#10年期国债收益率再跌破1.7% Market Divergence Widens, Short-Term Trading Enters a Wait-and-See Phase
As the 10-year government bond yield broke through the key 1.7% level, the market's bullish-bearish divergence rapidly widened, institutions generally slowed their trading pace, and the bond market officially entered a wait-and-see phase, making short-term trend-driven moves more difficult.
Bosera Funds analyzed that month-end liquidity in July was loose and expectations for easing policies strengthened, driving a rapid compression in ultra-long-end spreads and pushing the 10-year government bond yield below 1.7%. However, the market currently lacks the implementation of substantive incremental policies. The bond market is expected to remain range-bound in the short term, and further declines in yields will require the concrete implementation of easing policies such as reserve requirement ratio cuts and interest rate cuts.

Liang Weichao, chief fixed-income analyst at China Post Securities, further pointed out that the downward breakout in the 10-year government bond yield was largely a byproduct of trading sentiment in the ultra-long end. There is considerable divergence in expectations regarding the upside potential after the breakout. Interbank negotiable certificate of deposit rates have already shown a rigid tendency to be “easier to rise than fall,” with market expectations even pointing to a test of 1.5%; meanwhile, persistently expensive funding costs will continue to create marginal pressure on banks’ funding costs, thereby affecting banks’ demand for short-duration bonds and placing some constraints on the bond market’s short-term performance.

In summary, the bond market is currently in a phase of trading driven by “expectations first, fundamentals lagging,” and the risk-reward profile has declined somewhat after long-end yields broke through key levels. In the short term, the market will repeatedly trade around the pace of policy implementation, economic recovery data, and changes in liquidity conditions. One-way trend moves will be difficult to sustain, so a range-trading approach is recommended, with a focus on tracking the subsequent implementation of monetary policy and monthly macroeconomic data to capture structural allocation opportunities.$CHCUSD {currencycard:tradfi}(CHCUSD) ‌