The bond price is inversely proportional to the market interest rate. The market interest rate has been falling in recent years, so the debt base has also performed well. However, since May 2020, the debt base has declined to some extent, so what is the reason?

Why did the debt base fall so much after May Day?

Debt-based income comes from bond prices, which will be affected by bond supply factors. The recent increase in bond supply and the market's expectation of future bond supply increase are one of the main reasons for this bond decline. According to the Futures Daily, before May 2020, the scale of three batches of special bonds issued in advance totaled 2.29 trillion yuan, exceeding the total of 2 2. 1.5 trillion yuan last year. In addition, the Political Bureau of the Central Committee has mentioned the special national debt before. Considering the upcoming two sessions, the market has strong expectations for the issuance of special national debt.

In the long run, in order to further solve the financing difficulties of small and medium-sized enterprises, there is still room for market interest rates to fall. In the long run, there are still positive factors of debt base, but in the short term, there are certain negative factors, and investors should adjust them appropriately.