Core Viewpoint - The article discusses the market dynamics following the long-end interest rates breaking through the 2% threshold, emphasizing the need for a revised analytical framework in the bond market to address potential long-term oscillations rather than a continuous decline [5][6]. Group 1: Long-End Interest Rate Downward Path - Historical data shows that the downward path of long-end interest rates in developed economies exhibits significant asymmetry, with the time taken to drop from 3% to 2% being shorter than from 2% to 1% [6][8]. - The Japanese case during the 1998 Asian financial crisis illustrates this pattern, where the 10-year government bond yield quickly fell below 2% and 1%, followed by a prolonged oscillation between 1% and 2% for seven years [7][8]. - Factors triggering rebounds in interest rates during oscillation periods include marginal tightening of monetary policy, better-than-expected economic data, and the siphoning effect from equity markets [8][9]. Group 2: Conditions for Breaking the 1% Threshold - Long-term interest rates face strong resistance when approaching the 1% level, often requiring specific catalysts such as major economic or financial crises, policy rates nearing theoretical lower limits, or significant external shocks [9][10]. - Historical instances of developed economies effectively breaking the 1% threshold typically coincide with their policy rates being at or near zero [9][10]. Group 3: Mechanisms of Constraints - The lower bound of policy interest rates acts as a constraint, as nominal rates cannot fall below zero, limiting the effectiveness of monetary policy transmission [11][14]. - The rigidity of term premiums, which compensates for risks associated with long-term bonds, restricts further declines in long-end interest rates, as it is influenced by structural factors and market expectations [15][16]. - Institutional asset allocation behavior shifts when long-term bond yields drop below 2%, leading to increased risk asset allocations or cross-border investments, thereby reducing domestic long-term bond demand [17][20]. Group 4: Insights for Bond Market Analysis - The traditional analytical framework for bond markets may become ineffective as the 10-year government bond yield approaches the 1% to 2% range, necessitating a focus on new structural dynamics [21][22]. - The pressure for asset-liability matching among financial institutions has emerged as a key structural force influencing long-term interest rates, particularly in low-yield environments [22][23]. - Central banks' balance sheet operations have evolved into core tools for interest rate control, significantly impacting long-end rates through both flow and stock effects [23][24]. Group 5: Implications for China's Bond Market - The bond market in China may enter a prolonged oscillation phase following the 10-year government bond yield breaking the 2% threshold, necessitating a reassessment of investment strategies from a cross-asset allocation perspective [25][26]. - Current asset allocation behaviors indicate extreme states, with bond assets in public funds significantly exceeding equity allocations, suggesting ongoing rebalancing processes [25][26].