Treasury futures close higher across the board; 30-year futures up 0.31%

Beijing, September 24 (Xinhua Finance) — China's bond market showed modest strength on Thursday (September 24), with treasury bond futures closing broadly higher. Yields on interbank major rate bonds fluctuated narrowly, with China Development Bank (CDB) bonds slightly outperforming government bonds. The open market saw a net withdrawal of 110.5 billion yuan, while short-end funding rates edged up as the month-end approached.

Institutions suggest that market sentiment has turned optimistic ahead of the holiday period. With short-term funding rates closely anchored to policy rates, ultra-long-term bonds remain the preferred instrument for bullish positioning.

Market Performance

Treasury Bond Futures closed higher across the board:

• 30-year contract: +0.31% to 117.37
• 10-year contract: +0.03% to 109.59
• 5-year contract: +0.03% to 106.565
• 2-year contract: +0.01% to 102.594

Interbank Major Rate Bonds saw yields mostly decline:

• 30-year government bond ("26 Ultra-Long Special Bond 04"): yield down 0.25 bps to 2.1175%
• 10-year CDB bond ("26 CDB 05"): yield down 0.1 bps to 1.7545%
• 10-year government bond ("26 T-bond 16"): yield up 0.05 bps to 1.6715%

Convertible Bond Index closed down 1.34% at 471.83, with a turnover of 42.107 billion yuan. Notable decliners included Shenglan Convertible Bond 02 (-9.48%), Yinlun Convertible Bond (-9.33%), Jintian Convertible Bond (-7.75%), Sifang Convertible Bond (-7.14%), and Jincheng Convertible Bond (-6.30%). Gainers included Hongtu Convertible Bond (+7.33%), Xianghe Convertible Bond (+6.77%), Fuxin Convertible Bond (+3.02%), Shanlu Convertible Bond (+2.32%), and Taifu Convertible Bond (+0.97%).

Overseas Bond Markets

North America (as of September 23 local time): U.S. Treasury yields rose across the board.

• 2-year: +13.55 bps to 4.889%
• 3-year: +15.28 bps to 4.969%
• 5-year: +16.1 bps to 4.996%
• 10-year: +15.08 bps to 5.112%
• 30-year: +9.5 bps to 5.397%

Asia: Japanese government bond yields mostly recovered.

• 5-year: +9.6 bps to 2.373%
• 20-year: +8.8 bps to 3.91%
• 10-year: +6 bps to 3.08%

Eurozone (as of September 23 local time):

• France 10-year: +15.4 bps to 4.655%
• Germany 10-year: +9.2 bps to 3.551%
• Italy 10-year: +14.7 bps to 4.501%
• Spain 10-year: +11.6 bps to 4.038%
• UK 10-year: +10.9 bps to 5.346%

Primary Market

CDB issued financial bonds with the following results:

• 3-year: winning yield 1.4334%, bid-to-cover ratio 2.6, marginal ratio 4.9
• 7-year: winning yield 1.6446%, bid-to-cover ratio 5.35, marginal ratio 19
• 10-year: winning yield 1.7616%, bid-to-cover ratio 5.76, marginal ratio 1.82

Liquidity

Open Market Operations: The People's Bank of China (PBOC) conducted 51.5 billion yuan in 7-day reverse repurchase agreements at a fixed rate of 1.40% via quantity-based bidding on September 24. The bid volume and winning volume both stood at 51.5 billion yuan, fully meeting primary dealer demand. With 162 billion yuan in reverse repos maturing on the same day, the net withdrawal amounted to 110.5 billion yuan.

Funding Rates: Short-term Shibor rates mostly edged up.

• Overnight: +0.27 bps to 1.364%
• 7-day: +1.6 bps to 1.4%
• 14-day: -1.2 bps to 1.418%
• 1-month: +0.07 bps to 1.426%

Institutional Views

CITIC Securities: Following the ruling that IEEPA tariffs are illegal, large-scale tax refunds have significantly narrowed U.S. tariff net revenue this year. The CBO estimates that, due to refunds, U.S. net tariff revenue for fiscal 2026 will be approximately $250 billion lower than its February forecast. The newly implemented Section 301 tariff exemptions are more extensive but are expected to only partially offset the revenue loss from the cancellation of IEEPA tariffs. Combined with rising mandatory spending and debt interest burdens, the U.S. faces elevated fiscal deficit pressure, with debt burdens expected to increase year by year.

Huatai Securities: Recent market activity has centered on three main trading themes: (1) Fed rate hikes and overseas long-term bond yields, (2) geopolitical tensions and oil price movements, and (3) shifts in AI industry narratives. The probability of a Fed rate hike in October is low, with the next possible move in December. Under the dual pressures of inflation and midterm elections, Trump may push for a restart of U.S.-Iran negotiations, potentially easing geopolitical tensions. The AI narrative is shifting toward model development and demand validation, though the profitability of subsequent model applications remains to be proven.

Editor: Wang Zhe