Roles in the Capital Market If you want to know the relationship between financial products such as stocks and bonds, you must first understand the general situation of the capital market and their roles in the market.

At present, the main funds in the capital market can be divided into five aspects, namely money from the stock market (funds for buying stocks), money from the bond market (funds for buying bonds), money from banks (funds for saving),

The futures market refers to the money from other derivatives (funds for buying futures and other derivatives) and the money that is ready to enter at any time (the funds that are temporarily idle in the hands of investors and are willing to flow into the other four markets).

You can understand it this way. Money in the current narrow financial market mainly consists of cash in the hands of investors, bank deposits and money that has flowed into investment products.

Of course, if the above picture is combined with the corporate economy, government, and import and export, it can basically fully illustrate the general distribution of funds across the country. But because we are talking about the capital market, we will try to minimize the spread and only discuss the matter.

If the relationship between these roles does not take into account the fact that the central bank prints money, and import, export, and inflation are basically stable, we can think that the money in the market is certain. That is to say, if there is no increase in money or an unexpected decrease in money,

The total amount of residents' cash, deposits, and investments is basically constant, but it will flow back and forth between the stock market and the bond market due to different situations.

Lao Lei told you before that for any financial product, the more frequent the transactions, the higher the price will rise. The colder the transactions, the easier it will be for the price to fall.

The reason is actually very simple. Price increases require push, while prices fall naturally as soon as the push disappears.

This has the same meaning as the gravity of all things in our junior high school physics. For example, if you lift a stone, you need to actively exert effort. Once you stop exerting force, you don't need to press down deliberately, and the stone will naturally fall to the ground.

On earth, so in the end, different disciplines have the same origin.

So based on what Lao Lei just said, we can clearly know that the essential relationship between these five subjects is that one waxes and wanes and the other waxes and wanes.

If you invest more money in the stock market, there will be less money in the bond market, and there will be less bank deposits, and vice versa.

Of course, everyone should note here that usually, the futures market and other derivatives markets mainly follow changes in the stock market or bond market, because almost all financial derivatives are derived from equity or bonds, but the leverage is a little higher.

Just big.

So for ordinary investors, we only need to remember that the liquidity of the capital market consists of residents' idle funds, stock market funds, bond market funds, and bank deposits.

Here I would like to say that in addition to controlling the liquidity of the capital market, the government will also affect the liquidity of the social industrial chain. Of course, large-scale liquidity control for the entire society will also have an impact on the stock market, bond market, etc.

It has a great effect, but after all, it is an outside influence, so it is not within the scope of our discussion.

How do these roles interact with each other? Lao Li said above that we mainly need to consider the four aspects of residents' idle funds, stock market funds, bond market funds, and bank deposits, and these four roles have a relationship with each other.

In fact, any analysis of events or news about financial markets is based on the above framework.

For example, the yield on the U.S. ten-year Treasury note, which has been very popular recently, has soared.

First of all, we need to understand the meaning of this indicator. First of all, its formula is as follows: It means that if you buy a bond now, the ratio of the total income of the bond at maturity to your purchase price

It's the yield to maturity.

Because the real-time price of a bond is different from its par price, which is the same as convertible bonds, generally speaking, the higher the yield to maturity, the lower your purchase price, that is, the lower the real-time price of the bond.

Therefore, the increase in this indicator represents the decrease in bond prices, which means that a large number of bonds have been sold, and more funds have left the Sifang. This part of the funds is actually currently in the form of negotiable over-the-counter funds.

, because this is the money after being sold by investors.

According to the theory of one thing going down, the other going up, capital flight from the bond market will be good for other markets, but which market will it have an impact on?

This requires us to analyze the reasons for the flight of funds from the bond market. According to the basically unified view in the current market, the reason for the flight of funds from the bond market is: the increase in expectations for U.S. economic recovery triggered market interest rate hike expectations, which indirectly caused the contraction of liquidity in the financial market.

expected, resulting in a double kill for stocks and bonds.

This is just an example to tell everyone how to analyze similar situations in the future after determining the essential relationship between stocks, bonds, banks, etc. (first analyze whether there is more or less money, then analyze why, and finally lock in the target).

This article basically ends here, but I remembered that friend’s message, so I would like to talk about the US dollar index by the way.