Report Summary 1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report - The central bank has been actively guiding the market's reasonable expectations through various measures to prevent the strengthening of unilateral consensus expectations in the bond market [1]. - Timely guidance by the central bank is crucial to prevent systemic risks, address domestic interest - rate constraints, and drive funds to flow from the bond market to the stock market [3]. - Preventing strong unilateral consensus expectations can control the rapid decline of interest rates, maintain the steepness of the interest - rate curve, and promote economic recovery [4]. 3. Summary by Related Content Central Bank's Measures to Guide Expectations - Last year, the central bank issued documents, conducted window - guidance on rural commercial banks, and prohibited some market participants from buying long - term bonds. It also约谈ed aggressive financial institutions and issued heavy fines for bond - market violations [1]. - In early January this year, the central bank influenced the market through marginal changes in liquidity operations, and the Financial Times warned against over - interpreting monetary easing. In the first quarter, the central bank maintained a tight balance of funds, leading to a rise in short - term bond yields and then long - term yields, breaking the consensus expectation formed since last quarter [2]. - In June this year, the central bank did not publish the monthly treasury bond trading data on June 30 and removed the wording of "choosing the opportunity to cut reserve requirements and interest rates" in the second - quarter regular meeting of the Monetary Policy Committee, effectively interfering with the consensus expectation of breaking through the previous low [6]. Significance of Central Bank's Guidance - To prevent the rapid decline of interest rates from triggering systemic risks, such as the liquidity trap in Japan in the 1990s. For example, the rapid decline of the 10 - year treasury bond rate from around 2.1% to 1.6% last quarter needed timely correction [3]. - There are many constraints in the downward path of domestic interest rates, including pressure on bank net interest margins and liability sides, and the need to maintain the stability of the RMB exchange rate to avoid excessive capital outflows [3]. - The central bank may aim to drive funds from the bond market to the stock market, especially under the strategy of developing new - quality productive forces, to support the financing of technology companies [3]. Current Bond Market Situation - Since early May this year, the 10 - year treasury bond has been fluctuating around 1.65% - 1.70%. Without a new comprehensive interest - rate cut, the bond market has not reached a new low. The market has been speculating about restarting treasury bond trading and opening an interest - rate cut window in July [5][6].

Core Viewpoint - The article discusses the volatility of stock prices in relation to company earnings and market expectations, emphasizing the importance of not buying stocks at high price-to-earnings (P/E) ratios, regardless of the company's perceived greatness [2][3]. Group 1: Company Performance and Market Reaction - Yihai International's profit grew from 125 million to 790 million from 2015 to 2019, leading to a market capitalization surge to 120 billion, with a P/E ratio of 150 [2]. - The COVID-19 pandemic caused a significant drop in Yihai's profits and market capitalization, with the stock price falling from 148 to 15, reflecting a P/E ratio decline to 17 [2]. - Similar patterns were observed with Pop Mart, where profits halved in 2022, leading to a stock price drop from 107 to 10, despite a recovery in 2023 [3]. - China Feihe's stock price fell from 25.7 to 6 due to declining birth rates and market pessimism, despite only a slight profit decrease [4]. Group 2: Market Predictions and Investment Strategy - The market often predicts company performance 1-2 years in advance, as seen with China Feihe and Luzhou Laojiao, where stock prices adjusted before earnings reports were released [7][8]. - The article suggests that smart investors should buy stocks during market lows when company fundamentals indicate potential recovery, as demonstrated by the investment in China Feihe at its lowest point [5][6]. - The strategy involves identifying companies with strong long-term growth potential while avoiding high P/E ratios during market euphoria [8].