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【Financial Analysis】How to lay out after the interest rate cut? Institutions talk about bond market investment in the fourth quarter

Xinhua Finance and Economics, Shanghai, October 4 (Reporter Yang Yiren) Before the National Day, in the context of the introduction of a series of monetary policy "combination punches" such as RRR cuts and interest rate cuts, the bond market has come out of a favorable market, and yield fluctuations have risen.

Analysts believe that in the short term, policy variables (including real estate regulation, fiscal increase, etc.) will cause disruption to the bond market. However, in view of the fact that the monetary policy has entered a period of strength, in the fourth quarter of the RRR cut and interest rate cut are still expected, institutions need not be too pessimistic about the performance of the bond market.

Short-term emotional hesitation

It can be seen that although monetary easing policies such as RRR cuts and interest rate cuts were implemented as scheduled at the end of September, the bond market has come out of a wave of interest rate rebound after the market has fully expected this. More importantly, the "steady growth" signal and the introduction of the "combination punch" led to the improvement of market risk appetite, resulting in a significant strengthening of the stock market, in this context, the bond market ushered in a significant correction, and long-term bond yields rose sharply.

According to public data, as of the close of trading on September 29, the yield of the interbank interest rate bond market rose as a whole. For example, SKY_3M rose 1BP to 1.42%; The 2-year yield curve of Chinese bonds jumped 5bp to 1.49%; SKY_10Y surged 8bp to 2.25%.

Why did the bond market adjust sharply before the holiday?

"'Fiscal policy + redemption feedback' is the main concern of the market." An institutional trader pointed out that "on the one hand, the 'steady growth' policy may not be exhausted, and this uncertainty has led to deepening market concerns about the disruption caused by policy increases, and on the other hand, the market is also worried about the possible redemption feedback of the 'wealth management-bond base'." ”

"We also believe that considering that there will be a number of incremental policies, including fiscal policy, will be introduced one after another, which means that the bullish sentiment in the stock market has not been fully released, and it is expected that the bond market will still be biased towards headwinds in the short term, and the market volatility will be large and show a weak consolidation pattern." Qu Rui, an analyst at the research and development department of Oriental Jincheng, said.

"This round of policy force is significantly more active than the previous operations since 2022, taking monetary policy as an example, since the start of the RRR and interest rate cut cycle in July 2021, there has not been a situation where two policies have been continuously implemented in the month." Zhou Guannan, chief analyst of fixed income at Huachuang Securities, said frankly, "However, from the perspective of the direction of policy force, the management still focuses on improving the wealth effect of residents' income, expectations and assets, aiming to enhance the internal vitality of the economy through consumption, and has not returned to the old road of real estate and infrastructure to drive traditional investment." Therefore, it is not yet possible to judge whether there will be a significant increase in the slope of economic recovery. ”

Positive support remains

So, looking forward to the fourth quarter, can the bond market continue to be deployed?

"We don't think the market needs to be too pessimistic." In the view of Zhang Jiqiang, chief analyst of fixed income at Huatai Securities Research Institute, "the regulatory authorities will still strive to avoid the occurrence of redemption feedback." If the market overshoots, institutions can watch whether the monetary authority will buy long-term Treasury bonds in the open market during the market correction – partly for liquidity reasons, and secondly, to reserve for subsequent bond sales. ”

Not only that, "there are still a number of policy tools waiting to be introduced in the fourth quarter." For example, the second RRR cut, LPR and deposit interest rate reduction, and stock mortgage interest rate reduction are selected at the right time. Zhou Guannan said.

Li Qinghe, chief analyst of fixed income at Guolian Securities Research Institute, said: "Monetary easing is still a necessary condition to support the stabilization and recovery of the economy at present, in short, interest rates do not have the basis for a significant rise." With the digestion of this round of favorable policies, the market can still expect the central bank to promote the continuous improvement of economic growth and social demand through RRR and interest rate cuts, and stabilize the scale of bank debt holdings. At the same time, the relative improvement of the external policy environment is also conducive to the continued development of China's monetary policy. ”

The research from CICC also pointed out that although the policy interest rate such as MLF has been reduced this year, the actual level of the policy rate is still not low compared with the inflation level, and if the effect of stimulating the economy is to be better played and the flow of existing money to the real economy, it may be necessary to further reduce the policy interest rate and guide the overall money market interest rate and bond and loan interest rates downward.

"We believe that even if the fiscal policy is strong in the fourth quarter, its impact on the capital side is more phased. After all, the central bank has clearly announced that it will also cut the reserve requirement ratio at an opportune time depending on the market liquidity situation. Yin Ruizhe, chief fixed income analyst of SDIC Securities, predicts that "the capital level in the fourth quarter will most likely show a state of 'stable and loose', and DR007 may run in the range of 1.5% to 1.55%." ”

It is worth mentioning that as of the close of trading on September 30, the yield of the interbank interest rate bond market turned back again. For example, SKY_3M fell 2BP to 1.40%; The 2-year yield curve of Chinese bonds fell by 3BP to 1.46%; SKY_10Y downside 10BP to 2.15%.

Keep an eye on swing trading

To sum up, focusing on the layout of the fourth quarter of the selection of bonds, the current optimistic institutions believe that the current domestic economic operation is in the structural transformation stage under the background of multi-cycle downward effects such as population, real estate, debt leverage, etc., if the macro-control policy does not have a significant force, it is difficult for the new momentum to hedge the slowdown of the growth of the old momentum in the short term, and the return on capital may still tend to decline at the margin, in this context, the domestic bond interest rate will most likely continue to decline from this year to next year, unless the policy is obviously forceful and can form an effective hedge—— If the fiscal expansion is significant and the deficit is significantly increased to support fiscal spending in social and people's livelihood, the demand of the real sector will gradually pick up and enter a positive cycle, and it is expected to see interest rates bottom out and turn to rise.

Of course, some institutions with a cautious view pointed out that in the long run, the main line of market trading reflected in the performance of stocks and bonds has shifted from monetary easing expectations to risk appetite switching.

"As the macro policy may continue to land in the coming period of time and have a wide impact, market participants are expected to continue to play with the fundamentals to improve expectations after the policy is implemented, so that the bond market will face greater uncertainty." Li Qinghe suggested, "Follow-up institutions should pay attention to the market volatility brought about by the October earnings season - that is, whether the stock market sentiment can be sustained, and the reality reflected in the economic and financial data in the fourth quarter." ”

For bond market investors, looking forward to the fourth quarter, on the one hand, they need to be wary of the disturbances caused by large-scale fiscal stimulus and policy implementation - the market has recently become more and more expected of fiscal strength and steady growth, and it is necessary to be wary of the disturbance caused by large-scale fiscal stimulus to the reversal of bond market supply and fundamental expectations.

On the other hand, it is necessary to be vigilant against the impact of the acceleration of government bond issuance on the bond market - since August, the pace of government bond issuance has accelerated, which will also pose a certain disturbance to the capital side and have a negative impact on the performance of the bond market.

As a result, most industry insiders judge that in the context of the interweaving of long and short, rationality and emotion, "variety selection + band operation" in the fourth quarter is still better than the duration strategy.

"We tend to choose the left side of the adjustment layout, especially for the allocation market, the 10-year Treasury rate rebounded above 2.2% can be more positive." Zhang Jiqiang said, "In addition, short- and medium-duration credit bonds, commercial financial bonds and certificates of deposit can still be adjusted because of greater certainty." ”

CICC's survey also shows that 40% of respondents chose "swing trading" in response to the question of "what kind of bond investment strategy to adopt to increase returns in the next three months", which is still the highest priority. 14% of the respondents chose to "only do relative value trading, not betting on direction"; Another 9% of respondents chose to "shorten the duration and eat only coupons".

Editor: Xing Lisha

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