Weekly report of inter-bank bond market: yield goes down one step
Lin Chaohui, Huatai United Securities Co., Ltd Important market factors in the current period: the net decrease of foreign exchange in April (P3); The central bank has continuously implemented positive repo operations and suspended reverse repo operations (P5); Money market interest rate hit a new low in the year (P7-P8); Benchmark varieties of 10-year treasury bonds (P9) will be issued next week; The yield of the secondary market of bonds fell sharply across the line and the transactions were further active (P13). Analysis of bond market trend: driven by the central bank's reduction of the reserve ratio and the further rise of market risk aversion, the bond market yield fell sharply this week. In terms of benchmark bonds, the short-term yield declined more than the long-term yield, and the financial bond yield declined more than the national debt. In terms of credit products, the yield decline of short-term varieties and highly rated varieties was also relatively leading, Except for long-term treasury bonds, the downward range of the yield of mainstream bonds this week has basically reached or exceeded the rate cut for one time (25BP). From the perspective of funds, this week R007 It quickly fell back to about 2.70% and hit a new low in the year. It is expected that the central bank will continue to use the positive repo operation to allocate the reasonable maturity distribution of the funds released by the decline of the reserve ratio in the short term. Therefore, R007 has little room for further fall in the recent stage, and may recover slightly under the guidance of the positive repo operation of the central bank. From the perspective of fundamentals, the major economic data released in April were significantly weaker than our previous expectations. The growth rate of industrial added value, exports, consumer goods retail and fixed investment in that month all hit the lowest level in the year. Although the new credit in the month with more pioneering significance fell quarterly, it was also lower than the expected level on the whole, The overall decline of the above important indicators triggered the central bank to cut the reserve ratio for the second time. Under the continuous stimulus of gross easing, we expect that the new credit in May is expected to rebound moderately, while exports should be improved. The corresponding economic growth will rise moderately from the low point in April. Therefore, the accelerated economic downturn in April has delayed the bottom of this round of economic adjustment, But timely policy action is expected to curb further economic decline. From the perspective of policy, Premier Wen Jiabao proposed this weekend to "put stable growth in a more important position" in response to the latest economic situation, so the combination of fiscal, monetary and industrial policies is expected to continue to be launched. The latest reduction in the reserve ratio in May can basically make up for the bank capital demand in the rest of the second quarter, At the same time, under the situation of increasing volatility of overseas situation, it is expected that the reserve ratio will continue to decline for about two times in the second half of this year. In addition, under the situation that the real deposit interest rate is near zero and the growth rate of residential savings deposits is still lower than the growth rate of loans, we do not believe that the feasible conditions for interest rate reduction are available within the year, However, under the background that the average interest rate of real loans in the first quarter did not fall but rose, the Central Bank may accelerate the introduction of expanding the downward floating range of loan interest rates of banking institutions. As far as the valuation of the bond market itself is concerned, the yield of 1-year central bank bills dropped sharply to below 2.70% this week, which is basically at the same level as the current R007. Compared with the 1-year fixed deposit rate, it has implied more than two interest rate cuts. In the case that R007 is difficult to further decline, the yield of short-term central bank bills also has no room for further decline. At the same time, the sensitivity of short-term yield to changes in the direction of capital will be further improved; In terms of medium and long-term interest rates, the benchmark yield of 10-year treasury bonds fell back to 3.36% this week, which is lower than its theoretical bottom line, namely, the current one-year fixed deposit rate of 3.50% is nearly 15BP, and has returned to its starting point before the start of the interest rate increase cycle in October 2010. In the case that the prospect of interest rate reduction is difficult to materialize, the yield of 10-year treasury bonds has little room for decline, Compared with the national debt, the medium and long-term financial debt still has the advantage of interest margin; The credit spreads of credit products relative to financial bonds are generally close to or slightly higher than the historical average. Considering the accelerated expansion of credit bonds and the reduction of credit rating quality and other factors, the current credit spreads do not have additional value advantages and can mainly fluctuate with financial bonds. Based on the above analysis, the economic growth in April dropped significantly and delayed the bottom of this round of economic adjustment. On the one hand, the quantitative total easing policy can provide a more relaxed financial environment, on the other hand, it can prevent further economic decline. Therefore, the market environment faced by the bond market is generally favorable, but not enough to form a new round of trend opportunities. In combination with the current valuation of various bonds, under the background of the sharp decline of the bond market yield in the whole line this week, especially the decline of the yield of short-term and medium-term varieties, which is more than one interest rate cut (25BP), the decline of bond interest rates has been in place in one step, the market trading opportunities have been quickly erased, and investment needs also need to be focused on. Suggestions on investment strategy in the secondary market: for configuration demand, under the background of the economy continuing to bottoming out but policy strengthening and prevention, we can choose the valuation advantage varieties for investment, among which the short end advantage varieties are AAA short-term financing, the middle end advantage varieties are five-year financial bonds and five-year AAA medium-term notes, and the long end advantage varieties are 10-year financial bonds. The trading order operation opportunity has been significantly reduced. At present, the five-year AAA medium note yield is still slightly higher than the low level in the year, and its coupon protection advantage is also higher than the national debt and financial bonds in the same period, which can be used as an alternative for trading observation.
