CITIC Securities says funds' Q2 pattern of extending duration has continued, but the risk-reward at the ultra-long end has shifted marginally. The 30Y-10Y yield spread has tightened further since end-Q2 to about 47bp; trading activity in Chinese government bonds beyond 10 years remains at high historical percentiles. With limited remaining room for further spread compression, if long-end absolute yields lack further downward momentum marginal buying from funds and broker-dealers could weaken, in

CITIC Securities says funds' Q2 pattern of extending duration has continued, but the risk-reward at the ultra-long end has shifted marginally. The 30Y-10Y yield spread has tightened further since end-Q2 to about 47bp; trading activity in Chinese government bonds beyond 10 years remains at high historical percentiles. With limited remaining room for further spread compression, if long-end absolute yields lack further downward momentum marginal buying from funds and broker-dealers could weaken, increasing the risk of a phased pullback from crowded positions.