According to the financial credit data released by the central bank in January, the scale of social financing and credit demand exceeded market expectations, especially corporate bonds became the main driving force. This phenomenon has raised concerns about the shift in fiscal spending to restraint, resulting in the market's expectation of the degree of subsequent fiscal and monetary policy efforts, which in turn affects the bond market's response strategy in the later stage. Overall, there are no significant negative factors at present.
It is worth noting that short-term loans and medium- and long-term loans to non-financial enterprises increased by 146 trillion yuan and 331 trillion yuan, an increase of 50 billion yuan and 190 billion yuan respectively year-on-year. This suggests that the strengthening of corporate loan demand may create new variables for the bond market. The logic lies in the fact that due to the high cost of financing debt issuance, the demand for loans for corporate financing is increasing.
So, will the demand for corporate loan financing continue to be released? This is one of the key factors affecting the future bond market, especially the credit bond market. Historically, similar changes have occurred in September 2016, April 2020 and August 2022, but yields have risen after a brief correction in the bond market.
Some analysts pointed out that although the influencing factors of the bond market are related to the release of credit demand, the key is still to consider the extent of economic recovery and the direction of monetary policy. Sun Binbin, chief fixed income analyst of Tianfeng**, expects that the probability of a rate cut in February is not high, and the probability of a separate LPR cut is relatively large. This has less of an impact on the pricing of bond yields. If MLF pricing is strictly followed and no rate cuts are made in February, the downside of Treasury yields will be limited. Even if there is a subsequent trade in interest rate cuts, the pace is expected to slow unless the easing of funds drives the bulls.
At present, there are indeed no significant negative factors in the bond market. Therefore, although there may not be a bull steepness, it should still remain long**. The so-called unexpected situation is naturally outside the existing analysis, and the main thing behind it is the strain.
In addition, the performance of the stock and bond markets before the Spring Festival is also worth paying attention to. It has undergone a process of restoration, while the performance of the entitled debt base has been strong. In contrast, pure debt** is relatively flat. However, the top performance varieties of medium and long-term pure debt** performed well. This shows that the bond market traded loose monetary expectations in advance in January, and the seesaw effect of the stock and bond markets is obvious.
For the bond market, the RRR cut is more certain for the short-end, and the pressure on the long-end is limited. It is recommended to pay attention to the marginal disturbance of the bond market on the capital side and the allocation plate. Of course, the pre-holiday strategy was generally adopted, especially in terms of heavy debt and light stocks. This shows that the use of risk management is being valued.
Overall, bond market sentiment and ** will normalize in 2024. In the context of the economic growth rebound has not yet been solidified, it is expected that the monetary policy will remain neutral and loose. In the future, more attention will be paid to cross-cyclical and counter-cyclical adjustment, and more emphasis will be placed on coordination with fiscal policy. In the short term, although the issuance of additional 1 trillion treasury bonds has a limited effect on boosting demand, the continuous strengthening of real estate stabilization and credit easing expectations will still cause certain disturbances to the bond market sentiment, and superimposed on the smoothing of credit requirements and cross-year capital demand, which may lead to the expected increase in capital fluctuations, bringing certain pressure to the bond market, but the upside risk is controllable.
February** Dynamic Incentive Program