Short-term interest rates are declining, and the yield curve is steepening.

Important Notes: 01) E Fund Unit Trust - E Fund (Hong Kong) Short-Term Bond Fund ("Sub-Fund") is subject to general market fluctuations and other inherent factors of the Sub-Fund's assets. Therefore, you bear the risk of not recovering the principal invested in the Sub-Fund or potentially losing most or all of your investment. 02) The Sub-Fund primarily invests in a portfolio of debt securities denominated in USD, EUR, HKD, or offshore RMB with maturities not exceeding 3 years, including debt securities issued in emerging markets, aiming to generate a stable income stream for the Sub-Fund beyond capital appreciation to achieve long-term capital growth. There is no guarantee that the Sub-Fund will achieve its investment objective. 03) The Sub-Fund may bear a) investment risks, b) risks associated with investing in debt securities (including credit/counterparty risk, interest rate risk, sovereign debt risk, credit rating and credit rating downgrade risk, valuation risk, and risks related to below-investment-grade and/or unrated debt securities), c) "dim sum" bond risks, d) emerging market risks, e) risks related to sale and repurchase agreements, f) risks related to reverse repurchase agreements, g) concentration risks, h) RMB currency risks, RMB-denominated category risks, and RMB hedging category risks, i) risks related to perpetual bonds, j) convertible bond risks, k) risks of investing in other collective investment schemes/funds, l) risks related to investing in debt instruments with loss-absorbing features, m) risks related to contingent convertible bonds (including trigger level risk/conversion or full write-off risk, coupon cancellation risk, sector concentration risk, and being novel and untested), n) risks related to equity securities, o) Eurozone and European country risks, p) hedging/derivative instrument risks, q) currency risks, r) risks of distributions being paid from capital and/or substantially from capital, and s) risks related to collateral and/or securitized products. 04) Unless the intermediary has explained to you at the time of selling the fund that, after considering your financial situation, investment experience, and objectives, this fund is suitable for you, you should not invest in the Sub-Fund. 05) Dividends will be distributed monthly, subject to the fund manager's discretion. Distributions may be paid from capital or substantially from capital, which will immediately reduce the Sub-Fund's net asset value. The fund's dividend yield does not represent the fund's return rate, and a positive dividend yield does not mean the fund's return is positive. Past dividend yields do not indicate future dividend yields. 06) Investors should not make investment decisions based solely on the information provided in this document and should read the details and risk factors contained in the relevant fund's offering documents.

Hello, dear investor friends, wishing you all a Happy New Year! May your investment journey be smooth sailing in the new year, with your holdings rising steadily and your returns continuously shining!

Global central banks were active in December, with varying policy directions. The Fed cut interest rates by 25 basis points as expected to 3.50%-3.75%, announced monthly purchases of $40 billion in Treasury bills, and the dot plot suggests another 25 basis point cut in 2026; the market currently believes there is an 80.1% probability that the Fed will keep rates unchanged in January 2026. Additionally, Trump postponed the appointment of the new Fed chair to early this year, demanding the new chair be a "super dove" to inject more liquidity into the market. The ECB kept rates unchanged for the fourth consecutive time, while the BoE cut rates by 25 basis points in a 5:4 vote, and the BoJ raised rates by 25 basis points as expected. In China, the December LPR remained unchanged for the seventh consecutive month, and the central bank explicitly stated it would significantly increase the scale and proportion of various medium- to long-term funds actually invested in A-shares.

Divergence in US-China PMI data, with different economic trends to watch. In the US, the final December manufacturing PMI was 51.8, unchanged from the preliminary reading and expectations but down from November's 52.2, marking the weakest expansion in five months. Slowing production growth and shrinking new orders indicate weak demand, with tariffs pushing up corporate costs as a key factor. Overall, US manufacturing remains resilient, but the foundation for recovery is not yet solid, requiring cautious observation going forward. China, however, showed positive signals, with the December PMI returning to expansion territory after eight months, recording 50.1%, up 0.9 percentage points from the previous month, mainly due to recovering export and infrastructure demand, pre-holiday stockpiling, and policy support.

In bond market performance, global bond markets saw a slight pullback overall last week, with the global composite index down 0.21% and the US Treasury index down 0.17%. On interest rates, US Treasury yields fell at the short end and rose at the long end, steepening the yield curve, with the 2-year US Treasury yield down 1bp to 3.47% and the 10-year US Treasury yield up 6bp to 4.19%.

The net asset value of E Fund (Hong Kong) Short-Term Bond Fund Class B Accumulating HKD Shares was 112.555*. In response to recent bond market volatility, we will focus on high-quality, higher-coupon bond targets to solidify stable income foundations while continuing to seize trading opportunities to further enhance overall returns. Short-term bond funds are less sensitive to interest rate fluctuations, making their allocation advantages particularly significant in the current volatile environment.

Key economic data releases to watch this week:

Monday: US December ISM Manufacturing Index;

Wednesday: US December ISM Non-Manufacturing Index;

Friday: China December CPI and PPI data;

Friday: US December Non-Farm Payrolls.

* Data sourced from E Fund Hong Kong's official website as of 2026/1/2.

Disclaimer: The issuer of this report is E Fund Asset Management (Hong Kong) Limited. This report does not constitute an invitation or recommendation to invest in fund units. Subscription for fund units must be made using the application form accompanied by the fund prospectus. Investments involve risks, and fund prices may rise or fall. Past performance is not indicative of future performance. Before investing, investors should carefully read the investment risks related to the fund in the fund prospectus (including the "Risk Factors" section). This report may only be distributed in certain jurisdictions. In any jurisdiction where the distribution of such materials or the making of any invitation or recommendation is not permitted or would be unlawful, this report does not constitute such distribution or invitation or recommendation. This document is exempt from pre-vetting and authorization by the Hong Kong Securities and Futures Commission and has not been reviewed by the Hong Kong Securities and Futures Commission. SFC authorization does not imply a recommendation or endorsement of the scheme, nor does it guarantee the commercial merits or performance of the scheme, nor does it mean the scheme is suitable for all investors or any individual investor or any category of investors. Copyright © 2026. E Fund Asset Management (Hong Kong) Limited.