The debt market has been experiencing a noticeable surge since the beginning of the year, and recent trends indicate an even more substantial upward trajectoryThe net asset values (NAVs) of bond funds have risen sharply, reflecting a healthy appetite among investors for fixed-income securities.

Statistics reveal that as of December 13, over 3,400 bond funds have achieved record-high NAVs, representing more than 80% of the total bond funds availableNotably, more than a thousand of these funds have generated returns exceeding 5% year-to-date, attracting significant investor interest.

From a macroeconomic perspective, the yield of 10-year government bonds has seen a considerable decline since DecemberOn December 2, the yield fell below the crucial “2%” mark for the first time, leading to a series of new record lowsThis trend has continuously fed into investor confidence as the pure bond fund index recorded an impressive seven-week streak of gains, with a notable one-week increase of 0.29% recently, marking the largest weekly gain observed in recent times.

In the past week, most bond funds reported positive performanceA clear “see-saw” effect has emerged between the stock and bond markets lately; while equity markets faced some challenges, the bond market strengthenedRecent data indicates that nearly 3,700 bond funds experienced an increase in their NAVs within just one week, representing a stunning 99% of the sampled funds.

Examples of standout performers include over 300 bond funds that achieved a weekly NAV increase of over 1%. The DeBond Ruiyu Rate Bond A climbed by an impressive 3.3%, leading the pack, while other notable funds such as the Pengyang Zhongbond-30 Year Treasury ETF and Bosera's 30-Year Treasury ETF also enjoyed increases of more than 2.5%.

The Pengyang Zhongbond-30 Year Treasury ETF's third-quarter report noted a shift in monetary, fiscal, and real estate policies from conservative to more proactive stances

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Although it acknowledged that these policy shifts take time to materialize, it remains optimistic about future investment opportunitiesDuring an economic recovery period, 30-year treasury bonds may face competition from equity assets, but their fundamental investment value remains intact.

Factors contributing to this outlook include the prevailing monetary policy aimed at sustaining low-interest rates amid a backdrop of liquidity expansionThe likelihood remains high for further interest rate reductions, enhancing the attractiveness of long-term treasury bondsAdditionally, following significant corrections in late September, the continuous rise observed in 30-year treasury bonds has alleviated market “fear of heights,” thereby encouraging a fresh wave of capital inflow.

Reflecting on the recent past, there has been a robust recovery of bond funds following a major market correction at the end of SeptemberThe pure bond fund index has notably risen over a series of seven consecutive weeks, cumulatively gaining 1.24% since OctoberThe recent weekly gains of 0.2%, 0.27%, and 0.29% highlight an accelerating upward trend.

When assessed from a long-term perspective, bond funds appear to be on a steady upward trajectory despite minor fluctuations along the wayCurrently, the pure bond fund index has reached an all-time high since its inceptionThe overarching increase has enabled large segments of bond funds to continually surpass previous NAV records, contributing to a bustling investment environment.

Year-to-date returns from select bond funds showcase impressive yields, with numerous funds generating returns above 5%. Top performers such as the Guangda Medium and High-Grade A Fund, ICBC Ruiying, and the Pengyang Zhongbond-30 Year Treasury ETF reported yields exceeding 20%.

Some bond funds have included convertible bonds within their portfoliosThe Guangda Medium and High-Grade A Fund indicated in its third-quarter report that it opts for high-value convertible bonds to leverage potential rebounds in the equities market

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