Core Viewpoint - The bond market is expected to maintain a volatile trend ahead of the holiday, with the 10-year government bond yield approaching the critical level of 1.8%, leading to increased profit-taking pressure [1] Market Performance - Government bond futures closed mostly higher, with the 30-year main contract down 0.10% at 111.96, the 10-year main contract up 0.02% at 108.26, the 5-year main contract up 0.06% at 105.905, and the 2-year main contract up 0.03% at 102.414 [2] - The interbank major interest rate bonds showed narrow fluctuations, with government bonds performing slightly better than policy bank bonds [2] Overseas Bond Market - In the Asian market, Japanese bond yields rose across the board, with the 10-year yield increasing by 2.8 basis points to 2.263% [3] - In North America, U.S. Treasury yields collectively rose, with the 2-year yield up 4.71 basis points to 3.572% and the 10-year yield up 4.39 basis points to 4.279% [3] Primary Market - The Ministry of Finance's weighted average winning yields for 28-day and 182-day government bonds were 1.0959% and 1.2755%, respectively, with bid-to-cover ratios of 3.49 and 2.72 [4] - The China Development Bank's three-term financial bonds had winning yields below the market valuation, with 2-year, 5-year, and 10-year yields at 1.4944%, 1.7258%, and 1.9501%, respectively [4] Funding Conditions - The central bank conducted a 7-day reverse repurchase operation of 105.5 billion yuan at a rate of 1.40%, with a net withdrawal of 296.5 billion yuan for the day [5] - Short-term Shibor rates mostly increased, with the overnight rate down 4.8 basis points to 1.317% and the 7-day rate up 0.3 basis points to 1.488% [5] Institutional Insights - Huatai Securities noted that offshore bonds issued in the Shanghai Free Trade Zone are primarily aimed at foreign investors, with no new non-financial corporate bonds issued as of January 2026 [6] - CITIC Securities expects that the ongoing promotion of high-dividend insurance products and the influx of funds from bank deposits will continue to support premium income in 2026 [7]

Core Viewpoint - Hedge funds have made a £100 billion bet on UK gilts, raising concerns from the Bank of England about potential risks to financial stability due to increased borrowing and trading activities [1][2]. Group 1: Hedge Fund Activities - As of the end of November, hedge funds borrowed £99.9 billion from banks to reinvest in gilts, marking a tenfold increase from just over a year ago when the figure was less than £10 billion [5]. - Hedge funds now account for one-third of all gilt trades, up from 15% a few years ago, indicating a significant increase in their market involvement [4]. - A small number of predominantly US hedge funds are responsible for 90% of all net borrowing, raising alarms about concentrated risk in the market [6]. Group 2: Regulatory Concerns - The Governor of the Bank of England has indicated that volatility in the bond market is unavoidable, with hedge fund trading posing risks to the financial system due to less regulatory scrutiny compared to banks [2]. - Hedge funds have opposed regulatory proposals aimed at limiting their risk-taking on gilts, arguing that stricter rules could lead them to avoid UK debt, potentially increasing the Treasury's borrowing costs [2]. - Economists have drawn parallels between the risks in the UK and the US, where hedge funds' exposure to US Treasuries increased significantly between 2017 and 2019 [7]. Group 3: Market Dynamics - Hedge funds leverage the risk-free status of gilts to borrow large amounts, sometimes up to 100 times their capital, to profit from small price differences in bonds [4][5]. - A sudden economic or financial shock could lead to "fire sales" in gilts, which may destabilize financial markets [6]. - Historical context shows that during the onset of the pandemic in March 2020, hedge funds unwound significant leveraged bets, contributing to market volatility [8].

Group 1 - Bitcoin (BTC) has experienced a 10% rally since the beginning of the year, with analysts predicting it could reach six figures for the first time since mid-November [1] - The U.S. Treasury market is characterized by outstanding credit quality and a very low risk of default, serving as collateral in various financial transactions [2] - When Treasury prices are volatile, it constrains credit and discourages risk-taking, while stable bond prices encourage investment in riskier assets like cryptocurrencies [3] Group 2 - The ICE BofA MOVE index, which measures expected volatility in Treasury bonds, has fallen to 58, the lowest level since October 2021, indicating a favorable environment for Bitcoin and tech stocks [4] - Historically, Bitcoin has shown a tendency to move in line with the Nasdaq 100 index and inversely to the MOVE index, a trend that persisted through Bitcoin's 2022 crash and the subsequent bull run in 2023 [5] - The decline in bond market volatility is one of several factors supporting a bullish outlook for Bitcoin, alongside new ETF inflows [6]

Market Overview - The market is currently in a wait-and-see mode ahead of the Federal Reserve's decision, with NASDAQ showing a decline while other indices are performing positively [1] - The 10-year yield has reached 4.20%, the highest since September 4, raising questions about its impact on equities [1] Interest Rates and Equities - Technical resistance for the 10-year yield is noted between 425 and 430, with a more significant resistance level for equities identified at 450 [2] - Historical context shows that yields have risen after each cut since September, with current yields only nine basis points above the levels when cuts began [3] - The rise in yields following the September cut was 100 basis points by the end of the year, suggesting that current concerns about yield increases may be overstated [4] Federal Reserve Outlook - The language used by the Fed regarding future rate cuts, particularly if it is hawkish, is expected to have a more substantial impact than today's rate decision [5] - There is speculation about the potential for elevated bond market volatility returning in 2026, which could pose challenges for the market [6][7] - The market appears to have already priced in a hawkish stance from the Fed, leading to bullish sentiment among investors [8] Earnings Reports and Market Reactions - Upcoming earnings announcements from Oracle and Broadcom are anticipated to be significant for market direction, potentially overshadowing the Fed's announcements [8][12] - The market is currently at a high, with the S&P and NASDAQ showing minimal percentage changes, indicating uncertainty about future guidance from major companies [12] Future Economic Indicators - The probability of a follow-on rate cut in January has decreased to 23%, with more confidence in a cut expected by June [19][20] - The upcoming economic data next week could dramatically alter the Fed's outlook and policy decisions [22]

Check the markets here as we wait for this afternoon's Fed decision. Of course, the news conference from the chair, NASDAQ's red, everything else is green, but certainly there feels like it's a wait and see. Uh Liz, nice to have you back.Um the 10-year yield 420. >> Yep. >> Okay.That's the highest since September the 4th. Piper Sandler today says, "Is the tenure at 425 the line in the sand for equities?" So, is that the biggest wild card today. what rates do on the back of whatever the Fed says.>> Uh, yes, ...

Group 1: Corporate Developments - High-profile CEO departures have created significant buzz, including Nestle's CEO resigning over an undisclosed affair and Suntory's CEO stepping down due to potential illegal substance purchases [1] Group 2: Bond Market Volatility - Bond market volatility has been a major focus, with significant yield movements in the U.K. gilt market and across Europe, indicating potential ongoing instability [2] - France is at the center of European bond yield uncertainty, with a confidence vote in the government expected to lead to a loss for the ruling party, raising the possibility of a snap election by President Macron [4] - A straw poll by Nomura suggests that French government bond yields (OATS) would need to change dramatically to significantly impact international investor confidence, with a key rating review by Fitch on September 12 being a critical date [5] Group 3: Central Bank Actions - The European Central Bank (ECB) is anticipated to maintain interest rates at 2% during its upcoming meeting, with a dovish stance expected from President Christine Lagarde [7] - Market observers expect Lagarde to be questioned about the situation in France during her press conference, although she is likely to avoid direct responses [8] Group 4: Upcoming Economic Data - Key economic data releases include German trade data on Monday, French Industrial Production data on Tuesday, U.S. Inflation data on Thursday, and German Inflation and U.K. GDP data on Friday [9]

Core Viewpoint - The bond market has been in a sideways trend for over half a month, with the 10-year treasury yield fluctuating around 1.65% since early April, failing to break below 1.6% [1][2]. Group 1: Market Dynamics - The uncertainty from tariff impacts and expectations for "rate cuts" have been the main drivers for the previous rapid rise in the bond market [4]. - The ongoing tug-of-war between bullish and bearish sentiments is likely the reason for the recent stability in the bond market [5]. - Bullish views on the bond market are supported by the demand for safe-haven assets due to U.S.-China trade tensions, strong expectations for monetary easing, and a potential slowdown in the recovery of the economic fundamentals [6]. - Bearish views stem from the possibility of the U.S. lifting tariff sanctions, a potential delay in monetary easing, and a recovery in economic fundamentals that exceeds expectations [7]. - Both bullish and bearish perspectives seem to address the same issues but differ in their outlooks and expectations [8]. Group 2: Uncertainty Factors - The bond market continues to face significant uncertainty due to variables such as tariff negotiations, growth stabilization policies, and the timing of monetary easing measures [9]. - Until the situation becomes clearer, the bond market is expected to remain volatile [10]. Group 3: Long-term Investment Perspective - From a long-term perspective, the bond market may still represent an important component of asset allocation despite short-term fluctuations [11]. - The Wind pure bond fund index has shown positive returns every year from 2007 to 2025, with a cumulative increase of 117.94% and an annualized return of 4.42% from 2007 to 2024, indicating stability compared to the stock market [12][15]. - As the domestic economy transitions from high-speed growth to high-quality development, long-term bond yields may continue to decline, presenting ongoing allocation value in bond assets [16]. - However, it is important to note that after a prolonged upward trend, volatility in the bond market may increase, suggesting a need to lower expectations and adopt a "stability-first" approach in response to potential future fluctuations [16].