On Tuesday (January 27), the interbank money market rates remained generally balanced yet slightly loose. However, the bond market failed to strengthen, instead experiencing a widespread pullback due to fluctuations in the equity market, leading to an overall rise in yields and a slightly flatter yield curve.
Funding Market: Open Market Net Injection, Short-term Rates Fall
The central bank conducted a 7-day reverse repo (OMO) injection of 402 billion yuan, with 324 billion yuan maturing, resulting in a net injection of 78 billion yuan. The funding environment showed marginal improvement, with DR001 falling to around 1.37%, and there was ample willingness to lend short-term, providing basic liquidity support for the bond market.
Bond Market Trend: Supported by Funding in the Morning, Then Influenced by Stock Market Sentiment
Against the backdrop of a relatively loose funding environment, treasury futures opened higher in the morning, with bond market sentiment initially recovering. But subsequently, affected by stock market fluctuations and the "stock-bond seesaw effect," futures and cash bonds weakened. The economic data released later was generally in line with expectations, having limited impact on the market, which experienced narrow fluctuations throughout the day and tightened slightly at the close.
Cash Bonds Performance: 10-Year and 30-Year Yields Rise, Longer Durations More Sensitive
For interest rate bonds, the yield on the active 10-year government bond (250016) rose by 0.45 basis points to 1.8295%, and the yield on the active 30-year government bond (25 Special 6) rose by 1.35 basis points to 2.2555%. In the credit bond market, the short-term end showed relatively better resilience amid stable funding, while longer durations saw more cautious buying at high valuation levels.
Institutional Perspective: Term Spreads Narrowing, Structural Flattening Continues
CITIC Securities pointed out that although the funding environment is not tight, the bond market mainly saw a pullback. Near the end of trading, the decline narrowed due to reduced buying by insurance funds and weakened support, leading to a slight upward movement in yields. The "10-year to 1-year" term spread narrowed somewhat, with the curve showing slight flattening characteristics, and short-term long-term rates remain easily disturbed by risk appetite.
Money Market and Valuation: Shibor Mostly Declining, Overall Lower Bond Valuation
Under the CSI Valuation Framework, money market prices were mixed but generally stable: overnight Shibor reported 1.3710%, down 4.90 basis points, and the 1-month Shibor reported 1.5556%, down slightly. The weighted overnight repo rate in the interbank market fell to 1.37%, while the 7-day repo weighted rate rose to 1.58%. The exchange overnight repo weighted rate was around 1.40%.
Regarding trades, exchange bond turnover fell to 207.8 billion yuan, including 51.8 billion yuan in government bonds; government bond futures saw mixed performance, with key contracts at 10-year, 5-year, and 2-year reporting 108.185, 105.840, and 102.386, respectively. The CSI All Bond Index fell by 0.024%, with the CSI 10+ Bonds and CSI Government Bonds leading the declines.
Other Market Clues: Strengthening of Renminbi and Pre-Spring Festival Volatility Expectations
In the foreign exchange market, the Renminbi continued to strengthen against the US dollar, with the spot rate rising to 6.9539 on January 26, reaching a new high since May 2023; institutions believe this helps expand monetary policy space. As the Spring Festival approaches, multiple factors intertwine, making the bond market more likely to maintain a volatile pattern in the short term.
REITs: Overall Small Gains but Notably Divergent, Moderate Activity
In the public REITs sector, the CSI REITs Total Return Index closed at 1045.72 points, up 0.08% on the day, with a year-to-date increase of 3.55%. The sector showed continued divergence, with consumer and expressway sectors leading the gains, while the industrial park sector remained weak. The total market turnover was 666 million yuan, up from the previous period, with a daily turnover rate of 0.58%, indicating moderate trading activity.
