Core Viewpoint - The annualized yield of government bond reverse repos has been rising quietly, indicating potential investment opportunities as the market approaches the mid-year point [1][3]. Group 1: Market Trends - Since late June, the annualized yield for 1-day government bond reverse repos in the Shanghai market has shown a gradual upward trend, with a significant increase of 13.17% on June 25, reaching 2% during intraday trading on June 26 [3]. - Similarly, the Shenzhen market's 1-day government bond reverse repo yield also experienced a rise, with a closing increase of 13.02% on June 25 and reaching 2% intraday on June 26 [3]. - Other maturities of government bond reverse repos in both markets have also seen varying degrees of yield increases recently [4]. Group 2: Interest Rate Environment - The overall interest rate level in the market has been low, with the loan market quoted interest rates (LPR) remaining unchanged at 3.0% for 1-year and 3.5% for 5-year loans as of June 20 [6][7]. - Deposit rates have also been on a downward trend, with major banks recently lowering rates across various terms [7]. - Various "treasure-like" products have similarly seen their yield levels drop significantly compared to historical peaks [8]. Group 3: Reverse Repo Operation Guidelines - Investors can choose between Shanghai and Shenzhen markets for government bond reverse repos, with a low investment threshold of 1,000 yuan [10]. - There are multiple maturity options available, including 1-day to 182-day terms, allowing investors to select based on their cash flow needs and yield preferences [11]. - The process for placing orders involves selecting "sell" rather than "buy," and many brokerage platforms now offer user-friendly interfaces for executing these transactions [12][13].

Core Viewpoint - The decline in bank deposit interest rates is a concern, but it is unlikely that rates will drop to zero in China due to various economic factors and the current financial landscape [1][3][12] Group 1: Current Trends in Deposit Rates - Recent years have seen a significant decline in bank deposit interest rates, with 3-year rates dropping from 3.05% to 1.50% and 1-year rates from 2.25% to 1.3% [1] - Concerns have been raised that if this trend continues, deposit rates could eventually reach zero, similar to some developed European countries [1][3] Group 2: Economic Context and Implications - The situation in Europe, where some countries have zero deposit rates, is not directly applicable to China, as those rates are often just nominal and banks still offer rates above zero [3][4] - China's economic conditions, including a GDP growth of 5.4% in the first quarter and a high M2 money supply exceeding 300 trillion, suggest that a zero interest rate policy would not be feasible [8][12] Group 3: Risks of Zero Interest Rates - A zero deposit rate could lead to significant capital outflows as domestic deposits would shift to countries with higher rates, exacerbating issues in the domestic real estate and stock markets [6][12] - The potential for increased loan demand due to low rates could result in higher default rates, reminiscent of the U.S. subprime mortgage crisis, indicating that maintaining a balance in interest rates is crucial [10][12]