TODAY’S KEY TOPICS

    　　China Economy: Implications of China’s 10-year government bond yield falling below 2%

    　　The recently released interbank deposit self-discipline initiative has driven interest rates lower, in our view, serving as a catalyst for the 10-year government bond yield to fall below 2%. According to our observation, the process of the decline in the 10-year government bond yield was accompanied by clear changes in China’s monetary policy. We believe the decline suggests that the achievement of multiple objectives often requires the use of a variety of policy tools, and a more appropriate policy mix could be the combination of fiscal expansion, monetary easing, and a moderate increase in the flexibility of the renminbi exchange rate.