GUANGZHOU (Fund China) – Although the bourse treasury bond Index rose slightly last week, the inter-bank treasury bond index market yield dropped sharply, the 1-year treasury bond yield fell 8 bp(basic point) reflecting a gradually bullish trend in the bond market.

Liu Hongbing, the manager of the China Nature Fortune Growth Fund indicated that, it is necessary to pay attention to the central bank’s control policy as the tight monetary policy was asked to implement prudently brought forward at the central bank working meeting recently.Since the end of last year, as banks controlled the loans outflow leading to an increased demand for assets in bonds, and the money market’s liquity is abundant.

Recently, the amount of open market’s due capital is a little big, the central bank’s countermeasure to control the liquity and countermeasures’ action will make an impact on the market. It is expected to strengthen the open market operation via the quantitative tools. Maybe will raise the required deposit reserve ratio again, he said.

The United States December umemployed ratio increased to 5%, the highest record since “9.11″ reflecting that the US.economy was deeply affected by the Subprime Mortgage crisis. And there is still no sign for straightening up. The market expected that the the U.S. government will go on to cut the interest rate at January.

Copyright Fund China 2009.

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