【Zheshang Bank FICC Fixed Income**】Leave a point of sobriety and a point of drunkenness1. Domestic market
1. Market conditions
Today's maturities are mixed, 1Y NCD down about 2bp, 2Y government and financial bonds generally up 1bp, 10Y treasury bonds active bonds fluctuate more in the day, down nearly 4bp in early trading, down 1bps compared with yesterday, 30Y treasury bonds continue to soar, up to 4bp down intraday, ** down 3bp compared with yesterday.
In the morning, the market directly opened the crazy TKN mode, and the long-end yield soared, and the pre-market 10Y Treasury bond active bond was from 2445% down to 241%, off 240% is just one step away, but the yield has since increased slightly**. The impact of PMI data on the market as a whole is not large, and the market is mainly based on the logic of taking profits after a rapid and sharp downward trend, and the treasury bonds are open high and low.
However, due to the sluggish performance of the equity market throughout the day, the bond market gradually strengthened in the afternoon, and the long end began to have downward strength again, and the 30y treasury bond** almost closed at the high point of the day.
Yesterday, the market was saying that after the yield broke through the previous low, there was no reference system to refer to; Judging from our recent exchanges with various investors around us, the participants in this round of hot ** do have new faces other than traditional investors, and these forces are also the reasons for the rapid development of this round**. However, as said in "Flowers", "to make investment, the heart should be hot, and the mind should be cold", although the main line of easing may remain the same, but under the consensus expectation, ** fermentation has been too extreme, and the funds are completely loose (after all, 3msibor is still 239%, FR007 is still fixed again 235%) has yet to be verified, and the current market pricing may have priced in excessive easing expectations, and if the market's expectations are disappointed thereafter, investors will need to be more wary of the risk of market correction than the failure of the January rate cut at the current low yield. On the other hand, considering that the MLF operation time in February is likely to be after the Spring Festival holiday, there are only a few trading days left for the market to "take profit and fall into the bag".
We believe that if you stay sober and drunk, you can consider reducing the bag in the short term.
2. All-day performance
Data**: ifind
2. Overseas markets
Overnight, the U.S. released December JOLTS job openings data, which unexpectedly rose to 90260,000, higher than expectations of 8.75 million and a three-month high. The resilience of the labor market flattened Treasury yields, and the market postponed expectations of a Fed rate cut, with the probability of a rate cut falling to 40% in March. The 2-year Treasury yield**4bp to 435%。The long-end yield continued to digest the impact of the US Treasury's reduction in quarterly refinancing, and the curve steepened** flattening was more obvious, and the 10-year Treasury yield **2bp to 4.05%, the 20-year Treasury yield closed at 439%。
In addition, the Case-Shiller 20 city house price index for November was also released overnight, which was **015%, an increase slightly lower than the market consensus of 050%。The pace of monthly appreciation slowed to its lowest level since February 2023. But the impact of the decline in mortgage rates since the end of last year may not be fully reflected in that data. Home price appreciation is expected to accelerate in the coming quarters as aggregate demand for housing begins to recover as falling mortgage rates begin to recover, while existing homeowners who have locked in low-interest mortgages in the past remain reluctant to put their homes on the market.
During today's European session, affected by lower-than-expected inflation data in France, the yields of core European countries appeared**, driving the US Treasury yields to continue to fall, and the 10-year US Treasury yield**3bp is currently at 402% key points. Details of the Treasury Department's quarterly refinancing and FOMC meeting will be announced tonight. We expect the FOMC meeting statement to potentially abandon the hawkish stance in the forward guidance, but not to signal a rate cut. At the same time, the pace of balance sheet reduction will be discussed at this meeting, and Powell is expected to respond to this at the press conference, while paying attention to the response to recent economic data.
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