0757 GMT - The unusual trend of the yuan gaining while Chinese government bond yields fall has further room to run, Capital Economics' Thomas Mathews says in a note. The recent market moves, though unusual, reflect China's economic situation: while the trade surplus is huge, warranting a stronger exchange rate, sluggish domestic demand calls for looser financial conditions, such as lower bond yields, he says. While Mathews thinks the trend has further room to run, there could be some near-term stumbling blocks, as the People's Bank of China is seeking to stymie the yuan's appreciation through its setting of the daily fix, and China's fiscal policy looks set to be more expansionary.