Will the central bank restart bond purchases? The bond market awaits a "variable" to break the deadlock
On the eve of the Federal Reserve's interest rate decision announcement, various sentiments in the domestic market are intertwining. In particular, after the macroeconomic data for August was recently disclosed, the market has more expectations for the introduction of stronger growth-stabilizing policies, which has also supported the strengthening of the government bond futures market. The main contract for 10-year government bond futures recorded four consecutive days of gains yesterday. "The variable that may break the deadlock in the bond market next could be the central bank's resumption of bond purchases," said Liu Yu from Huaxi Securities Research Institute. He believes that compared to one-time measures like reserve requirement ratio cuts and interest rate reductions, sustainable central bank bond purchases, if implemented, could be a greater benefit for the bond market and more easily push interest rates back into a downward channel. However, the timing of the central bank's bond purchases is difficult to determine, making it a more prudent choice to operate with large positions on the right side based on this signal
