The easiest way to invest in bonds is to peg to the market interest rate, that is, the "10-year Treasury bond yield", and the bond is basically negatively correlated with the market interest rate.
So when will the market interest rate be**? When will it**? How should I adjust my bond holdings? This leads to the concept of the "credit cycle":
When the central bank began to "release water", that is, the central bank began to send money to commercial banks, it means that it has entered a wide monetary cycle, and the market interest rate has begun.
When commercial banks begin to "inject water" into the real economy, that is, when they lend a large amount to enterprises, it means that they have entered a wide credit cycle, at this time the market interest rate has approached the bottom, the economy is facing inflationary pressure, and bonds are about to go to the tail of the bull, and long-term bonds should be gradually replaced with short-term bonds, commonly known as "reducing duration", and the total number of bonds has dropped to 4 5 percent;
When the central bank finds that the economy is overheated, it will begin to make money, and then it will enter a tight monetary cycle, and the market interest rate will rise, in contrast, the coupon of the old bond will not be attractive, so the bond will begin, at this time, a large number of short-term bonds should be held, and the total number of bonds will be controlled at about 5 percent;
When the money is gradually taken away by the central bank, commercial banks will also tighten credit, so it has entered a tight credit cycle, market interest rates began to peak and fall, the economy is facing deflationary pressure, bonds are in the first market, at this time should be mainly held in cash, and when the bond yield exceeds the currency, it means that the bond has come out of the bear market and can increase the bond again.
A more vivid analogy will help you understand the above process: there is a "reservoir" between the central bank and the commercial banks, the central bank is responsible for controlling the "water inlet pipe" and the commercial bank is responsible for controlling the "water outlet pipe". When the central bank releases water into the pool, it is the monetary easing cycle; When a central bank pumps water out of the pool, it tightens the monetary cycle; When commercial banks inject water from the pool into the real economy, it is a wide credit cycle; When commercial banks begin to reduce the amount of water injected into the real economy, they tighten the credit cycle.
To put it simply: bond movements are influenced by market interest rates, which in turn are influenced by monetary and credit policies. An easy monetary cycle is good for bonds, and a tight monetary cycle is bad for bonds.
Therefore, when we invest in bonds, we must keep an eye on the trend of market interest rates, pay close attention to the actions of the central bank and commercial banks, and adjust the bonds in a timely manner**.
In addition, in addition to the monetary policy of the Chinese central bank, we also need to pay attention to the monetary policy of the US central bank, that is, the US Federal Reserve. When China and the United States synchronize monetary easing, bonds are a big bull market; When China synchronizes monetary easing and credit easing with the United States, it is a big bull market. In other words, if China and the United States move in the same direction, there will be a big bull market or a big bear market; If China and the United States go against the grain, they will cancel each other out, and then it will be up to them to see whose intentions or attitudes are more resolute.
In short, as investors, we must always stand with the country and the central bank, help not add to the chaos, and invest in bonds when the monetary easing is safe.