Group 1: Inflation Expectations - Inflation expectations have been rising, with Brent crude oil averaging $102 per barrel in March, a 40% year-on-year increase[1] - March is a critical turning point for PPI, expected to turn positive in April, indicating a significant shift in inflation dynamics[1] - Structural inflation issues are likely to dominate the bond market in Q2[1] Group 2: Historical Inflation Cycles and Bond Market Response - Since 2000, five notable inflation cycles have occurred, with the first three validating the theory that "inflation determines interest rates"[2] - In the last two cycles, the correlation between CPI/PPI and interest rates has weakened, indicating a shift from demand-driven to supply-driven inflation[2] - The transition point occurred around 2012, marking a change in inflation dynamics from comprehensive to structural inflation[2] Group 3: Short-term Implications for the Bond Market - If structural inflation persists briefly, it may amplify negative impacts on the bond market, particularly if other risk variables weaken institutional sentiment[3] - Should structural inflation not ease, the central bank may preemptively tighten liquidity, leading to a gradual adjustment in interest rates[3] - A potential shift to comprehensive inflation, indicated by CPI exceeding 3%, could lead to significant upward adjustments in long-term interest rates[3] Group 4: Current and Future Inflation Projections - The probability of CPI exceeding 3% within the year is considered low, with a peak expected at 2.6% by Q3, followed by a gradual decline[4] - If structural inflation expectations rise further, bond market adjustments may see interest rates peak between 1.85% and 1.90%[4] - A defensive strategy is recommended if long-term rates approach the lower limit of around 1.80%[4]