We have summarized the following reasons:

First, the interest rate of 1-year treasury bonds has risen by 19BP to 2.83% from November 1 to November 16, and the main reason for the sharp drop in the bond market is that the funds are slightly tight (the price of certificates of deposit has increased and the interest rate of funds has continued to rise);

second, the epidemic prevention policy is optimized and the real estate policy is overweight. The market's scarce funds are expected to change due to policy changes, and the market is beginning to worry that the real estate recovery may further reduce the stock funds in the market. In the case of insufficient incremental funds, the "moving" of stock funds can easily form a seesaw effect. With more funds in real estate and stock market, the funds in bonds will naturally be compressed.

Third, the bond market fell sharply, which triggered the redemption of debt-paying institutions. On November 15th, the fund sold 97.8 billion yuan of bonds in the secondary market, a record high since May 22. With the influence of loss effect, the demand for redemption of wealth management products clients is expanding, which leads to further imbalance between supply and demand of bonds and accelerates the decline of bonds.