Core Viewpoint - The bond market has returned to a weak state, with government bond futures closing down across the board, and interbank bond yields mostly rising slightly by around 0.5 basis points [1][2]. Market Performance - Government bond futures closed lower, with the 30-year main contract down 0.51% to 113.89, the 10-year main contract down 0.07% to 107.98, the 5-year main contract down 0.06% to 105.77, and the 2-year main contract down 0.02% to 102.388 [2]. - The interbank major rate bond yields showed a weak consolidation, with the 10-year government bond yield rising by 0.05 basis points to 1.828% [2]. - The China Convertible Bond Index closed down 0.52% at 479.58 points, with a total transaction amount of 443.71 billion [2]. Overseas Market Trends - In North America, U.S. Treasury yields rose collectively, with the 10-year yield increasing by 7.33 basis points to 4.087% [3]. - In Asia, Japanese bond yields mostly fell, with the 10-year yield down 1 basis point to 1.867% [3]. - In the Eurozone, 10-year bond yields for France, Germany, Italy, and Spain all increased, with the 10-year French yield rising by 7.5 basis points to 3.482% [3]. Primary Market - The China Development Bank's financial bonds had a successful auction with 2-year, 5-year, and 10-year yields at 1.5504%, 1.7565%, and 1.9395% respectively, with bid-to-cover ratios of 2.22, 2.4, and 2.89 [4]. Liquidity and Funding - The central bank conducted a 7-day reverse repurchase operation of 156.3 billion at a rate of 1.40%, resulting in a net withdrawal of 145.8 billion for the day [5]. - Short-term Shibor rates mostly declined, with the overnight rate down 0.5 basis points to 1.302% [5]. Institutional Insights - Huatai Securities noted that the introduction of commercial real estate investment trusts (REITs) could enhance asset liquidity and potentially lead to a revaluation of related assets and companies [6]. - Huachuang Securities highlighted that the central bank's bond purchase volume in November could be a key observation indicator, with expectations that exceeding 100 billion could catalyze a warming of monetary policy expectations [7].

Core Viewpoint - The recent bond market fluctuations are influenced by the People's Bank of China's (PBOC) bond purchasing activities, with various institutions predicting differing scales for November's bond purchases, reflecting diverse interpretations of the central bank's monetary policy logic [1][2][3]. Group 1: Predictions on Bond Purchase Scale - Institutions have varying predictions for the PBOC's bond purchase scale in November, categorized as conservative, moderate, and aggressive, indicating different understandings of the central bank's monetary policy [2]. - A cautious perspective suggests that while the October net purchase of 20 billion yuan was small, the average daily purchase of 5 billion yuan over four trading days is significant, leading to expectations that November's net purchases will exceed October's but maintain a careful pace [2][3]. - Some analysts believe that the scale of bond purchases will depend on changes in bond yields, with potential adjustments based on whether yields decline too quickly or remain stable [3]. Group 2: Market Dynamics and Liquidity - The liquidity gap in November is estimated at around 2 trillion yuan, with the PBOC likely using bond transactions to maintain the DR007 rate within the 1.4-1.5% range [3]. - The current holdings of the PBOC account for about 6% of the total bond market, indicating room for expansion compared to developed countries [3]. - Analysts suggest that the resumption of bond purchases could act as a substitute for reserve requirement ratio (RRR) cuts, with a significant number of market institutions expecting a lower probability of RRR cuts in the fourth quarter [3][4]. Group 3: Market Reactions to Purchase Scenarios - Different scenarios for bond purchase scales could lead to varied market outcomes, with small-scale purchases (200-500 billion yuan) signaling a steady policy and keeping yields within the 1.75%-1.85% range [5]. - Medium-scale purchases (500-1000 billion yuan) could create downward pressure on yields, potentially lowering them to the 1.7%-1.75% range, while larger purchases (over 1000 billion yuan) might significantly alter market supply and demand dynamics [5][6]. - The bond market has shown increased sensitivity to negative factors since November, which may be linked to upcoming regulatory changes affecting fund sales [6]. Group 4: Investor Sentiment and Strategy Adjustments - A bond fund manager noted that the October purchase of 20 billion yuan was more symbolic than impactful, emphasizing the need for clarity on the central bank's medium to long-term operational framework [7]. - As year-end liquidity demands rise, the bond market is becoming increasingly tense, with upcoming data expected to clarify the ongoing dynamics [7].