Core Viewpoint - The bond market continues to experience narrow fluctuations, with recent adjustments in LPR and deposit rates not significantly impacting market sentiment [1][2] Market Performance - As of May 21, the interbank bond market showed slight fluctuations in yield rates, with the 3-month government bond yield stable at 1.43%, the 2-year yield down 1 basis point to 1.48%, and the 10-year yield up 1 basis point to 1.71% [2] - The recent adjustments in LPR and deposit rates were anticipated and did not lead to significant market changes, as the market had already priced in the current easing measures [2][3] Institutional Perspectives - Some institutions maintain a bullish outlook on the bond market, suggesting that the current environment allows for active bond allocation and potential capital gains through extending duration [5] - The consensus among institutions is that the broad trend of declining interest rates remains intact, although the current sentiment is somewhat weak due to limitations on the downward movement of long-term rates [4][5] Future Expectations - The expectation is that the decline in deposit rates will lead to a decrease in other cash-like rates, which is crucial for managing banks' funding costs and stabilizing the financial system [4] - The market anticipates that as currency constraints ease, there will be continued downward adjustments in short-term rates, which could subsequently lead to declines in medium to long-term bond yields [4] Investment Strategies - The prevailing strategy among investors is to engage in wave trading, with 83% of surveyed investors favoring this approach, while others are considering duration adjustments and selective exposure to equity [6] - Institutions recommend focusing on medium to short-term bonds with positive carry, while also exploring opportunities in municipal private placement bonds and stable ABS valuations [6]

Core Points - The People's Bank of China announced a decrease in the Loan Prime Rate (LPR), with the 1-year LPR at 3% and the 5-year LPR at 3.5%, both down by 10 basis points from the previous month [1] - Major banks collectively lowered deposit rates, with a 5 basis point reduction in demand deposits and a 15 to 25 basis point reduction in fixed-term deposits [1] - The reduction in deposit rates is expected to lower the cost of liabilities for commercial banks, enhancing their willingness to lend [1][2] Group 1: Impact on Real Estate Market - The real estate market showed signs of stabilization, with new residential sales area declining by 2.8% year-on-year from January to April 2025, but the decline rate has narrowed [1][2] - The decrease in LPR is anticipated to lower financing costs for both enterprises and residents, which is crucial for stimulating investment and consumption [1][3] - The current policy environment is expected to support the real estate market, with core cities showing positive performance [2][4] Group 2: Future Policy Directions - The central bank's recent actions, including a reduction in public housing loan rates, are expected to create more room for lowering commercial mortgage rates [3] - The government has shown strong confidence and determination to stabilize the real estate market, with a variety of supportive policies anticipated to be implemented [4][5] - Comprehensive policies aimed at boosting domestic demand and consumption are expected to strengthen the fundamentals of the real estate market [5]