Huatai Securities: it is expected that the bond market will continue to maintain a volatile trend, the probability of losses is not high, PPI turning positive, weakening of interest rate cut expectations, and abundant supply constraints further downward pressure on yields.

Huatai Securities pointed out that the bond market has been fluctuating towards strength recently, with long and ultra-long end government bond boxes shaking, while the mid-short end, policy financial bonds, ordinary credit bonds, and perpetual bonds have shown signs of strength, with obvious yield spreads compression. As we enter the second quarter, there have been new changes in the macro environment of the bond market: increased uncertainty in both domestic and foreign fundamentals, a tendency towards easing in monetary policy but uncertainty about cuts in reserve requirements and interest rates, rising bond supply pressure, with the timing of government bond issuances being a key variable. It is expected that the bond market will continue to fluctuate, with low odds of significant gains, as positive PPI, weakened rate-cut expectations, and abundant supply will constrain further yield declines. In terms of strategy, focus on coupon rates > variety selection > leverage > duration and sink. Credit bonds will mainly focus on the mid-short end, maintaining a certain level of leverage and slightly lengthening durations. Ultra-short-term rates and time deposits have lost investment value, but there is still room for slight compression in tax yield spreads and perpetual bond yield spreads, with short-term attention to trading opportunities such as switching 30-year government bonds.