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]