news flash·2025-07-31 00:19Core Viewpoint - Foreign institutions have reduced their holdings of RMB bonds for two consecutive months due to the narrowing basis of the one-year USD against the onshore RMB, which has compressed the overall yield of interbank certificates of deposit [1] Group 1: Market Trends - In May and June, foreign institutions decreased their investments in RMB bonds primarily because of the reduced yield from interbank certificates of deposit [1] - The upcoming maturity peak of interbank certificates of deposit, which were invested in by foreign institutions last year, has also contributed to this trend [1] Group 2: Future Outlook - Looking ahead, the "anti-involution" policy direction in July has reignited inflation expectations, leading to a shock in the interest rate bond market [1] - There may be investment opportunities in long-term bonds once the sentiment in the stock and commercial markets stabilizes [1] Group 3: Long-term Investment Logic - The ongoing process of RMB internationalization and the trend of "de-dollarization" are expected to drive foreign institutions' long-term demand for diversified asset allocation, leading to continued increases in RMB bond holdings over the long term [1] Group 4: Currency Stability - Despite fluctuations in foreign capital flows in the bond market, the increase in foreign investments in the equity market, stable expectations from China-US trade negotiations, and the central bank's balanced exchange rate policy suggest that the RMB exchange rate is likely to maintain resilience in the short term [1]