Core Viewpoint - The recent changes in public fund fee regulations have significantly impacted the bond market, leading to a sharp rise in bond yields and a decline in bond fund returns [1][2][3] Group 1: Market Reaction - The yield on 10-year government bonds rose from 1.74% on September 4 to a peak of 1.83% on September 10, while the 30-year bond yield increased to around 2.10% [1] - As of September 11, 751 out of 930 short-term pure bond funds reported negative returns over the past week, and 2926 out of 3571 medium to long-term bond funds also showed negative returns [1] - The CNEX bond divergence index indicates that fund institutions have been major sellers in the current bond market downturn [2] Group 2: Regulatory Changes - The new fund fee regulations, effective from September 5, adjust redemption fees for bond funds, encouraging long-term holding and impacting liquidity management strategies [3][4] - The new redemption fee structure includes a minimum of 1.5% for holdings under seven days, 1% for holdings between seven and thirty days, and 0.5% for holdings between thirty days and six months [4][5] Group 3: Investment Strategy Shifts - The new regulations are expected to alter the asset allocation logic for fixed-income products, with a shift towards longer holding periods and different preferences for bond types among institutional investors [7][8] - As funds exit bond funds, there may be a preference for short-term credit bonds and mid-duration bonds, while demand for long-term government bonds may weaken [8][9] - The absence of liquidity management functions in bond funds may lead to increased interest in bank wealth management products, which do not have redemption fees [6][9] Group 4: Market Dynamics - The bond market is experiencing a unique adjustment, with no significant cross-market linkage observed, primarily due to the new redemption fee adjustments and the historical low yields following last year's bond bull market [2][3] - The new fee structure may lead to a preference for bond ETFs as a substitute for liquidity management, as financial institutions seek to adapt to the changing landscape [9][10]