Caitong Securities: Overseas ultra-long bond yields soar, logically benefiting A-shares and global commodities

According to the Zhitong Finance APP, Caitong Securities released a research report stating that recently, overseas ultra-long bond yields have repeatedly broken previous highs. The reasons include heightened market concerns about the loosening of the Federal Reserve's independence and the general relaxation of fiscal discipline during the summer earnings season in major developed economies. In addition, the traditional holders of overseas long-term government bonds are gradually changing, and the marginal pricing power of long bonds is shifting, amplifying the market's response to uncertainty. The firm believes that the combination of high interest rates and a weak dollar, led by the U.S. dollar, along with recessionary appreciation in other countries, logically benefits risk assets such as A-shares and globally priced commodities.

The main viewpoints of Caitong Securities are as follows:

Since August 2025, overseas ultra-long bond yields have repeatedly broken previous highs. How does this affect the domestic market? The firm believes that major developed countries are facing an extremely complex situation, with the combination of high interest rates and a weak dollar led by the U.S. dollar, while other countries are experiencing recessionary appreciation, which logically benefits risk assets such as A-shares and globally priced commodities. However, at the same time, the bond market need not be pessimistic, as the global monetary policy cycle has long been differentiated, and the monetary policy remains supportive, highlighting the allocation value of the bond market.

The two main triggers for the recent surge in interest rates are: First, the market's heightened concerns about the loosening of the Federal Reserve's independence, as ongoing political interference is raising policy risk premiums; Second, major developed economies have generally relaxed fiscal discipline during the summer earnings season, with the U.S. "Big and Beautiful Act" (OBBBA) and the fiscal dilemmas in countries like Europe and Japan forcing investors to vote with their feet, reviving demands for fiscal discipline.

In addition, the reason lies in the shifting marginal pricing power of long bonds. The traditional demand side—central banks and insurance companies—are systematically reducing their holdings of government bonds. This has led to private investors, who are more sensitive to price and demand higher risk compensation, gradually becoming the marginal price setters in the market. This structural change amplifies the market's response to uncertainty.

In terms of major asset classes: Historical data shows that under the rare combination of "weak dollar + high U.S. bond yields," value/cyclical style stocks (such as the Dow Jones) and commodities typically perform better. In overseas markets, the 30-year government bond yields in the U.S., Germany, and France still have room to rise. In the short term, considering the Federal Reserve's interest rate cut expectations, the expected central level for the 10-year U.S. Treasury yield is between 3.95% and 4.35%, with the dollar index in the range of 95-99; equity assets may benefit from an increase in market risk appetite; gold may benefit from potential inflation recovery and demands for the Federal Reserve's independence and fiscal discipline; the domestic bond market has a certain degree of independence, with a moderately loose monetary policy tone still in place, and the dollar may enter a rate-cutting cycle, further relaxing external constraints. The firm continues to be optimistic about the 10-year and 30-year government bonds around 1.75%/2.0%.

This week's bond market review (September 1 - September 5) — funds were balanced and slightly loose, stock market volatility increased, and the bond market experienced high-level fluctuations. Factors such as rising commodity prices were bearish; while the Ministry of Finance and the central bank held a leadership meeting, and the central bank conducted a buyout reverse repurchase, which were bullish for the bond market. Ultimately, the yield on the 10-year government bond fell by 1.19 basis points to 1.83%, and the yield on the 10-year policy bank bond remained flat for the week at 1.87% Wealth Management and Duration Tracking - Slight Decline in Wealth Management Scale, Duration Rising. As of August 31, the outstanding scale of wealth management slightly decreased by 8.2 billion yuan week-on-week. This week (as of September 5), the overall duration of public funds rose by 0.01 to 2.38, and the degree of divergence also decreased, with market consensus expectations slightly rebounding.

Risk Warning: Historical patterns may not represent the future, macro environment may exceed expectations, monetary policy may exceed expectations