After 12 years, the bond market once again witnessed a historic moment. On April 11, Beijing time, the interest rate spread of China US 10-year Treasury bonds was upside down for the first time since 2010. As of the close of the day, the yield of 10-year Chinese treasury bonds was 2.7402%, and the yield of 10-year US Treasury bonds broke 2.76%. This situation has aroused investors' concerns about the follow-up operation space of monetary policy and capital flow. Analysts said that the upside down of China US interest rate spread may continue in a short time and is expected to "return to positive" in the second half of the year. Facing external constraints, the focus of China's monetary policy is to broaden credit, and structural monetary policy tools will play a major role. At the same time, the current cross-border capital fluctuations under securities investment are still within the normal and controllable range, so there is no need to worry too much. The upside down of China US interest rate spread may continue in the short term Since March, the yield of 10-year US bonds has soared by 102.6bp, continuously breaking the important psychological threshold of the market. As of yesterday's press time, it has risen above 2.7% to 2.769%. Over the same period, the yield of 10-year Chinese treasury bonds fell only 3.75bp. The gradual warming of the Fed's tightening expectation is the driver of the rapid rise of US bond yields. The minutes of the Fed's interest rate meeting in March released last week released a "Strong Eagle" signal and stirred the market again - the minutes showed that Fed officials supported the combination of "offering" to raise interest rates by 50bp and start the table contraction in May this year. The industry believes that in the short term, the yield of 10-year US bonds may be high, and the interest rate spread between China and the United States may continue to hang upside down. Societe Generale research macro team believes that at present, major overseas central banks tend to tighten, interest rates resonate upward, and the upward range and high maintenance time of US bond yields may exceed previous market expectations. The interest rate of 10-year US bonds is likely to challenge 3%. "There is still the possibility of further upside down in the interest rate gap between China and the United States in the next one to two months." Wang Qing, chief Macro Analyst of Dongfang Jincheng, said that this round of upside down of interest rate difference between China and the United States may be a short-term phenomenon, and it is expected to "return to positive" in the second half of the year. With the landing of the Federal Reserve's interest rate hike and contraction and the emergence of downward pressure on the economy, the 10-year US bond interest rate may enter a downward cycle at the end of the second quarter. At that time, if the domestic epidemic improves, the steady growth policy works and the economy is expected to improve, the 10-year medium-term bond interest rate still has room to rise. Structural monetary policy tools are more attractive in the follow-up Will the upside down interest rate spread between China and the United States restrict the relaxation space of the central bank's monetary policy? Many experts said that the Fed's interest rate hike, table contraction and narrowing of the interest rate gap between China and the United States may disturb the loose rhythm of China's monetary policy to a certain extent, but it does not constitute a substantive hard constraint. Liu Yu, a fixed income analyst at GF Securities, said that the current statutory reserve ratio and policy interest rate are at a low level, facing external constraints. The focus of monetary policy may be to broaden credit to support the economy, that is, to enhance the stability of total credit growth and maintain the growth of credit and social financing. "The overall orientation of monetary policy has been very clear, that is, 'the total amount should be stable and the structure should be advanced'." Wang Yifeng, chief banking analyst at Everbright Securities Research Institute, believes that structural monetary policy tools may play a greater role. Including the increase of re loans for supporting agriculture and small expenditure, the creation of two special re loans for scientific and technological innovation and inclusive pension. Taking re loans as the base currency is expected to "increase the frequency and increment", and strive to avoid the formation of market expectations of "flood irrigation". Chen Jianheng, head of fixed income research and managing director of CICC, said that in the future, more targeted liquidity support will be provided by raising the balance ceiling of structural monetary policy instruments. Controllable capital outflow pressure Steady growth and timely force is the key The accelerated rise of US bond interest rates has exacerbated the volatility of global capital markets, which has been transmitted to domestic financial markets. Wang Qing said that the capital outflow pressure caused by the upside down of interest rate spread between China and the United States was controllable. The recent net outflow of funds from the bond market and stock market is largely due to the general outflow of international capital from emerging markets after the intensification of geopolitical tensions. At present, the fluctuation of cross-border funds under China's securities investment is still within the normal and controllable range, and there is no need for policy overreaction. The outflow of short-term funds does not hinder the inflow of long-term funds. Wang Qing said that considering that China's economy will maintain a medium and high growth level, the financial market will be further opened to the outside world, and RMB assets are showing a certain risk aversion attribute, after experiencing short-term fluctuations, the continuous inflow of overseas securities investment will still be the general direction in the future. CICC believes that China's own growth resilience and steady growth are the most critical to deal with the upside down of interest rate differentials between China and the United States. Whether steady growth can be made timely and effective will be the key to resist capital outflow and exchange rate weakness. At the same time, compared with China, some emerging markets may bear greater pressure under the superposition of supply-demand mismatch at the liquidity inflection point. (Xinhua News Agency)