Short-term allocation opportunities in the bond market may now exist, with funds rushing in. The Guotai 10-Year Treasury Bond ETF (511260) had a net inflow of over 120 million yuan in the previous trading day.

Short-term allocation opportunities in the bond market may be emerging, with funds rushing in. In terms of liquidity, the 10-year government bond ETF, Cathay (511260), saw a net inflow of over 120 million yuan on the last trading day.

Relevant institutions indicate that, from the perspective of inflation expectations, the oil price disturbances caused by the situation in Iran are not the core of the inflation problem. The long-term upward shift in the inflation center caused by overheating demand or excessive monetary issuance is the main pricing factor for interest rates. The transmission of imported inflation to interest rate pricing is not clear. According to the central bank’s discussions in annual monetary policy implementation reports, it does not focus on imported inflation from the supply side unless it widely transmits to the core CPI or triggers inflation expectations across society.

However, since the anti-involution movement, prices of domestically priced goods (such as black commodities and building materials) have gradually warmed, potentially boosting domestic demand through improved corporate retained profits. We believe that the overall inflation triggered by demand improvement will bring greater interest rate risks. From this perspective, imported inflation from crude oil actually has the opposite effect on the domestic economy: since the main sources of crude oil are not domestic, rising oil prices will squeeze the profit margins of the domestic midstream manufacturing sector. Against the backdrop of weak domestic demand, imported inflation may further lead to a deterioration in the fundamentals. If the fundamentals decline, it could signify short-term allocation opportunities in the bond market.

The 10-year government bond ETF, Cathay (511260), tracks the Shanghai 10-year government bond index, selecting bonds with a remaining term of 7 to 10 years that are listed on the Shanghai Stock Exchange as samples, maintaining constant duration. From past performance, since its inception, the net value of the 10-year government bond ETF, Cathay (511260), has repeatedly reached new highs, with historical performance remaining stable. According to the fund’s regular reports, as of the end of 2025, the one-year return rate reached 0.4%, the three-year return rate reached 14.23%, the five-year return rate reached 23.19%, and the cumulative return rate since inception reached 36.31%.

Notably, since its establishment, the 10-year government bond ETF, Cathay, has experienced a total of 8 complete calendar years from 2018 to 2025, maintaining positive returns every year, and is expected to become a tool for asset allocation that can withstand bull and bear cycles.

Risk Warning: Data source from fund regular reports, Wind; relevant performance verified by the custodian bank; past performance does not represent future results. The 10-year government bond ETF was established on August 4, 2017. From 2017 to 2025, the net value growth rates/performance benchmarks are: -1.55%/-1.01%; 7.6%/8.47%; 2.49%/4.81%; 1.92%/2.09%; 5.19%/5.78%; 2.52%/2.87%; 4.37%/4.83%; 9.02%/8.09%; 0.40%/-1.34%. Mention of individual stocks is only for industry event analysis and does not constitute any stock recommendations or investment advice. Short-term fluctuations of indices are for reference only and do not represent future performance, nor do they constitute a commitment or guarantee of fund performance. Views may be adjusted as market conditions change and do not constitute investment advice or commitments. The risk-return characteristics of mentioned funds vary, and investors are advised to read fund legal documents carefully, fully understand product elements, risk levels, and income distribution principles, choose products that match their risk tolerance, and invest cautiously. For fund fees, please refer to legal documents.

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