Caitong: Overseas long-term bond interest rates soar, logically beneficial to A-shares and global commodities.

Caitong released a research report stating that in recent period, overseas ultra-long-term bond rates have repeatedly broken previous highs. This is due to increasing market concerns about the relaxation of the independence of the Federal Reserve and the general relaxation of fiscal discipline in major developed economies during the summer earnings season. In addition, traditional holders of overseas long-term government bonds are gradually undergoing changes, and the marginal pricing power of long bonds is shifting, thus amplifying the market's response to uncertainty. The bank believes that the combination of high interest rates and a weak dollar led by the US dollar, as well as the depreciating currencies of other countries, logically favors A-shares and other risk assets, as well as globally priced commodities. The main points of Caitong are as follows: Since August 2025, overseas ultra-long-term bond rates have repeatedly broken previous highs, how does this affect the domestic market? The bank believes that major developed countries are facing an extremely complex situation, with the US dollar leading a combination of high interest rates and a weak dollar, and other countries experiencing depreciating currencies. This logically favors A-shares and other risk assets, as well as globally priced commodities. However, at the same time, there is no need to be pessimistic about the bond market, as the long-standing differentiation of global monetary policy cycles and the supportive attitude of monetary policy highlight the value of bond market allocation. There are two triggers that ignited the recent surge in interest rates: first, increasing market concerns about the relaxation of the independence of the Federal Reserve, continuous political intervention is raising policy risk premiums; second, major developed economies have generally relaxed fiscal discipline during the summer earnings season, with the US's "Big and Beautiful Act" (OBBBA) and fiscal difficulties in Europe, Japan, and other countries forcing investors to vote with their feet, reawakening demands for fiscal discipline. Furthermore, the change in the marginal pricing power of long bonds is also occurring. Traditional demanders such as central banks and insurance companies are systematically reducing their holdings of government bonds. This is causing private investors, who are more price-sensitive and require higher risk compensation, to gradually become the marginal price setters in the market. This structural shift amplifies the market's response to uncertainty. In terms of major asset classes: historical data shows that under the rare combination of a weak dollar and high US bond rates, value/cyclical style stocks (such as the Dow Jones) and commodities usually perform better. In overseas markets, the 30-year government bond rates of the US, Germany, and France still have room to rise. In the short term, considering the expected rate cuts by the Federal Reserve, it is estimated that the central range of 10-year US bond rates will be between 3.95%-4.35%, and the dollar index will be in the range of 95-99; equity assets may benefit from an increase in market risk appetite; gold may benefit from potential inflationary pressures and demands for the independence of the Federal Reserve and fiscal discipline; the domestic bond market has a certain degree of independence, with a moderately loose monetary policy stance, and the dollar may enter a further easing cycle, easing external constraints. The bank continues to be optimistic about the 10-year government bond/30-year government bond at around 1.75%/2.0%. Review of the bond market this week (September 1st-September 5th) - Funds are slightly loose, stock market volatility intensifies, and the bond market oscillates at highs. Factors such as rising commodity prices constitute bearish signals; however, factors such as the Ministry of Finance and the People's Bank of China holding a leader meeting and the People's Bank of China making reverse repurchase agreements are bullish for the bond market. Ultimately, the yield of the 10-year government bond decreased by 1.19 basis points to 1.83%, and the yield of the 10-year government bond remained stable at 1.87% for the whole week. Wealth management and duration tracking - Wealth management scale slightly declined, duration increased. As of August 31st, the scale of wealth management outstanding decreased by 82 billion yuan on a weekly basis. This week (up to September 5th), the overall duration of public fund rose by 0.01 to 2.38, and the degree of divergence also decreased, with slightly higher market consistency expectations. Risk warnings: Historical patterns do not necessarily represent the future, macroeconomic environment exceeding expectations, monetary policy exceeding expectations.