Overnight reverse repurchase agreement tool boosts market sentiment 10-year government bond futures main contract hits new high for the year.

The overnight reverse repurchase tool of the central bank has officially landed, and the bond market sentiment has significantly heated up. On June 29, the central bank carried out a 300 billion yuan overnight reverse repurchase operation, although the operation rate was not disclosed, the market interpreted it as a signal that the central bank is further protecting cross-quarter liquidity. As a result, government bond futures strengthened, with the main contract of the 10-year government bond futures hitting a new high for the year. Institutional professionals believe that liquidity has become a core variable in recent bond market trading. The use of overnight reverse repurchase tools helps to improve the accuracy of the central bank's short-term liquidity management and stabilize market expectations for cross-quarter funding. However, in the short term, this tool still belongs to the framework of liquidity management improvement and should not be simply understood as incremental easing or policy rate adjustments.