Core Viewpoint - The broad trend of declining interest rates remains unchanged, with potential for further benefits not yet fully realized [1] Group 1: Interest Rate Adjustments - On May 20, both deposit and loan interest rates were lowered simultaneously, with the LPR (Loan Prime Rate) decreasing by 10 basis points for both the 1-year and 5-year rates, now at 3% and 3.5% respectively [2][3] - The average reduction in deposit rates across major banks was approximately 16 basis points, with longer-term deposits seeing a larger decrease of 25 basis points [2][3] - The adjustment in deposit rates is expected to alleviate banks' interest margin pressures and promote credit issuance, while also increasing the attractiveness of bond investments [5][8] Group 2: Market Reactions - Despite the expected downward trend in bond yields following the interest rate cuts, the bond market reacted with mixed results, with long-term bond yields rising instead [2][3] - As of May 21, the yields on 10-year and 30-year government bonds increased by 0.35 basis points and 1 basis point respectively, indicating a market adjustment rather than a straightforward decline [3][9] - Analysts suggest that the market has already priced in a range of monetary policy changes, leading to a complex trading environment where the impact of rate cuts may not be straightforward [6][7] Group 3: Future Outlook - The ongoing decline in deposit rates is expected to create more space for long-term bond yields to decrease, although the timing and extent of this change remain uncertain [8] - Analysts predict that the next window for potential interest rate cuts may not occur until the third quarter of this year, influenced by factors such as bank deposit flows and the overall monetary policy environment [7][8] - The report from China International Capital Corporation indicates that if deposit rates decline without corresponding decreases in other cash-like rates, banks may face increased pressure from deposit migration, complicating the stability of their liabilities [8]