Morgan Stanley's funds have indicated that the yield rate on 10-year government bonds has dropped below 2% in recent times, hitting a historical low. The decline in bond yields signifies a renewed interest in bond market investments, which is undoubtedly a positive signal for investors seeking stable returns. It is anticipated that funding will be relatively abundant in the first half of next year, with pressure on local governments likely to be more apparent in the second half. A new round of policy measures is expected to be introduced; in terms of the bond market, the first half of next year may see an overall environment of interest rate fluctuations trending downward. The timing of adjustments will depend on when local governments introduce corresponding policies. Even in the event of a rebound, it is likely that gains will be recovered, so it is important to grasp the trading rhythm. After a fall followed by a rise in the bond market post-"924", breaking through new highs Looking back at the bond market trend in recent months, following the announcement of the "policy gift package" on 924, market risk appetite has visibly increased, leading to a flow of funds from the bond market to equity markets and causing some fluctuations and adjustments in the bond market. Data source: Wind; Timeframe is from 2023.12.8 to 2024.12.8. Past performance does not guarantee future results. However, after the announcement of the U.S. election results, the conclusion of the Federal Reserve's interest rate meeting, the convening of a series of important domestic meetings, and the swift implementation of key issues such as debt-to-equity swaps, since late November, the central bank has injected funds in excess of expectations, leading to institutional funds entering the market and sparking a new round of trends in the bond market, which has even quietly reached new heights. On December 6th, the China 10-year government bond net price index closed at 121.58, reaching a new high, indicating that the bond market has emerged from a period of roughly 2 months of turbulent trends. Data source: Wind, 2023.12.8-2024.12.8. Past performance does not guarantee future results. December has a high probability of a bond market rally Looking back at the bond market over the past few years, there is usually a rally at the end of the year, which is generally favorable for the bond market as a whole. Taking the 10-year government bond net price index as an example, since 2017, for seven consecutive years, the index has recorded gains in December. Data source: Wind, timeframe: from 2017.12.1 to 2024.12.10. Past performance does not guarantee future results. In terms of the driving factors behind the increases in recent years, the superficial reasons may seem different: In December 2020, with a weak recovery as the main theme, the central bank unexpectedly continued its MLF operations, leading to a further decline in short-term interest rates, combined with increased demand from institutions for asset allocation, resulting in a rally following turbulence in the bond market. In December 2021, after the central bank's reserve requirement ratio cut, the loose funding conditions remained in place, with policies emphasizing the need for "front-loaded policy efforts" and "accelerated progress in fiscal expenditure." Under policy negotiations, the bond market saw minor gains. In December 2022, the negative feedback loop caused by the "net value transformation of wealth management products" led to adjustments in bond market yields and a downward trend. However, as the turmoil gradually subsided and with the central bank stabilizing funding conditions, the bond market still saw minor gains. December 2023 and this year's December share some similarities, both being driven by the negotiations between year-end meeting policy expectations and weak economic reality, leading to an upward trend. However, in reality, the core essence of the driving factors mentioned above has a commonality: on the one hand, as the year-end approaches, with the convening of top-level meetings, policy uncertainties gradually resolve, and the planning for the following year becomes clearer; on the other hand, institutions will enter a phase of increased asset allocation at the year-end in preparation for the new year. In an environment of asset scarcity, there is often a possibility of early "rushing" into asset allocation.