Bond market outlook: focus on opportunities such as medium and short end and band
Interest rate debt strategy: focus on opportunities such as medium and short term, band, etc. In the short term, the downward breakthrough of 10-year and 30-year treasury bond interest rates requires stronger incremental gains to be realized. Although the upward space is greater, the effect of supply undertaking, monetary policy and real estate policy needs time to test, and the adjustment is not achieved overnight. The monetary policy is likely to be further stable and loose. Since April, the scale of financial products has continued to rise, so the short-term supply and demand pattern is more secure. We can focus on the moderate sinking of one-year deposit receipts and the investment value of three-year interest rate bonds. The 30-year treasury bond ETF has generally stabilized after a small decline in size, and the fund's position in ultra long bonds has been at a low level. Combined with the odds level, it is recommended to wait for band opportunities under the premise of controlling withdrawal.
In terms of credit strategy, last week's performance of credit bonds was better than that of interest rate bonds, with strong allocation strength. The market qualification sank and the duration was prolonged, and the short-term sinking was more obvious; The compression of credit spreads also shows the characteristics of narrowing of hierarchical spreads. Affected by the favorable policies of real estate, the yield of real estate bonds has declined significantly. It is suggested to observe the opportunities for high-quality central state-owned enterprises to participate in real estate bonds. In terms of urban investment, the performance of medium and short ends is better than that of long ends, which can be moderately sunk and excavated. At the same time, the supply of ultra long credit bonds has increased, so we can focus on relevant opportunities. There is limited space to explore cyclical bonds and private corporate bonds. The credit spread of the 2-4-year two year perpetual bonds has been slightly reduced. Considering the lack of game space for the current interest rate bonds, some institutions may turn to the two year perpetual bonds with both liquidity and security to seek income. It is suggested that the allocation market should sink moderately to explore coupon opportunities, and the trading market should wait for the subsequent band trading opportunities.
In terms of bond conversion strategy, the equity market was slightly adjusted last week, and industries with strong performance in the early stage, such as nonferrous metals, chemicals, and real estate, experienced a correction. At present, the convertible bond valuation has not yet reached the alert position. In the short term or in shock, the YTM of debt convertible bonds has been significantly repaired, and the cost performance ratio has decreased. Therefore, we can pay appropriate attention to the balanced target. Industry suggestions focus on: 1) the logic of price increase, such as resource products, pigs, industrial chemicals, metals, or utilities; 2) Overseas or domestic demand improvement direction, such as white electricity/small household appliances, overseas construction machinery, consumer travel, etc; 3) Growth direction, such as AI computing power; 4) Hot topics such as low altitude economy, equipment update, etc.
Fundamentals: 1) Since May, the medium and high frequency economic data show that the demand margin has stabilized, and production differentiation: the transaction area of land in 100 cities has stabilized on a month on month basis, the transaction area of commercial housing in 30 cities has increased first, the retail and wholesale of passenger vehicles have steadily warmed up, the comprehensive export index has risen, the weekly output of steel has continued to rise, and the operating rate of the industry has differentiated, The daily coal consumption of eight coastal provinces continued to decline seasonally. High frequency infrastructure performance differentiation. 2) Price:
In May, CPI rose moderately year on year, PPI fell or accelerated convergence.
Review of interest rate bond market: 1) Capital interest rate: the central bank last week invested 68 billion yuan in net capital, with capital interest rate rising slightly and bill interest rate falling. 2) Primary issuance: the net supply of interest rate bonds increased, and the quantity of certificates of deposit increased and the price was flat. 3) Secondary market: the bond market fluctuates in a narrow range. On 5/17-5/24, the interest rate of 1Y/10Y government bonds rose 3BP/1BP.
Review of credit bond market: 1) Primary issuance: last week, the main credit bond varieties changed from net repayment to net supply. 2) Secondary market: trading and investment increased, yield continued to decline, and interest margin rebounded. 3) There were no issuers with ratings up and 2 issuers with ratings down last week; Two new extended bonds were added, and no new defaulting entity was added.
Review of convertible bond market: 1) Convertible bond index fell, trading volume rose 4.19%, and the full sample index of convertible bonds (including public offering EB) calculated by us fell 0.32%. Major stock indexes fell in the same period. 2) From the perspective of sectors, all sectors fell, with cycles, optional consumption and TMT sectors leading the decline. 3) The valuation fell, the premium rate of 100 yuan fell to 23.28%, and the YTM average of pure debt rose.
Risk tips: changes in fundamentals, policies that are less than expected, credit risks, stock market fluctuations, risk of price and premium rate adjustment, risk of forced redemption of convertible bonds, and omission or deviation in data statistics.
