The bond market is on the strong side. First, the supply pressure has been significantly reduced, and the progress of special bond issuance is less than expected; Second, due to the impact of the equity market, the risk sentiment is weak, and the seesaw effect of stocks and bonds has boosted the trading sentiment of the bond market, especially the 30-year varieties have a strong performance; Third, the policy side is less than expected, and the fiscal and real estate policies have failed to improve the downward trend of fundamentals. On the other hand, the funding rate is still expensive, and the bond market curve is still flat.
China Life Security** believes that in terms of fundamentals, the PMI data is better than the January seasonality, but it is mainly driven by production and inventory, demand is still weak, and the problem of overcapacity still exists, which also leads to a general decline in PMI** sub-items. The index of new export orders in January was 472%, up 1 from the previous month4PCT, in the future, the United States financial conditions have improved, and the US manufacturing PMI has signs of stabilization and rebound, which may support domestic exports.
In terms of liquidity and policy, China Life Security** believes that Shanghai's real estate policy has been relaxed, but it is weaker than market expectations, which has led to a decline in bond yields. The policy has also constrained the infrastructure of the 12 heavily indebted provinces, and the room for fiscal development has also decreased. In terms of liquidity, the funding rate is still relatively expensive, but the stability has been significantly enhanced, and there is a phenomenon that it is not tight at the end of the month and not loose at the beginning of the month. The central bank is striking a trade-off between anti-rotation and steady growth.
On the whole, China Life Security** believes that the current market curve is relatively flat, and the capital is still expensive, which restricts the short-end performance, and the long-end, especially the ultra-long performance, is better. The policy is lower than market expectations, and under the tone of stable growth, some long-term contractionary policies still exist, such as the coexistence of fiscal leverage and local leverage, and the coexistence of monetary RRR reduction and air defense transfer. In the future, the economic fundamentals are still in the bottom range, the policy force is still unclear, and the bond market is expected to remain strong.