Group 1 - The report highlights that since July, long-term interest rates have been fluctuating upwards, influenced by macroeconomic narratives and regulatory factors, leading to changes in institutional behavior and trading friction, resulting in a structural resilience in certain credit varieties while others have experienced significant declines [1][10] - In the third quarter, the credit market showed structural resilience and significant declines in specific varieties, with short-term credit demonstrating relative stability, with yield increases mostly within 10 basis points, while long-end perpetual bonds saw yield increases exceeding 30 basis points, indicating a notable drop compared to standard bonds [12][13] - The report anticipates that if new regulations on public fund sales are implemented and the floating profits from wealth management products are fully released, there may be a revaluation of credit assets, with potential trading friction between exiting trading positions and entering allocation positions [3][10] Group 2 - The report notes a shift in trading behavior, with wealth management products increasing their net purchases of credit bonds, reflecting the emerging value of credit yields post-adjustment, while the net purchases of certificates of deposit have decreased [2][3] - The report emphasizes that the fourth quarter and the year 2026 will be critical for the credit bond market, as the challenges faced by institutional liabilities could drive a revaluation of credit asset values, particularly if the new public fund sales regulations are enacted [3][4] - The report suggests that the pricing center for perpetual bonds may rise due to the revaluation of credit attributes, and short-term credit may see a support level shift from 1.8% to 2.0% as the market adjusts to the new regulatory environment [4][5]

Core Insights - The report indicates a cautious sentiment in the bond market, with the emotional index remaining in the "cold" zone for three consecutive weeks, reflecting a weaker rebound compared to previous instances when the market typically self-corrected in similar conditions [2][8] - The uncertainty surrounding the new public fund sales fee regulations is identified as a key factor suppressing market sentiment, leading to increased observation and hesitance among investors [2][8] - The report outlines the potential for redemption shocks, drawing on historical data from 2022 to 2025 to analyze the current market's pricing and risk exposure [5][10] Redemption Shock Analysis - Since 2022, there have been 10 notable redemption shocks, with the most severe occurring in late 2022 due to policy shifts and concentrated redemptions, while 2023 saw only one significant event linked to tightening liquidity and real estate policy adjustments [3][10] - The typical path of redemption shocks involves initial pressure on funds, particularly long-term and liquid bonds, leading to widening spreads and potential secondary market impacts [4][9] - The report emphasizes that the current market's pricing of potential redemption risks is at a moderate level, with key indicators such as the 10-year government bond yield and various spreads showing mixed signals [5][12] Market Pricing and Indicators - The 10-year government bond yield has increased by 6 basis points, which is below historical averages, indicating limited disturbance in the liquidity environment [5][12] - The report notes that the current widening of the national development bond spread is approaching historical highs, while other spreads are showing varying degrees of widening, suggesting a complex market response to the new regulations [12][19] - The net value of medium to long-term pure bond funds has seen a slight decline of -0.26%, which is less severe than historical averages, indicating that the market has absorbed some of the regulatory impacts [12][27] Strategic Considerations - The report suggests that the rapid cooling of market sentiment and the low microstructure index may increase the likelihood of a short-term rebound post-National Day, although caution is advised regarding potential tail risks from the fee regulations [6][32] - The analysis of fund duration and divergence indicates a shift towards shorter durations and higher divergence, reflecting a defensive positioning by investors in response to market uncertainties [41][32]