July 8, the Ministry of Finance and the State Development Bank are issuing new debts in the inter-bank bond market. A trader from a venture capital in Shanghai said the CDB 10-year long bond are in great demand but the short-term bond—- 6 month discount bonds are lack of demand, some of short-term bonds failed to be sold at the auction.
The traders think the main reason for this situation is that there would a period of vacuums after market interest rates hike. On the long terms, after the subsequent interest rate rises, there is a less chance on government behavior to raise the interest rates. So it is suitable to buy long-term bonds. But to the short-term bonds, due to the intense short-end funds, the market demand is not strong enough.
Caijing
Translated and edited by Peng Bo. He is now an editor of m4.cn. Write to him at pb.bloomberg@gmail.com.