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While some market experts feel that the inclusion of Chinese bonds into the Bloomberg-Barclays index will not have a significant impact on Chinese domestic bond yields, the settlement system is still nonetheless a major development.

“More broadly, as perhaps a symbolical first step towards inclusion in the global family of indices, it’s of critical importance,” said John Woods, chief Asia-Pacific investment officer for Credit Suisse. “We’re seeing Chinese risk, both fixed income and equity, becoming more of a tradeable asset, more of an investable risk asset as far as global investors are concerned.”

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For more trends in fixed income, visit the Fixed Income Channel.