Guojin Asset Management: The implementation of reserve requirement ratio cuts and interest rate cuts. The loose monetary policy provides strong support to the bond market.

On May 7th, the State Council Information Office held a press conference to introduce the situation related to the "package of financial policies to support stable markets and expectations". The long-awaited policies of reserve requirement ratio cut and interest rate cut were finally implemented. The fixed income investment team of Guojin Asset Management stated that the overall "double cut" this time reflects the central bank's policy direction of "moderate easing". The central decline in funding rates is relatively clear good news for the short end of the bond market. However, due to the weakening of the basic fundamentals of the market in the previous period, the curve is too flat, leading to some profit-taking pressure on the medium and long end rates in the short term. Nevertheless, in the current international economic environment, loose monetary policy still provides good support for the bond market.