Bond Market Closing | Slightly stronger with volatility, 10-year government bond yield rises slightly by 0.5bp

Ask AI · Why didn’t the PMI rebound reverse the bond market yield uptrend?

China Financial News (3月31日讯) (edited by Li Xiang) Today, the Shanghai Composite Index rose and then retreated; intra-day liquidity was relatively loose, yet the bond market as a whole turned slightly green. The yield on the 10-year government bond edged up by 0.5 bp. In the view of industry insiders, the Middle East situation still has significant uncertainty. With liquidity loosened around quarter-end, demand for allocations from funds, banks, and others has been released, but signs of profit-taking pressure have already appeared. Entering the second quarter, the bond market may still maintain a volatile but relatively strong performance.

Specifically, most government bond futures closed higher. The 30-year benchmark contract rose 0.15% to 111.690 yuan; the 10-year benchmark contract rose 0.04% to 108.400 yuan; the 5-year benchmark contract rose 0.03% to 106.105 yuan; the 2-year benchmark contract was unchanged at 102.538 yuan.

In the interbank market, the yields of major policy-related government bonds mostly rose. As of 16:30 this afternoon, the yield on the on-the-run 10-year government bond issue 260005 rose 0.5 bp to 1.808%; the yield on the on-the-run 10-year policy bank bond issue 250220 rose 0.2 bp to 1.956%; and the yield on the on-the-run 30-year government bond issue 2500002 rose 1.1 bp to 2.2845%.

（Data source: Wind, compiled by China Financial News）

Primary market side:

Industry insiders noted that today’s official China March manufacturing PMI was 50.4, up from the prior value of 49. However, the Middle East situation still has substantial uncertainty. At the same time, the main reason yields fell broadly on the prior trading day was that quarter-end liquidity loosened. Today’s liquidity remains very loose. The DR001 volume-weighted average interest rate fell by more than 3 bp to around 1.27%. Demand for allocations from funds, banks, and others has been released, but signs of pullback pressure have already emerged. Entering the second quarter, the bond market may still maintain a volatile but relatively strong performance.

In the open market operations, the PBOC stated that on March 31 it carried out a 32.5B yuan reverse repo operation with a fixed interest rate and quantity tendering for a 7-day term. The operation rate was 1.40%, with tender volume of 32.5B yuan and winning volume of 32.5B yuan. Wind data shows that 17.5B yuan of reverse repos matured on the day; based on that, the net daily injection was 15B yuan.

Regarding liquidity, most Shibor short-term products fell. Overnight fell 4.1 BP to 1.277%; 7-day rose 2.0 BP to 1.438%; 14-day fell 2.5 BP to 1.469%; 1-month fell 0.2 BP to 1.495%, hitting a new low since August 2022.

Interbank repo benchmark fixing rates mostly declined. FR001 was unchanged at 1.4%; FR007 fell 2.0 bps to 1.49%; FR014 fell 2.0 bps to 1.5%.

Inter-silver interbank repo benchmark fixing rates mostly declined. FDR001 fell 3.1 bps to 1.28%; FDR007 was unchanged at 1.43%; FDR014 fell 4.0 bps to 1.44%.

The pledged-repo interest rates showed mixed performance, with increases and decreases as follows:

（Data source: Wind, compiled by China Financial News）

In secondary certificates of deposit, 3M Guo shares traded around 1.44%, down 0.5 bp from the prior trading day. 1Y Guo shares traded at 1.5025%, down 0.75 bp from the prior trading day.

（Data source: Choice, compiled by China Financial News）

（China Financial News, Li Xiang）