The Core Variable Of The Bond Market Is No Longer Economic Growth.

At present, another view of many bond markets is that regulation has shifted and the relaxation of regulation has brought a bull market in the bond market.

The main argument of this view is that in recent years, many banks have received information from their respective departments or local banking regulatory bureaus for delay in submitting their own reports, with a delay of one or two months.

The view is that the CBRC can relax the bank's time to submit its self-report, and it can leave more time for banks to prepare for self-examination, so that it can be understood as a turning of regulatory policy.

The relationship between nominal economic growth and the yield of 10 - year treasury bonds is an obvious piecewise function: before 2013, there is a high degree of consistency in both direction and amplitude.

However, after 2013, the two began to deviate significantly from the fluctuation range. After the two quarter of 2015, they even deviated from the direction.

Specifically, the three typical deviations are:

First, October 2013 -2014 February.

In October 2013, China's nominal economic growth began to decline sharply, from 13.51 to 10.99, but the 10 year bond yield rose from 4.11 to 4.56, rising by nearly 45BP, and there was a clear divergence between them.

Second, April 2015 -2016 January.

After April 2015, the economic growth rate began to stabilize, no further decline, nominal growth rate remained at 7.5 level, but the 10 year treasury bond yield began to decline sharply, from 3.53 to 2.82, reaching 71BP, there was a clear departure from the two.

Third, October 2016 -2017 May.

Since October 2016, China's economy has been steadily improving, but the yield of treasury bonds has increased sharply in recent 10 years, rising rapidly from 2.69 to 3.62 in the past 8 months, which is close to 100BP.

Through these three periods, we can see that since October 2013, there are about 44 months, including 23 months and more than half of the time. There is a clear divergence between nominal economic growth and the yield of 10 year treasury bonds, indicating that there is no obvious correlation between the two relations since 2013.

The reason is that we found that the first period belonged to the peak period of "money shortage" in 2013, and the shortage of funds was the core variable of the bond market.

The second period is part of the "asset shortage" period since 2015, and the central bank's moderately loose monetary policy has made the market "asset shortage", greatly reducing the bond market yield; the third period is the "dark era" of the 2016 bond market, which has shifted from the central bank's monetary policy to a healthy neutral.

Therefore, we can easily see that a common feature of the above period is that

The factors far exceed the fundamentals. Because of the central bank's monetary policy factors, the bond yields obviously deviate from the fundamentals. Therefore, we have reason to infer that the central bank's monetary policy may have become the core variable of the bond market rather than the economic fundamentals.

We believe that since 2013, bond markets and

The correlation is very high, both in the direction and the extent of change, showing a high degree of consistency. But after 2013, there was a significant deviation between the two, and even more than half of the time there was a sharp opposite trend, reflecting that the fundamentals may no longer be the core variables of the bond market. On the contrary, the central bank's monetary policy may have become the core variable of the Chinese bond market. Therefore, judging the nominal economic growth rate has passed, it is not convincing to infer that the bond market returns have passed and the bond market interest rate has entered the downstream channel.

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