Morgan Stanley's co-head of fixed income investment, Huiwen Wu, noted that after a period of overshooting and correction, the bond market is currently experiencing short-term fluctuations while seeking a clear trend. A review of market performance over the past decade shows that long-term interest rates in November typically have limited downward space, making yield compression in long-duration bonds a more stable play. Currently, short-term 1-year bonds have rebounded to their lows for the year. While short-term bonds saw limited adjustments in Q3 2025, they were the fastest to recover in October, with traders adopting a cautious stance. Purchases by securities firms and funds have concentrated on short-to-medium-term credit products on the left side of the "barbell" strategy. Further declines in November are expected to be limited. However, as the central bank begins trading government bonds, stability in the short-to-medium-term yield curve has improved significantly. Against a backdrop of weakening high-frequency economic data, open market operations remain accommodative, reducing risks for short-term assets. The market is expected to shift toward long-duration and credit spread opportunities, though the extent and pace of compression remain uncertain.

In terms of strategy, November calls for selecting high-risk-reward assets for recovery, as a sustained trend has yet to emerge. Thus, liquidity considerations remain crucial in asset selection. Looking ahead to 2026, both equities and bonds are expected to remain range-bound, with structural and periodic opportunities dominating. Strong expectations but weak fundamentals are likely to persist. Market expectations for price recovery are high, but discrepancies in these expectations and potential periodic resistance could influence bond market trends.

Amid loose liquidity conditions, short-term bonds are expected to continue serving as an alternative to household deposits. Additionally, fixed-income-plus products with embedded options saw incremental inflows in Q3 2025, which may contribute to performance divergence in 2026. The bond market has transitioned from a one-sided rally to a low-rate, low-volatility, low-spread cycle, entering an era where trading prowess dictates success. Opportunities now stem from market overreactions rather than frothy highs.

Investors can seek returns from three key disparities: 1. **Information disparity**—tracking marginal changes in macro data and open market operations through high-frequency analysis. 2. **Behavioral disparity**—adopting contrarian strategies during emotional market swings, such as identifying "sentiment premiums" in Treasury futures amid hedging-driven volatility, following the principle of "big positions for big moves, small positions for small moves." 3. **Strategy disparity**—capturing rate bond fluctuations, exploiting credit spreads and sector rotation alpha in credit bonds, and targeting low-priced, low-premium convertible bonds to avoid single-asset return ceilings.