On September 10, Treasury bond futures hit a new low in the past six months, and long-term bond prices showed a relatively obvious drawdown. Among them, the 30-year main contract was 114.76 yuan, a drop of 1%; the 10-year main contract was 107.49 yuan, a drop of 0.27%, both hitting new lows since March 24. At the same time, the yield on 10-year treasury bonds has also returned to above 1.8% after more than five months.
The inflation data released by the National Bureau of Statistics on the same day became one of the important incentives for further adjustment of the treasury bond market. Data shows that in August, CPI (Consumer Price Index) fell by 0.4% year-on-year and remained unchanged month-on-month; PPI (Industrial Products Ex-factory Price Index) fell by 2.9% year-on-year, ending the downward trend for eight consecutive months, from a month-on-month decrease of 0.2% to a flat month, attracting high attention from the market. Inflation data strengthens, which is usually bad for the bond market.
“The low base and anti-intra-volume policies jointly support the narrowing of the year-on-year decline in PPI.” Wu Chaoming’s team at Caixin Research Institute believes that benefiting from the start of the “anti-intra-volume” action in related industries, the prices of coal mining and washing industries, ferrous metal smelting and rolling processing industries, and ferrous metal mining and selection industries have all turned from negative to positive month-on-month, forming the main support for the recovery of PPI growth rate.
In fact, the bond market has fluctuated and weakened since the end of June, and has fallen significantly since August. The difference from the past bond market adjustment is that the main reason for this bond market adjustment is the increase in risk appetite brought about by the continued rise in the stock market, and the “anti-involved” policy has brought about the increase in inflation expectations.
The bond market has intertwined long and short factors, and the fluctuations are intensifying, which is significantly different from the unilateral bull market in 2024, and has also made bond investors’ yields this year significantly worse than expected. Statistics show that as of September 9, 2025, the cumulative yield of the CSI Comprehensive Bond Index (all bonds) has been only 0.45% this year. This yield level puts pressure on bond fund managers, especially pure bond fund managers, and short-term strategies have become the mainstream of allocation for more and more fund managers.
Lu Pin, chief fixed income analyst at China Securities, believes that bonds are already “weak assets” and it is recommended to treat them with “weak thinking”. The essence of strong stocks and weak bonds comes from institutions’ demand for rebalancing stocks and bonds, which determines the preference of funds in two types of assets.
