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Who propped up the umbrella in the dark clouds, let the national debt futures turn against the wind

January 11, 2019 07:35
Author: Li Lanjun
source: International financial newspaper

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Summary
[Who is holding up a protective umbrella in the dark clouds to let the national debt futures turn against the wind] 2019, the national debt futures launched a new year offensive, and strive to the upstream, riveting the strength of Lianyang. In the first week of the new year, the three-year, five-year, and 10-year treasury bond futures broke records, setting a new high since the release. (International Finance News)

The cold winter clouds are shrouded, the financial market is “rainy and rainy”, and the long-lost national debt futures market has been awakened, becoming a harbor for investors to warm up. 2019, Treasury futures launched a new year offensive, and strive to the upper reaches, riveting the strength of Lianyang. In the first week of the new year, the three-year, five-year, and 10-year treasury bond futures broke records, setting a new high since the release.

As of January 10, 10-year government bondsMain forceContract 1903 reported 98.015, the highest at 98.435, with a volume of 94,442 contracts.

The main contract of the 5-year government bond was 1906 reported 99.615, and the number of households was 5,392. The main contract for 2-year Treasury bonds was 1903 at 100.445, up 0.02%, and hit a new high since the opening.

The reasons for the increase mainly include two aspects: First, the macroeconomic data is weak, the downward pressure on economic growth is consistently confirmed by the market, the risk aversion is high, and the macro fundamental support of the bond market has not changed, so the government bond futures are accelerated; Is the central bankcurrencyThe policy slightly exceeded expectations, and the general year-on-year RRR cut was 1 percentage point, which brought support to the government bond futures funds.

However, market analysts still believe that although the rise in Treasury futures will continue for some time, but in the short term should be alert to the risk of increased market volatility, the future marketinterest rateThere is still a downside, and investors from all walks of life are "and cherished."

  Treasury futures turned against the wind

At the beginning of the new year, the first good sign of Treasury futures fell on the expectation of economic downturn.

Domestic economic growth continued to decline in 2018, the first, second and third quartersGDPThe year-on-year growth rates were 6.8%, 6.7%, and 6.5%, respectively.

Ruida Futures Research Institute said that investment in 2019 is expected to rise, but consumption is unlikely to stabilize, and net exports will also be affected. The current inflation level is relatively mild, and inflation is not expected to be a key point of policy next year.PMIThe indicator usually leads the GDP for several months. The official manufacturing PMI index and the Caixin manufacturing PMI data both fell in the second half of this year, indicating that the downward pressure on the economy will be greater next year.

In addition, loose monetary policy also increased the price of Treasury futures.

Under the downward pressure of the economy, the central bank of China restarted in mid-December 2018.RepoOperation, for the fifth consecutive day, the market has invested 600 billion yuan, and on December 19 announced the decision to create a medium-term loan convenience (TMLF), support small and private enterprises, and increase the refinancing and rediscount amount of 100 billion yuan. The easing measures are really on the ground.

  Seesaw with feng shui turn

The rise and fall of Treasury futures is inseparable from the national debt itself. For a long time, in the "storm" of the market, the national debt has always played an important role as an effective hedging tool. Conversely, when the market situation improves, the national debt will go down as a seesaw.

As early as the first half of 2018, investors worried about the economic prospects, the stock market and foreign exchange market volatility increased, and some of the safe-haven demand was generated. The risk aversion sentiment increased sharply, and the phenomenon of all kinds of funds flowing into the bond market was prominent. At this time, although the supervision, de-leverage and other factors still have some pressure on the bond market, the overall performance of the bond market is strong, and the yield is declining.

In late July, the implementation rules for the new regulations for asset management came to an end. In August, the guidance document for the implementation of the new rules for the implementation of the new regulations appropriately opened up restrictions on non-standard investment for public offerings. The central bank window guided the banks to allocate low-rated bonds and relaxed the MPA assessment. The reduction of the debt risk weight to zero also increased the allocation value of local bonds, so that the allocation of government bonds was diverted by non-standard, credit bonds and local bonds.

At the same time, the State Council executive meeting called for "positive fiscal policy to be more active, resolutely not engage in floods, and a sound monetary policy should be tight and moderate." When the news came out, it greatly boosted the market's confidence in economic development. The risk assets such as the stock market rose sharply, and the national debt hedging function weakened and entered the down channel.

However, the decline in the market came to an abrupt end after October, as the European and American stock markets plummeted in early October, panic sent to the A-share market, leading to a decline in domestic stock markets, domestic stock markets fell sharply, risk aversion renewed, and non-standard, credit bonds The local debts were over-purchased in the early stage, and the price/performance ratio was not high, which greatly increased the demand for government bonds.

Although the risk aversion has gradually improved over the years, the credit bonds and local debts have been continuously digested, and investment attractiveness has declined.interest rateThe increase in the value of debt allocation, coupled with the peak of local bond issuance, and the poor economic data, led to the “Yangma” RRR cut, and Treasury futures continued to be supported and hit a new high.

  Where is the market road?

Looking back on 2018, bonds are considered to be a few large categories of assets that get rid of "negative" gains. Kaixin 2019, many institutions are still optimistic about the dividends in the national debt futures market.

Many investors interviewed by the reporter said that they are optimistic about the bond market this year.

Shanghaifund companyPractitioners told the International Finance News that the bond market was still optimistic in 2019. Not only is the expected economic downturn, but also the lower inflation factors, these conditions are conducive to treasury futures. In addition, the central bank “released water” made the fund level looser than expected, and the total liquidity was also at a high level.

Market participants pointed out to the "International Finance News" reporter that after the continuous rise, the treasury bond futures increased, and may rise sharply in the short term, but still pay attention to the risk of increased market volatility.

Shenyin Wanguo National Debt FuturesAnalystTang Guanghua said that in the short-term, the treasury bond futures will be honored by the central bank, and the short-term interest rate will continue to be loose. With the gradual introduction of the steady growth policy, the short-term market divergence of the treasury bonds in the stage high will increase, and the volatility may increase.

The analyst said that in the long run, it is expected that in the context of economic growth slowdown and industrial product prices facing deflation, there will still be room for treasury bond yields, and treasury bond futures prices will remain strong, suggesting that the majority will be dominated by arbitrage strategies. Focus on the flat yield curve and the arbitrage trading, and pay attention to the various economic data to be announced.

It is worth emphasizing that although the national debt futures have risen in the past few days, the positives continue, but there are still other voices in the market.

Relevant industry insiders told the "International Finance News" reporter that the early issuance of local bonds has a great impact on the bonds. In August-September 2018, the centralized issuance of local special bonds caused a monthly correction of the national debt futures. The impact of debts on future debts should not be underestimated.

According to public information, the reporter of the International Finance News learned that the Standing Committee of the National People's Congress officially authorized the State Council to issue a new debt limit of 1.39 trillion yuan to the local government in advance in 2019. The insiders have revealed that local governments will start issuing local government bonds in late January, which is ahead of previous years, and the supply of local bonds has increased throughout the year.

(Article source: International Finance News)

                (Editor: DF318)

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