(China-Europe Wealth) published an article stating that at present, the determination of the central bank to use tools for regulation when necessary is relatively firm. Combined with the significant increase in the bond market in the previous period, the probability of timely profit-taking by early profit-taking positions when the bond market pulls back is higher, which is more likely to cause fluctuations in the bond market. This week may just be the "prologue", and the short-term correction of the bond market is not yet complete. At this stage, it is recommended to be patient, as the bond market is expected to remain in a favorable environment in the medium to long term, and there may be opportunities for aggressive positions in the fourth quarter. Why is the bond market adjusting? On Monday (August 5th), the sale of bonds by major banks caused a slight adjustment in the market, attracting attention. On Wednesday, the zero-yuan reverse repurchase operation conducted by the central bank also heightened cautious sentiment, resulting in narrow fluctuations in the bond market. Also on Wednesday, the China Interbank Market Trading Association initiated self-regulatory investigations on several commercial banks and announced in the early morning of Thursday that there were violations of lending bond accounts and interest transfers within small and medium-sized financial institutions, and such cases would be further investigated and handled. With the impact of multiple news, by the close of Thursday, there was a clear decline in long-term bonds. The main contract for the 30-year term fell significantly, closing down by 0.52%. In addition, the main contract for the 10-year government bond futures fell by 0.27%, with a slightly smaller impact on medium and short-term bonds, with the main contracts for the 5-year term and 2-year term falling by 0.13% and 0.03% respectively. The bond market's correction continued on Friday. How does the future of the bond market look? At present, the determination of the central bank to use tools for regulation when necessary is relatively firm. Combined with the significant increase in the bond market in the previous period, the probability of timely profit-taking by early profit-taking positions when the bond market pulls back is higher, which is more likely to cause fluctuations in the bond market. This week may just be the "prologue", and the short-term correction of the bond market is not yet complete. From a risk perspective, China-Europe Wealth believes that in the short term (looking ahead 1 month), we need to be alert to the net financing scale of over one trillion yuan in August's interest rate bonds, as historical experience shows that a net financing scale of over one trillion yuan in a single month can easily disturb the bond market. Looking further ahead (within a six-month period), November may be the peak of the net financing of interest rate bonds for the entire year, which is also worth paying attention to. However, from a medium to long-term perspective, the current macroeconomic environment is still in a weak recovery, monetary policy may remain loose, and the bond market is still in a friendly environment. Overall risks are controllable, trading opportunities still exist, but with increasing disturbances, volatility will also intensify. For individual investors, trading is more challenging and caution is advised. Impact on portfolios? China-Europe Wealth previously warned not to underestimate the central bank's determination to control the risks of long-term bonds. At this point, for pure bond portfolios, China-Europe Wealth believes that the absolute return experience for clients may be more important than the relative return. China-Europe Wealth chooses to sacrifice a bit of temporary excess returns flexibility to achieve better control over portfolio drawdowns, avoiding sharp ups and downs in trends. As long-term bonds are currently in a market trend of biased gaming, the cost-effectiveness of participation is not high. Therefore, at this stage, China-Europe Wealth recommends patience. In the medium to long term, the bond market is expected to remain in a favorable environment, and there may be opportunities for aggressive positions in the fourth quarter. Furthermore, considering the risk of a correction in long-term bonds, portfolios similar to cash-enhancing bond combinations may be more suitable for deployment at present.