The Seesaw Effect Between Stocks and Bonds Resurfaces, Bond ETFs Attract Nearly 1.5 Billion Yuan in Single Day! Efficient Arbitrage Using the "Thursday Rule"

How to Maximize Capital Returns on AI · Thursday Rule During Holidays?

On March 19, the market weakened, with the Shanghai Composite Index dropping over 1% at one point. Amid increasing stock market volatility, the bond market attracted funds—yesterday, the entire market’s bond ETF net inflow reached 1.475 billion yuan, second only to dividend and cash flow strategy ETFs.

It’s clear that recent capital is shifting toward safe assets. The underlying logic is: First, risk appetite is shrinking as the stock market weakens, prompting funds to seek safe havens. Ongoing tensions in the Middle East and rising external uncertainties reduce market profitability, leading risk-averse funds to move from equities to fixed income—classic “stock-bond tug-of-war” effect. Second, expectations for lower risk-free rates are rising. Recently, market expectations for monetary easing have increased, and bond prices move inversely to interest rates—when rate cut expectations grow, bond prices tend to rise. Buying bond ETFs now could yield price spread gains. Third, bonds provide coupon income. Even if bond prices fluctuate in the short term, holders still receive stable interest payments, offering a “safety cushion” for portfolios.

Currently, since safe-haven funds are flowing into bonds and bond prices are expected to benefit from rate cut expectations, how can idle funds in ordinary accounts efficiently participate in the bond market?

Simply leaving money in the account or buying money market funds can generate returns, but this approach isn’t the most efficient use of capital. Is there a method to seize bond price appreciation opportunities while also making idle funds during weekends and holidays work for you?

A classic strategy is: Perform a one-day government bond reverse repurchase on Thursday, then, after funds are returned on Friday, seamlessly buy low-volatility interest rate bond ETFs—such as the China Government and Policy Bank Bond ETF (511580).

Step 1: Master the “Thursday Law” of Government Bond Reverse Repos

The yield on government bond reverse repos isn’t fixed; it’s determined by market liquidity and demand—serving as a barometer of market “cash shortage.” Since reverse repos settle T+1, there’s a key timing aspect: if you operate a 1-day reverse repo on Thursday, the funds become available (tradeable but not cashable) on Friday, but the actual funds are occupied across Thursday, Friday, Saturday, and Sunday.

This means, by executing a 1-day reverse repo on Thursday, you effectively earn interest for three days (Friday, Saturday, Sunday). Despite the A-share market weakening today, the exchange’s reverse repo rates are slightly strengthening. For example, GC001’s annualized yield hovers around 2%. However, during month-end, quarter-end, or holiday periods, reverse repo rates often spike, creating opportunities to “harvest” gains. Note that reverse repo trading hours extend 30 minutes beyond the main market—after 3:00 PM, you can check available funds and sell (lend out) a 1-day reverse repo (Shanghai code 204001, Shenzhen code 131810).

Step 2: Follow Up on Friday to Keep Funds “Running”

On Friday morning, the principal plus three days’ interest from Thursday’s reverse repo automatically return to your account. These funds are available but not immediately usable, making them perfect for purchasing securities. You can then seamlessly reinvest this returned capital into liquid, low-volatility bond ETFs like China Government and Policy Bank Bond ETF (511580).

This ETF mainly invests in government bonds, with a recent scale of about 5 billion yuan, good liquidity, and T+0 trading, allowing for quick buy/sell at any time.

Three Major Advantages of This Relay Strategy

1. Complementary Yields: Reverse repo rates fluctuate. When market liquidity is ample (normal times), reverse repo yields are low, mainly serving as “idle cash management.” During month-end, quarter-end, year-end, or before long holidays, liquidity tightens, reverse repo rates spike, creating opportunities to “harvest” gains. The ETF (511580) performs well during these times—offering relatively stable income through coupons when reverse repo yields are flat. Together, they complement each other: reverse repos capture holiday “gains,” while the bond ETF provides steady coupon income.

2. Seamless Capital Flow: This strategy allows funds that would otherwise be idle over weekends to earn interest during Thursday’s reverse repo, then re-enter bond funds on Friday, continuing to participate in weekly gains. It maximizes capital utilization.

3. Simple Operations: Both steps are straightforward. Executing a reverse repo is as easy as selling stocks on your trading app; buying the bond ETF is also simple, with T+0 liquidity and continuous trading.

Source: Jisou Zhenji

Risk Reminder: Funds are subject to risks; please invest cautiously.