Summary of Conference Call on Long-term Bonds Industry Overview - The discussion revolves around the long-term bond market, particularly focusing on the 30-year government bonds in China and their recent performance trends [1][2][3]. Core Insights and Arguments - **Rising Yields**: Since July, the yields on long-term government bonds have risen sharply, influenced by a reversal of deflation expectations and breakthroughs in technology independence, which have elevated risk appetite in the A-share market [1][2]. - **Market Sentiment**: The sentiment in the market has been weak, with a notable increase in anxiety among investors as the 30-year bond yield rose nearly 10 basis points last week [2]. - **Investor Behavior**: There has been a significant shift in investor behavior, with many moving away from buying into the 30-year bond ETF during the recent downturn, indicating a preference for stop-loss strategies rather than bottom-fishing [3]. - **Banking Sector Impact**: Commercial banks are facing reduced capacity to absorb bonds due to stricter regulatory oversight on interest rate risks, year-end profit adjustments, and the cessation of long-term deposit products [3]. - **Insurance Companies**: Life insurance companies are experiencing a slowdown in premium growth and are increasingly favoring equity assets, leading to decreased demand for long-term government bonds [3]. - **Supply Side Dynamics**: The issuance of special government bonds is expected to continue until 2026, which will likely increase the supply of long-term bonds. Additionally, rising yields in overseas markets, such as Japan, are affecting domestic market sentiment [3][4]. Investment Strategy Recommendations - **Current Market Conditions**: It is deemed unwise to attempt to bottom-fish in the long-term bond market at this time, as the repricing process is not yet complete. The yield spread between 30-year and 10-year bonds in China is still lower than that in the US and Japan, indicating a mispricing that needs correction [4][5]. - **Short-term Opportunities**: Potential short-term trading opportunities may arise from new public fund fee regulations or increased bond purchases by the central bank, although these are not expected to reverse the overall market trend [4][5]. - **Risk Appetite**: For risk-tolerant investors, there is an arbitrage opportunity in the 30-10 year yield spread, which has exceeded 40 basis points. However, investors should be prepared for volatility [5]. - **Conservative Strategies**: Conservative investors are advised to adopt a leveraged carry strategy, as the current funding environment is stable and favorable for such approaches [5]. Additional Important Points - **Market Volatility**: The volatility in the A-share market has not weakened the macro trend, and investors with a higher risk appetite are encouraged to explore opportunities in the 10-year bond market, which is currently at the upper end of its trading range [2][5]. - **Long-term Outlook**: The long-term bond market is expected to continue its repricing process, and the best strategy remains leveraging carry strategies in the medium to long term [5].