Group 1 - The report discusses the emergence of active bond yield spreads, defined as the difference in yields between newly issued bonds (active bonds) and older bonds, primarily due to the liquidity premium associated with new bonds [7][18]. - It identifies three key patterns observed since 2016 regarding the trading volume and transaction amounts of 10-year government bonds and policy bank bonds, highlighting that the trading volume of new bonds is significantly higher than that of older bonds [7][18]. - The report notes that the trading volume of 30-year government bonds has increased significantly since 2024, indicating a growing institutional interest in ultra-long bonds [7][18]. Group 2 - The report analyzes the convergence patterns of active bond yield spreads, noting that after each switch of active bonds, the yield spread typically exhibits an inverted "V" shape, initially widening before gradually narrowing [27][31]. - It emphasizes that the speed and extent of convergence can vary under different market conditions, influenced by the behavior of trading and allocation participants [31][34]. - The report suggests that in a low-rate environment, allocation demand drives the market, leading to a "hold" mentality that increases prices and decreases yields on older bonds, potentially resulting in negative yield spreads [34][42]. Group 3 - The report proposes a trading strategy based on the active bond yield spread, recommending a "long old bonds, short new bonds" approach, while considering borrowing costs and potential returns during the convergence of yield spreads [45][49]. - It estimates that the borrowing cost for this strategy is approximately 40 basis points, and the active bond yield spread needs to be around 5 basis points to cover these costs [45][49]. - The report concludes that the active bond yield spread trading strategy remains profitable, with the maximum yield spread observed since 2023 being around 9.8 basis points [45][49].

Core Viewpoint - The article emphasizes the importance of a sustainable bull market rather than a rapid and volatile one, advocating for a gradual and long-lasting market recovery [3][5]. Market Performance - In August, the ChiNext Index and the STAR 50 Index rose by 24% and 28% respectively, while the CSI All Share, CSI 300, and CSI A500 increased by 10.74%, 10.33%, and 11.62% [3]. Historical Context - Significant market rallies often follow prolonged downturns, where excessive speculation is released, allowing quality assets to return to reasonable or undervalued levels [4]. Market Sentiment - The transition from a bear market to a bull market can be slow and challenging, but once a bull market is established, market sentiment can ignite rapid price increases [5]. Investment Psychology - The concept of "quick gains" challenges traditional beliefs about wealth accumulation, which typically associate effort with proportional returns over time [7]. Risk Awareness - Rapid market increases often coincide with a surge in trading volume, attracting speculative funds that chase short-term profits, leading to potential volatility if market sentiment shifts [9]. Investment Strategy - Investors are advised to recognize that quick gains are a reward for enduring previous market hardships, but should also be cautious of unsustainable price increases [11]. - It is recommended to take profits gradually and avoid impulsive buying during rapid market upswings to prevent becoming a "high-priced buyer" [11]. Long-term Wealth Creation - True wealth is built on a commitment to value, respect for risk, and a belief in gradual wealth accumulation [12].