Panic emotions dissipate at the end of the year without pessimism

Since late December, the bond market panic has gradually calmed down. Analysts said that although the seasonal tightening pressure of funds at the end of the year still exists, with the support of the central bank's stability policy and the release of fiscal deposits, there should be no major problems in maintaining a stable level. As individual institutional risk events are properly addressed, bond market yields are overshoot and are being repaired. Based on a combination of market sentiment, funding, interest rate supply and demand, and fundamentals, the bond market is expected to stabilize for a new year.

Emotion continues to ease

Since last week, the bond market panic has eased significantly. On the one hand, the central bank, through short-term capital placement and fund lending window guidance, has effectively stabilized liquidity fluctuations and solved the problem of insufficient liquidity caused by temporary extreme selling in bond markets; on the other hand, individual institutional bonds hold risks such as default. The incident was initially handled properly and stabilized the sentiment of market participants. From the perspective of the overall trading and trend of the market since last week, with the disappointment of panic selling and the appearance of interest rate debts after the sharp rise in yields, the market has stabilized from the unusually volatile fluctuations in the previous period.

Judging from the trend of the bond market around New Year's Day, Guoxin Securities (002736, shares it) and other agencies report that although the negative factors like de-leveraging and monetary policy are still not tightened, but only from the perspective of market sentiment factors The substantial easing of the bond market sentiment will be able to generally guarantee a stable market operation after the year before.

Guosen Securities said that the current round of bond market since the second half of October has fallen sharply and can be roughly divided into four stages. The first phase was the first round of declines from late October to early November. The main negative factors were the fluctuations in funding and the fear that the central bank would tighten the leverage of the currency-removal bond market. The second phase is from November 10 to November 28, and the main contradiction that caused this round of decline is that the US presidential election and rising commodity prices have triggered re-inflation expectations. The third phase was from late November to December 9, and the main reason for this decline was the redemption of institutions and some rumors related to foreign investment. The fourth stage is from December 9 to December 19, and the main driving factor for the collapse of this period is the impact of the national sea incident. From the three aspects of holding, repurchasing and trading, it fully reflects the mistrust between banks and non-bank financial institutions, which once caused the state of credit freeze.

Overall, the first and second phases are mainly related to monetary policy expectations and inflation expectations. The third and fourth phases, which have the biggest declines and the fastest declines, are basically caused by the rapid increase in market pessimism and panic. Judging from the management's follow-up response, the panic in the current round of bond market slump has been greatly eased. The strong release of related emotions also largely means the elimination of high-risk points in the market.

The head of the fixed-income department of a local securities brokerage department in Shanghai further pointed out that the current round of debt market de-leverage, from the management's point of view, may focus on whether there is “overcorrection” in the later period. According to the latest statistics of Chinabond, the current inter-bank bond market leverage ratio is 1.09 times, which has fallen below the historical average. After nearly a month of continuous plunge, the active contraction of various institutions' capital positions may have been excessive. The market participants said that although the current market sentiment is still difficult to reverse, the market still has some room for upward repair in both the short-term and long-term.

The balance of funds at the end of the year is roughly balanced

In the background of the end of the trading period, the capital is still the dominant force in the operation of the bond market. After the violent turmoil in the bond market and the money market last week, analysts also pointed out that the market capital of the New Year's Day is expected to remain stable overall. This will also effectively guarantee the bond market to run smoothly for a new year.

Despite the unusually tight situation in the early market capitalization under the impact of short-term concentrated selling in the bond market, the overall funding situation of the commercial banking system may not be as pessimistic as expected. Haitong Securities (600837, shares it) latest weekly report pointed out that the central bank has continued to invest about 1 trillion yuan in the past two weeks, plus December fiscal lending scale exceeds one trillion, it is expected that the December super-reserve rate may rise from 1.7% to more than 2.1% Bank liquidity is expected to gradually return from a tighter to a moderately neutral.

In addition, the analysis opinion from the DM financial peer quotation platform also believes that although the funds face is still affected by the MPA assessment at the end of the year, the personal concentration of foreign exchange at the beginning of the year, and the demand for cash withdrawals during the Spring Festival, there are also 10,000 in the remaining trading days in December. The positive factors such as the decentralization of financial deposits and the re-entry of funds from banks and other institutions will help improve the funding. After the central bank stepped up its liquidity release, the market capitalization of the trading days on the trading days since the second half of last week was very obvious. From the current market capital price, the seasonal tensions of funds have basically subsided during the year, and the market's concern for liquidity is shifting from “cross-year” to “cross-Chinese New Year”. In addition, according to the current liquidity of the market, monetary policy may enter a period of stability or slight tightening before the Spring Festival.

From the latest situation of the interbank capital market yesterday, although the central bank carried out a small net withdrawal of funds in the open market operation on the same day, the supply of funds for the whole day was still very abundant, and the 7-day variety just crossed the New Year's Day. Not enough. Overall, due to the large-scale fiscal deposits to be released this week, the current mentality of banking institutions is generally stable.

Next look at the fundamentals

According to the analysis of the comprehensive market participants, after the market panic and the pessimistic expectation of funds have been fairly calmed down, the main line of the late bond market is expected to return to the fundamentals. During this period, large institutions will gradually show their configuration needs at the high level of current bond yields, which will hopefully provide support for the short-term performance of the bond market.

Huachuang Securities and other institutions believe that the “recovery of the market” in the current round of bond market may cause the market to form an expectation of the bottom of the interest rate, that is, the future interest rate will fall below the psychological expectation of this bottom line. After the market sentiment eased, the bond market trend will further return to the fundamentals. The key factors affecting the market trend will be returned to projects including capital, inflation expectations, RMB exchange rate, and debt-side costs.

Some market participants also pointed out that although the short-term public fundraising institutions are generally cautious about the subsequent bond market, the insurance institutions have redeployed part of the cargo base and debt base in the early stage, and there are still a large number of agreement deposits due and the investment demand for insurance “opening the door” for the New Year’s Day. The configuration requirements before and after are expected to remain relatively high. After the bank's outsourcing investment plunged in the current round of the market, its potential return on foreign investment returns will still have a significant yield advantage over some loans. After the rapid de-leverage of the previous bond market, the potential debt-to-debt demand of large institutions is not expected to shrink significantly beyond the expected amount at the beginning of the year.

Overall, after the violent turmoil in the previous market, the supply-demand relationship in the bond market around the end of the year is not expected to deteriorate significantly. For the relevant factors affecting the overall performance of the bond market, investors can still continue to maintain patient patience and calm observation from the fundamentals of the central bank on the regulation of the market power center, the inflation situation, the trend of the RMB exchange rate, and the macroeconomic performance. The angle continues to look for trading leads in the market.

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