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Will it rise or not?
Caitong believes that whether or not the LPR is lowered, it may not necessarily drive interest rates to immediately break their previous lows. After all, the market has to navigate the trade-offs between the Sino-U.S. trade friction, the strength of a package of incremental policies, and the choice of monetary policy, with the combination of the three being dynamic and full of uncertainty.
Attraction increases! The domestic Bonds market size reaches 183 trillion yuan, and this year, the Holdings of Overseas Institutions in Bonds have increased by over 270 billion yuan.
① According to a report from the Financial League News Agency, as of April 15, over 1,160 Overseas Institutions have entered China's bond market, and the total amount of bonds held has increased by more than 270 billion yuan compared to the holdings at the end of 2024. ② Currently, there is still significant room for the opening up of China's bond market. At present, the proportion of bonds held by Overseas investors is only 2.4%, which is relatively low compared to developed economies and some Emerging Markets.
The significant economic data on GDP has been released, and the bond market is "calm," slightly declining, while the logic for the bond market strengthening remains amidst the increasing allocation of non-bank funds.
Recently, non-bank Institutions have increased their Shareholding positions in Bonds, with many leveraging through interbank lending operations. Compared to the "tight balance" state that appeared in March, the current low funding costs provide a good window for bullish buyers to enter.
The impact of Trump's tariffs: Institutions analyze the logic and strategy choices of Bond investment from five dimensions | Fixed Income Chief Market Commentary.
① Following the Trump administration's announcement of an additional 54% tariff on China, the Chinese bond market reacted sharply, highlighting the bonds' safe-haven attributes; ② The market quickly priced the bond market, and institutions expect the central bank to prioritize using structural tools to cut interest rates, with an increased probability of a reserve requirement ratio cut in May.
Cailian Press C50 Wind Direction Index Survey: In March, Crediting may be on par with the same period in 2024, government bonds maintain substantial issuance, driving social financing to increase year-on-year.
① New RMB loans in March may be around 3 trillion yuan, basically unchanged from the same period last year; ② The government's bond issuance remains at a high level in March, which may boost year-on-year growth in social financing; ③ The market anticipates that the year-on-year growth rate of the CPI in March is likely to rebound, while the decline in the PPI may remain stable compared to the previous month.
The risk of economic recession is accumulating, and Pimco is Bullish on Global Bonds bringing stable returns.
As the chances of a recession in the USA rise, Pacific Investment Management Company (Pimco) emphasizes the appeal of Global Bonds as a "source of stable returns."
