--- title: "The central bank continues to \"inject liquidity,\" with the Shibor overnight rate dropping to 1.319%! A-shares fluctuate, driving funds towards interest rate bond ETFs" type: "News" locale: "en" url: "https://longbridge.com/en/news/287710823.md" description: "Recently, bond ETFs have seen significant inflows, with a net inflow of 24 billion yuan, while broad-based and sector-themed ETFs experienced a net outflow of over 400 billion yuan. The central bank continues to \"inject liquidity,\" with a net injection of 248.5 billion yuan through reverse repurchase operations on May 26, and the Shibor overnight rate has dropped to 1.319%. Economic data has fallen short of expectations, and the market anticipates further interest rate cuts in the second half of the year. The A-share market shows clear divergence, with risk-averse sentiment driving funds to migrate to the bond market" datetime: "2026-05-27T03:34:17.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/287710823.md) - [en](https://longbridge.com/en/news/287710823.md) - [zh-HK](https://longbridge.com/zh-HK/news/287710823.md) --- # The central bank continues to "inject liquidity," with the Shibor overnight rate dropping to 1.319%! A-shares fluctuate, driving funds towards interest rate bond ETFs Recently, funds have continuously flowed into bond ETFs. According to statistics, as of May 26, bond ETFs (interest rate bonds + credit bonds) had a net inflow of 24 billion yuan, while broad-based and sector-themed ETFs experienced a net outflow of over 400 billion yuan during the same period. In the off-exchange fund sector, over 1,100 funds have issued announcements to limit purchases or suspend large subscriptions, with bond funds accounting for more than 60%. Industry insiders analyze that institutional funds are accelerating their entry into the bond market, which has created dilution pressure on the returns of existing products, forcing fund companies to limit purchases to protect the interests of holders. At the same time, the bond market continues to show a strong pattern. On May 26, the main contracts of government bond futures all closed higher, with the 30-year contract rising 0.19% to 113.47, and the 10-year contract rising 0.03% to 108.99; interbank cash bond yields fell across the board, with the yield on the 10-year government bond active bond down 0.5 basis points to 1.742%, and the yield on the 10-year policy bank bond down 0.25 basis points to 1.811%. **Three Factors Supporting the Strength of the Bond Market** The central bank continues to "inject liquidity" to stabilize funds. On May 26, the central bank conducted a 2.49 billion yuan 7-day reverse repurchase operation, with a net injection of 24.85 billion yuan for the day. In the previous week, the central bank had a cumulative net injection of over 400 billion yuan and increased the MLF net injection by 100 billion yuan. The Shibor overnight rate fell to 1.319%, and the 7-day rate fell to 1.377%, indicating a marginal easing of the funding situation. Economic data falling short of expectations reinforces the logic for easing. In April, the year-on-year growth rate of industrial added value dropped to 4.1%, the lowest since July 2023; retail sales increased by only 0.2% year-on-year, and the decline in real estate investment expanded to 13.7%. The 1-year LPR remains at 3.0%, and the 5-year LPR remains at 3.5%, staying at historical lows for 12 consecutive months, with the market expecting further rate cuts in the second half of the year. The high-level differentiation in the stock market has increased demand for safe-haven assets. On May 26, the A-share market rebounded after hitting a low, with the Sci-Tech Innovation 50 index once plummeting nearly 3%, and over 4,500 stocks declining, with a total transaction volume of 3.24 trillion yuan. The technology sector, after a previous surge, has seen significant differentiation, with an increased willingness to take profits, prompting some funds to shift from the equity market to the bond market due to risk aversion. The fixed income team at Caixin Securities points out that the current funding situation is returning from ultra-loose to neutral levels, but the overall tone of moderate easing by the central bank remains unchanged. The marginal convergence of the funding situation is a phase disturbance rather than a long-term trend of tightening, and the bond market still shows a fluctuating upward pattern. The fixed income department of CITIC Securities states that progress in US-Iran negotiations has led to a decline in oil prices and a cooling of overseas inflation expectations, combined with weak domestic economic data, creating multiple favorable conditions for the bond market. Although the yield on the 10-year government bond has narrowed to the lower end of the 1.75%-1.85% range, a trend upward turning point has not yet appeared. **Interest Rate Bond ETFs Become the New Favorite for Allocation** In the context of fluctuations and differentiation in the A-share market, limits on bond fund purchases, and continuously declining yields, on-exchange interest rate bond ETFs are becoming an alternative choice for institutional and individual investors due to their strong liquidity and flexible allocation characteristics As of May 26, the net inflow of interest rate bond ETFs in nearly 20 trading days is about 9 billion yuan; **the net inflow of the Government Bond and Policy Financial Bond ETF (511580) in nearly 20 trading days exceeds 1 billion yuan.** It is worth noting that in the volatile capital market, the long-term advantages of stock-bond allocation are very obvious. Backtesting data over the past 16 years shows that the classic allocation strategy of "30% stocks and 70% bonds"—that is, **30% in the CSI 300 Index representing equity assets and 70% in government bonds and policy financial bonds 0-3 Index representing interest rate bond assets**—demonstrates significant downside protection and long-term compounding ability. During the backtesting period, this portfolio has cumulatively increased by 68.49%, with an annualized return of 3.34%. In the same period, the CSI 300 Index has a cumulative increase of 36.67%, with an annualized return of only 1.98%. Meanwhile, the maximum drawdown of the portfolio is only -14.64%, while the maximum drawdown of the CSI 300 is as high as -47.59%. From the perspective of net value trends, this portfolio has experienced significantly lower drawdowns than the CSI 300 Index during multiple rounds of severe market adjustments in 2015, 2018, and 2021, and has recovered more quickly. Especially in the environment of continuous differentiation in the equity market after 2022, the stable coupon and capital gains from the bond portion effectively hedged the volatility on the equity side, allowing the portfolio's net value to maintain a steady upward trend. As of the latest update, **the Government Bond and Policy Financial Bond ETF (511580)** has a latest scale of 7.1 billion yuan, with an average daily trading volume exceeding 2 billion yuan. The latest duration of the underlying index is 1.27 years, with relatively lower volatility—an annualized increase of 2.29% over the past three years and an annualized volatility of 0.4%. In the current environment of a 10-year government bond yield spread of 1.74%, it may serve as a high-efficiency cash alternative tool ### Related Stocks - [02829.HK](https://longbridge.com/en/quote/02829.HK.md) - [511010.CN](https://longbridge.com/en/quote/511010.CN.md) - [511090.CN](https://longbridge.com/en/quote/511090.CN.md) - [82817.HK](https://longbridge.com/en/quote/82817.HK.md) - [02817.HK](https://longbridge.com/en/quote/02817.HK.md) - [09817.HK](https://longbridge.com/en/quote/09817.HK.md) - [000688.CN](https://longbridge.com/en/quote/000688.CN.md) - [000300.CN](https://longbridge.com/en/quote/000300.CN.md) - [600906.CN](https://longbridge.com/en/quote/600906.CN.md) - [600030.CN](https://longbridge.com/en/quote/600030.CN.md) - [06030.HK](https://longbridge.com/en/quote/06030.HK.md) - [511580.CN](https://longbridge.com/en/quote/511580.CN.md) ## Related News & Research - [Why This ETF Might Be Ready to Make a Quantum Leap](https://longbridge.com/en/news/295304166.md) - [QUICK SPARK: New Active Hedged ETF for Lower-Volatility S&P 500 Exposure Hits the Market](https://longbridge.com/en/news/294858914.md) - [Better buy: iShares Bitcoin ETF vs. Morgan Stanley Bitcoin ETF](https://longbridge.com/en/news/294960514.md) - [Mulvihill Canadian Bank ETF declares CAD 0.05 dividend](https://longbridge.com/en/news/295065784.md) - [Buffett-inspired ETF owns Berkshire, Apple, Amex and generates 15% yield](https://longbridge.com/en/news/294733673.md)