on the 50-year ultra-long-term Treasury bond is only 2.53%.
The fact that the interest rate on the 30-year ultra-long-term Treasury bond is higher than the interest rate on the 50-year ultra-long-term Treasury bond is a very obvious signal of the game.
What are we going to do?
The central bank borrowed treasury bonds, which is conducive to capital investment in the market, and pays attention to the rebound of the A-share market at this time. Although the A-share market has not shown a strong upward trend in the recent period, the situation will be improved to a certain extent under the injection of liquidity by the central bank.
Keep an eye on the recent volatility in the bond market. The decline in the interest rate of treasury bonds will drive the fluctuation of long-term bond interest rates to a certain extent, so there may be a certain degree of volatility in the bond-based market at this time.