Report Industry Investment Rating No relevant content provided. Core Viewpoints - The probability of "stocks and bonds sharing the same origin" is increasing, and they are likely to be in sync with the nominal growth rate [22][34]. - The focus of the "same origin" lies in price elasticity and the impact of price changes on the stock and bond markets, with policy and market attention centered on demand - led non - food prices [38][47]. - The "anti - involution" policy is an important arrangement in the future, with clear long - term and short - term goals and implementation paths [60][61]. Summary by Directory "Stock - Bond Disconnection" - After "9.24" in 2024, both stocks and bonds were bullish under the stimulus of loose monetary policy. In 2025, there was a slight "seesaw" pattern between stocks and bonds, with stocks strong and bonds weak. The median return of a certain scale of interest - rate bond public funds was around 0.2%, and the stock index rose nearly 800 points while the interest rate only increased by 20 points [7][8]. - The reason for the "stock - bond disconnection" is that they have different driving factors. In 2025, the bond market's main line was the revision and adjustment of expectations, including policy and economic expectations [9][11][12]. Increasing Probability of "Stock - Bond Homology" - A stock bull market requires both PE and EPS. Currently, it seems to be in a period where EPS needs to take over. When the stock market focuses on EPS, the probability of stock - bond homology increases [22]. - In the past year or so, the main factor determining the rise and fall of long - term interest rates has been the term premium. Currently, the term premium is at a reasonable level, and the long - term interest rate center's rise and fall will return to fundamental factors such as growth or prices [32]. - When the stock index returns to EPS and the bond market level matches the current policy and fundamentals, the probability of stock - bond homology increases, and they are homologous to the nominal growth rate [34]. Focus of "Homology" - In terms of the 2035 goals, the real growth has limited elasticity, while prices still have elasticity. Industry profit changes are closely related to prices, which are crucial for the stock market, and whether to get out of deflation is crucial for the bond market [38]. - Policy and the market pay more attention to demand - led prices, especially non - food prices or core CPI. When food and non - food prices move in the same direction, the situation is clear; when they move in opposite directions, in - depth structural analysis is needed [47]. - Under neutral assumptions, there is a chance to get out of deflation, but the risk lies in whether the month - on - month can reach the neutral level of recent years. The trend is determined, and it is unlikely to return to the 2024 situation [50][51]. - The "anti - involution" policy is very important. In the short term, the implementation path is still under observation, while in the long term, the goals and implementation paths are clear. International experiences from the US and Japan can be used for reference, and in the short term, administrative production control may be used to improve industry profit margins [60][61][66].

Group 1: Inflation Trends - In October, the Consumer Price Index (CPI) shifted from a decrease of 0.3% to an increase of 0.2%, marking the highest value since February of this year, with a seasonal level higher than the previous two years [1][8] - The Producer Price Index (PPI) saw a narrowing decline of 0.2 percentage points to -2.1%, marking the third consecutive month of narrowing [1][8] - Gold prices significantly impacted both CPI and PPI, with domestic gold futures prices increasing by 52.8% year-on-year, a substantial rise of 9.5 percentage points compared to September [2][12] Group 2: Food Prices and Core CPI - Food prices decreased by 2.9%, with the decline narrowing by 1.5 percentage points from the previous month, affecting CPI by approximately 0.54 percentage points [2][16] - Core CPI rose by 1.2%, the highest since March 2024, with a month-on-month increase of 0.2% [2][9] - The increase in core CPI was primarily driven by gold prices, with other goods and services related to gold also showing a significant year-on-year increase of 12.8% [2][12] Group 3: PPI and Industry Performance - The PPI for October showed a year-on-year decline of 2.1%, with notable performance in the non-ferrous industry, where prices increased by 5.3% and 2.4% for mining and metal processing, respectively [3][21] - The narrowing decline in PPI was attributed to ongoing capacity management and increased demand for coal mining and washing, with a reduction in the decline of 1.2 percentage points compared to the previous month [3][21] - Life goods PPI decreased by 1.4%, with the decline narrowing by 0.3 percentage points from the previous month [3][21] Group 4: Market Outlook and Strategy - The rise in prices is influenced by multiple factors, including the increase in gold prices and weather-related impacts on vegetable prices, leading to an unexpected overall price increase [4][23] - The bond market is entering a recovery phase, with a recommendation for a barbell strategy to manage risks while benefiting from potential interest rate declines [4][25] - The 10-year government bond yield is expected to recover to a range of 1.6%-1.65% by the end of the year [4][25]

Core Insights - The Consumer Price Index (CPI) in China has turned from a decline to an increase year-on-year, with the core CPI rising for the sixth consecutive month, indicating a positive shift in domestic demand [1][2] - The Producer Price Index (PPI) has shown its first month-on-month increase this year, signaling improvements in the upstream production sector [1][4] CPI Analysis - In October, the CPI increased by 0.2% month-on-month, slightly above seasonal levels, and turned from a 0.3% decline to a 0.2% increase year-on-year [1][2] - The core CPI, excluding food and energy, rose by 1.2% year-on-year, marking a continuous expansion for six months [1][2] - Key contributors to the CPI increase include rising prices in food, services, and industrial consumer goods [2] PPI Analysis - The PPI increased by 0.1% month-on-month in October, marking its first rise this year, while the year-on-year decline narrowed to 2.1% [1][4] - Factors such as improved market supply-demand relationships and price recoveries in key industries contributed to the PPI's positive change [4] Sector-Specific Insights - Service prices rose by 0.2% month-on-month and 0.8% year-on-year, with industrial consumer goods prices increasing by 0.3% month-on-month and 2.0% year-on-year [2][3] - The jewelry sector saw significant price increases, with gold and platinum jewelry prices rising by 50.3% and 46.1% year-on-year, respectively [2] Future Outlook - Experts predict that the CPI is likely to continue rising, while the PPI's year-on-year decline is expected to narrow further, with potential for positive growth in the first half of next year [5]

Report Industry Investment Rating - Not mentioned in the provided content Core Viewpoints of the Report - In September, the price index remained under pressure, with CPI and PPI year-on-year in negative territory for two consecutive months. The CPI was mainly dragged down by food and energy prices, while the core CPI continued to grow steadily. The year-on-year decline of PPI narrowed for two consecutive months, and the month-on-month remained flat [1]. - In the fourth quarter, the economic downward pressure may increase, and the possibility of using policy tools such as reserve requirement ratio cuts and interest rate cuts in the future rises. Attention should be paid to the continuity of incremental policies and signals of price level improvement [1]. - The bond market's performance in September deviated from the capital and economic fundamentals. The current bond market has prominent allocation value, and bond yields may fluctuate downward. The report is bullish on the bond market in October [1]. Summary by Relevant Catalogs CPI Analysis - In September, the CPI was -0.3% year-on-year, up 0.1 pct from the previous month, and +0.1% month-on-month, up 0.1 pct from the previous month. The core CPI year-on-year increase expanded to 1.0% for five consecutive months, possibly affected by consumption promotion policies and the rise in gold prices [1]. - Food prices have been negative year-on-year for eight consecutive months. In September 2025, food prices decreased by 4.4% year-on-year, dragging down the CPI year-on-year by about -0.77 pct. Non-food prices increased by 0.7% year-on-year, with the increase expanding for four consecutive months [1]. - In Q4, food price declines may ease due to the low base last year, service prices may maintain steady growth, and the performance of household goods and services prices may continue to be excellent [1]. PPI Analysis - In September, the year-on-year decline of PPI narrowed to 2.3%, up 0.6 pct from the previous month, and the month-on-month remained flat. The narrowing of the year-on-year decline was mainly due to the improvement in the prices of some domestic energy and raw material industries and the influence of international commodity price fluctuations [1]. - Policy-driven market environment improvement and industrial upgrading are the core supports for PPI stabilization, but the policy effect is weakening marginally. In Q4, the year-on-year decline of production material prices may continue to narrow, but it is difficult to turn positive year-on-year [1]. Economic Outlook - In the fourth quarter, the economy may face downward pressure. Consumption and exports may be under pressure, and the external environment is complex. The possibility of using policy tools such as reserve requirement ratio cuts and interest rate cuts in the future increases [1]. Bond Market Outlook - The bond market's performance in September deviated from the capital and economic fundamentals. The current bond market has prominent allocation value, and bond yields may fluctuate downward. The report is bullish on the bond market in October [1]. - It is predicted that the 10Y Treasury bond yield will return to around 1.65% this year, the 30Y Treasury bond to 1.9%, and the 5Y large bank secondary capital bond to 1.9% [1].

Core Viewpoint - The recent meeting of the People's Bank of China (PBOC) highlighted a series of key policy signals, indicating a flexible adjustment of monetary policy amid low inflation and marginal improvements in macroeconomic indicators [1][3]. Economic Situation - The external economic environment is becoming increasingly complex, with weakening global growth and rising trade barriers. Despite challenges such as insufficient domestic demand and low inflation, China's economy is showing signs of stability and improvement [3][4]. - The core Consumer Price Index (CPI) rose by 0.9% year-on-year in August, marking the fourth consecutive month of growth, while the Producer Price Index (PPI) decreased by 2.9% year-on-year, with a narrowing decline compared to July [3][4]. Monetary Policy Direction - The meeting emphasized the need for a moderately loose monetary policy, focusing on utilizing existing resources effectively rather than introducing new measures. This shift indicates confidence in the effectiveness of previously implemented policies [6][7]. - The PBOC aims to enhance the dual functions of monetary policy tools, promoting economic stability and maintaining reasonable price levels through better coordination with fiscal policy [6][7]. Future Expectations - There is a possibility of new growth-stabilizing policies in the fourth quarter, including potential interest rate cuts and reserve requirement ratio reductions to stimulate consumption and investment [7][9]. - Structural monetary policy tools will be prioritized to support key sectors such as technology innovation, green development, and small and micro enterprises [8][9]. Bond Market Insights - The meeting reiterated the importance of monitoring long-term bond yields, with the 10-year government bond yield recently rising to 1.8%. The PBOC is cautious about large-scale government bond purchases, preferring to manage liquidity and utilize existing policy tools [9][10]. - The potential for resuming government bond purchases will depend on market conditions and external economic influences, with a focus on stabilizing market expectations and guiding interest rates downward [10][11].

Group 1 - The national consumer price index (CPI) decreased by 0.4% year-on-year in August 2025, while the core CPI, excluding food and energy, increased by 0.9%, marking four consecutive months of expansion [1][4] - The producer price index (PPI) fell by 2.9% year-on-year, but the decline narrowed by 0.7 percentage points compared to the previous month, indicating a shift from decline to stability on a month-on-month basis [1][4] - The divergence in price indicators reflects a differentiated recovery in the domestic consumption market and industrial sector [1] Group 2 - Food prices were the main drag on the CPI, with significant declines in pork, fresh vegetables, and eggs, while non-food prices rose by 0.5%, particularly in services [3] - The PPI showed positive signals as it ended an eight-month decline, with prices in upstream industries like coal processing and black metal smelting turning from decline to increase [3] - Emerging industries such as integrated circuit packaging and shipbuilding saw price recoveries, indicating positive effects from industrial structure adjustments [3][4] Group 3 - Analysts noted that the current price trend exhibits characteristics of "core stability and structural improvement," with the core CPI reflecting a gradual recovery in domestic demand [4] - The narrowing PPI decline suggests improvements in industry capacity governance and stability in supply chains, particularly in key industries [4] - The recovery in emerging industry prices injects new momentum into the industrial economy, indicating that the recovery process in the industrial sector may be faster than expected [4] Group 4 - Experts anticipate that the recovery momentum in the consumption market will continue to be released, with service prices likely to remain high due to the normalization of peak seasons for tourism and accommodation [6] - The construction of a unified national market is expected to optimize industry competition, while macro policies will continue to drive structural adjustments in industries [6] - However, fluctuations in international commodity prices may pose input-related impacts, and the issue of insufficient domestic effective demand requires ongoing policy support [6]

Group 1 - The core viewpoint is that recent policies aimed at expanding domestic demand and boosting consumption are showing positive effects, leading to improvements in market supply and demand relationships and some positive price changes [1][2] - In July, the Consumer Price Index (CPI) increased by 0.4% month-on-month, reversing a previous decline of 0.1%, with industrial consumer goods prices rising by 0.5%, an increase of 0.4 percentage points from the previous month [1] - The Producer Price Index (PPI) decreased by 0.2% month-on-month in July, but the decline was narrowed by 0.2 percentage points compared to the previous month, marking the first contraction in the rate of decline since March [1] Group 2 - The prices of coal, steel, cement, photovoltaic products, and lithium battery manufacturing saw a reduction in month-on-month decline rates by 0.1 to 1.9 percentage points, contributing to a decrease in the downward pressure on PPI by 0.14 percentage points compared to the previous month [1] - Despite external uncertainties and competitive pressures in some domestic industries, the foundation for reasonable price recovery is being strengthened by more proactive macro policies and ongoing actions to boost consumption [2]

Group 1 - The "anti-involution" policy aims to address low-price disorderly competition rather than driving up prices, as the fundamental factor determining prices remains supply and demand, which is currently insufficient in the domestic market [1][4] - The "anti-involution" policy has been reinforced throughout the year, with various measures implemented to regulate low-price competition, including the revised Anti-Unfair Competition Law and the draft amendment to the Price Law [1][2] - The industrial producer price index (PPI) showed a year-on-year decline of -3.6% in July, but the month-on-month decline narrowed from -0.4% in June to -0.2%, indicating some stabilization in prices within certain industries [2][3] Group 2 - The core consumer price index (CPI) has been rising for three consecutive months, primarily due to reduced price wars in the automotive and home appliance sectors, along with seasonal increases in service consumption [2][3] - The effectiveness of the "anti-involution" policy is seen as a structural and moderate influence on prices, focusing on quality, service, and innovation rather than merely stimulating demand [4][5] - The recovery of prices is contingent upon the strength of demand recovery and the coordination of policies, with current consumer demand still lacking [3][4]

Group 1 - The Central Financial Committee emphasized the need to regulate low-price disorderly competition among enterprises, which is expected to improve market supply and demand relationships in certain sectors [1] - The National Bureau of Statistics reported that in July, the Consumer Price Index (CPI) increased by 0.4% month-on-month, compared to a decrease of 0.1% in the previous month, indicating a positive shift in industrial consumer goods prices [3] - The Producer Price Index (PPI) decreased by 0.2% month-on-month in July, but the decline was narrower than the previous month, marking the first contraction reduction since March [3] Group 2 - The prices of fuel and new energy vehicles stabilized in July, halting a consecutive decline, which reflects a potential recovery in consumer sentiment [3] - The government anticipates that with more proactive macroeconomic policies and ongoing consumption-boosting initiatives, the foundation for reasonable price recovery will be strengthened [3] - Despite external uncertainties and competitive pressures in some domestic industries, the regulation of low-price competition is expected to support price stabilization and improvement in key sectors [3]

Economic Performance Overview - In July, the industrial production showed a rapid growth with a year-on-year increase of 5.7% and a month-on-month increase of 0.38%. For the first seven months, the industrial added value increased by 6.3% year-on-year [1] - The total retail sales of consumer goods in July reached 38,780 billion yuan, marking a year-on-year growth of 3.7% but a month-on-month decline of 0.14% [1] - Fixed asset investment (excluding rural households) for the first seven months amounted to 288,229 billion yuan, with a year-on-year growth of 1.6%. Excluding real estate development investment, the growth rate was 5.3% [1] Economic Stability and Growth Factors - Despite fluctuations in some economic indicators in July, the overall growth rate of major indicators remains stable, with employment and prices generally stable. The economy is maintaining a steady growth trend [2] - The expansion of market demand is supported by ongoing consumption initiatives, with retail sales of consumer goods growing by 4.8% year-on-year in the first seven months, and service retail sales increasing by 5.2% [2] - The high-tech manufacturing industry saw a year-on-year increase of 9.5% in added value for the first seven months, indicating a positive development in new productive forces [3] Trade and Export Dynamics - In July, the total import and export volume increased by 6.7% year-on-year, reflecting strong resilience and vitality in foreign trade [5] - The diversification of foreign trade is showing positive results, with exports to ASEAN, the EU, and countries involved in the Belt and Road Initiative growing by 14.8%, 8.2%, and 11.7% respectively in the first seven months [6] - The export of mechanical and electrical products increased by 9.3%, with integrated circuit exports growing by 21.8% [6] Price Trends and Inflation - In July, the Consumer Price Index (CPI) rose by 0.4% month-on-month, reversing a previous decline, while the Producer Price Index (PPI) saw a month-on-month decrease of 0.2%, with the decline narrowing compared to the previous month [7] - The improvement in market supply and demand relationships has led to some positive changes in prices, with certain sectors experiencing reduced competitive pressure [7]