Macro: counter cyclical policy
Overseas: Double killing of stocks and bonds in the US market
The hawkish degree of the minutes of the Federal Reserve's interest rate meeting exceeded market expectations, and the geopolitical conflict between Russia and Ukraine continued to ferment, which became the two main lines of capital market fluctuations in January. 1) The minutes of the meeting of the Federal Reserve in December 2021 showed its firm determination to raise interest rates and discussed the reduction of interest rates for the first time. In the last cycle, the Fed began to shrink its watch after raising interest rates for nearly two years. 2) Since mid January, the geopolitical game has continued to ferment, the relationship between Ukraine and Russia has accelerated, and the two sides have deployed a large number of military personnel and equipment in the border areas of the two countries. 3) As of the closing on January 25, major categories of assets fluctuated sharply. First, the interest rate of long-term US bonds rose rapidly, once breaking 1.9%, and is still at a high level of 1.78%, 26bp higher than that at the end of 2021. Second, stock assets were under pressure, and the S & P 500 index fell 8.6%. Third, Brent crude oil futures rose 13.2% as the geopolitical conflict between Russia and Ukraine may affect Russia's oil and gas supply to Europe. Fourth, the safe haven assets represented by gold were adjusted by the hawkish expectations of the Federal Reserve at the beginning of the month. In the middle and late days, they benefited from the rebound of geopolitical conflicts, with an increase of 1% in January. We judge that the 10-year US bond yield may rise to a level slightly higher than 2% in the first half of this year; The style of US stocks may switch from technological growth to cyclical value. If the hawks of the Federal Reserve further exceed expectations, the possibility of in-depth adjustment of US stocks will not be ruled out.
China: steady growth pressure highlights
The economic data for the fourth quarter of 2021 "recovered slightly", but from the high-frequency data since the beginning of the year, the recovery momentum of the operating rate at the production end is weakening, the accumulation rhythm of some finished products is more than seasonal, and the pressure of "stable growth" is further highlighted under the drag of weak domestic demand. 1) GDP growth picked up in the fourth quarter of 2021, with an average growth rate of 5.2% in the two years, up from 4.9% in the third quarter. Among them, the pull of foreign demand on China's economy is relatively stable, the capital formation is greatly dragged down by the slowdown of real estate investment, and the problem of weak consumption growth still exists. 2) The marginal improvement of social finance growth rate is mainly due to the "leverage" of government departments, but the problems of weak demand for effective loans of enterprises, poor Consumption Willingness of residents and weak sales of commercial housing have not been solved. 3) In terms of asset prices: first, while the central bank increased monetary overweight, the market lacked confidence in steady growth, and the bond market performed strongly in January. Second, the stock market fell sharply under the influence of China's fundamentals and external sentiment. Third, although the central bank has repeatedly reminded the risk of RMB exchange rate fluctuation, the RMB exchange rate has further appreciated under the influence of strong exports and strong demand for foreign exchange settlement before the Spring Festival.
Policy: counter cyclical policy
Monetary easing increased, and fiscal policy was actively deployed. 1) Monetary policy: on January 17, the central bank lowered the 7-day reverse repo and 1-year MLF interest rates by 10bp respectively, and on January 20, it lowered the 1-year and 5-year LPR interest rates by 10bp and 5bp respectively. 2) Fiscal policy: on January 10, the national Standing Committee deployed to accelerate the promotion of major projects in the outline of the 14th five year plan. On January 20, it announced to continue the implementation of another 11 preferential tax policies related to science and technology, employment and entrepreneurship, medical treatment, education and so on until the end of 2023. We believe that the focus of fiscal policy in 2022 may shift from the expenditure side to the income side, and it is difficult to significantly improve the scale of infrastructure investment, but more tax cuts and fee reductions are expected. Monetary policy has entered a discretionary stage. If the credit extension in the first quarter is less than expected, the policy interest rate may be reduced twice.
