The short – term demand in the bond market remains strong, with yields on one – year Treasury bonds dropping by around 2.5 basis points, according to Securities Times on June 6th. Treasury bond futures closed higher across the board, with the 30 – year main contract rising by 0.35% to 119.780 yuan. Other contracts also showed gains:

The 10 – year main contract increased by 0.17% to 108.925 yuan.
The 5 – year main contract rose by 0.08% to 106.140 yuan.
The 2 – year main contract climbed by 0.02% to 102.452 yuan.

Declining Yields on Major Inter – bank Rate Bonds

Yields on major inter – bank rate bonds declined across the board. As of 16:30 p.m., the yield on the 10 – year active Treasury bond 250011 dropped by 1.15 basis points to 1.656%, and the yield on the 30 – year active Treasury bond 2500002 fell by 1.25 basis points to 1.8775%. The yield on the 10 – year active bond 250210 of the China Development Bank dropped by 0.95 basis points to 1.698%.

Market Dynamics and Central Bank Operations

Industry insiders noted that short – term Treasury bonds have seen good demand for three consecutive days. Coupled with the central bank’s tender for a trillion – yuan reverse repo on June 6th, the interest rates of domestic interbank certificates of deposit and short – term bond yields have all declined. This has also driven up the activity of long – term yields. The yields of Treasury bonds with a maturity of more than seven years have all declined by about 1.5 basis points. The main contract of Treasury bond futures T opened and closed higher, fluctuating narrowly around 108.55, but lacked further upward breakthrough momentum.

Upcoming Market Events

Next week, 930.9 billion yuan of reverse repos will mature in the central bank’s open market. The maturity schedule is as follows:

Next Monday: 0 billion yuan

Next Tuesday: 454.5 billion yuan

Next Wednesday: 214.9 billion yuan

Next Thursday: 126.5 billion yuan

Next Friday: 135 billion yuan

Investment Strategy Recommendations

Changjiang Fixed Income suggested that in the first half of June, credit bonds should shift to a defensive coupon strategy. Investors should take advantage of the window period of loose liquidity and the end of interest rate spread compression, focusing on medium and high – grade varieties. They should avoid the risk of interest rate fluctuation transmission and wait for allocation opportunities in ultra – long – term local government bonds and high – quality industrial bonds. Credit bond investors should appropriately reduce their exposure to duration, avoid excessive downgrading of their qualifications, pay attention to the special terms of individual credit bonds, and increase the margin of safety through terms protection. Meanwhile, if interest rate bonds enter a period of stabilizing sentiment after the adjustment, it is advisable to position state – owned enterprise industrial bonds that still have value undervalued areas.

Central Bank’s Reverse Repo Operation

The People’s Bank of China announced that on June 6th, it conducted a 7 – day reverse repo operation of 135 billion yuan through fixed – rate and quantitative bidding. The operation rate was 1.40%, with a bidding volume of 135 billion yuan and a winning bid amount of 135 billion yuan. Wind data shows that 291.1 billion yuan of reverse repos matured on that day. Based on this calculation, 156.1 billion yuan was withdrawn in a single day.