From "Stock Investment to Bond Investment" to Pricing Reversion: Switching Investment Logic in the Bond Market

Jin10 data reported on August 26th that the bond market has recently come under significant pressure. In response, Liu Yu, chief economist at Huaxi Securities, stated that on one hand, the sharp rise in bond market yields has led to capital losses; on the other hand, the traditional investment logic in the bond market has become ineffective. Theoretically, the three key factors currently pricing the bond market—liquidity, fundamentals, and policy—are all supportive of a decline in the Interest Rate, but the market has entered a pricing state determined by a single variable of risk preference, leading to an extreme shift towards “buying stocks to invest in bonds.” Looking ahead, institutions believe that the most pessimistic phase may have already passed, and the bond market is likely to return to its own pricing logic. After significant adjustments in the bond market, both trading and allocation opportunities have now emerged.