The number of newly diagnosed cases in many countries has dropped and the control strategy has been relaxed; China's epidemic situation repeats again, the prices of upstream raw materials rise, real estate sales and land acquisition of real estate enterprises are still depressed, and infrastructure construction still needs to be developed. How can the follow-up economy and policies go? In view of the above problems, we track the high-frequency data and major policies every half month: 1) epidemic situation, vaccine and resumption of work outside China; 2) China's economy (high frequency); 3) Important meetings and policies. This period is the data tracking since nearly half a month (2022.2.8-2.20).
I. epidemic vaccine: Overseas single day diagnosis fell, China's epidemic situation repeated again, and many countries turned to the strategy of coexistence with the epidemic situation
\u3000\u30001. Epidemic situation: the number of newly diagnosed cases in a single day overseas has dropped. In the past half month, the global average daily number of newly diagnosed cases has increased by 2.114 million, with a previous value of about 3.137 million. Among them, the average daily number of newly diagnosed cases in the United States and Europe has decreased to 150.0 and 466.000 respectively, with a previous value of 424 and 821.000 respectively. The epidemic situation in China has been repeated again. On February 19, more than 100 local confirmed cases were added in a single day, and the number of medium and high-risk areas in China rose to 98 (3 high-risk areas).
\u3000\u30002. Vaccines: 10.53 billion doses of vaccines have been vaccinated worldwide, with 61.9% of people vaccinated at least once; China has inoculated 3.08 billion doses in total; In the past half month, the average daily vaccination decreased to 5.204 million doses, and the vaccination rate recovered after the festival, but it was still slower than that before the festival.
\u3000\u30003. Epidemic prevention measures: the United States, the European Union, the United Kingdom and other European and American countries and regions have turned to the strategy of coexistence with the epidemic and gradually relaxed the epidemic control.
II. Global resumption of work: European and American transportation and personnel activities have improved, and the US economy continues to slow down
\u3000\u30001. Transportation: due to the relaxation of epidemic prevention and control, the number of global flights rebounded to about 85% before the epidemic; European and American congestion index rebounded significantly.
\u3000\u30002. Personnel activities: the entertainment and transportation indexes in Europe and the United States have improved significantly, but the workplace index has decreased steadily; Human activities in Asia continued to diverge.
\u3000\u30003. US economy: the Wei index fell further to 5.4%, indicating that the US economic recovery continued to slow down; Unemployment picked up slightly.
III. Liquidity: generally reasonable and abundant, the issuance of special bonds is relatively fast, and the interest rate spread between China and the United States continues to narrow
\u3000\u30001. Money market: in the past half month, the central bank returned 1050 billion yuan of net liquidity through Omo, mainly cross month liquidity at the beginning of the month, which is equivalent to the scale put in at the end of January. Most of the average interest rates in the money market fell, and the average spread between R007 and dr007 narrowed by 16.1bp month on month, indicating that the liquidity is reasonable and abundant, and the financing premium of non bank institutions fell; The yield of interbank certificates of deposit with different ratings fell.
\u3000\u30002. Bond market: 747.3 billion yuan of interest rate bonds were issued in the past half month, with an increase of 82.1 billion yuan month on month. Among them, 111 billion yuan of local special bonds were issued, 251 billion yuan less than the previous month; However, since the beginning of the year, 595.3 billion yuan of special bonds have been issued this year, second only to 777.6 billion yuan in the same period in 2020, and the overall issuance speed is relatively fast. The average yield to maturity of 10Y treasury bonds rose 4.4bp to 2.803% month on month, the average yield to maturity of 1y treasury bonds fell 11.4bp to 1.975% month on month, and the term spread expanded by about 15.8bp.
\u3000\u30003. Exchange rate and overseas markets: as of February 20, the US dollar index closed at 96.102, down 0.4% month on month in the past half. Among them, the US dollar was about 6.334 against the RMB, with a month on month appreciation of 0.2% in the last half of the year; The yield of 10Y US bonds was about 1.92%, with a month on month average increase of 16.2bp, and the average interest rate spread between China and the United States narrowed by 11.7bp to about 88.3bp in the past half month.
IV. China's economy: upstream prices rose significantly, production was weak, and real estate remained in the doldrums
\u3000\u30001. Upstream: the price of key raw materials has increased significantly. Brent crude oil closed at US $93.5/barrel, a new high since October 2014, with a month on month increase of 3.8% in the past half, mainly due to the intensification of geopolitical game and the impact on supply expectations; Power coal rose 17.0% month on month, mainly due to the reduction of imports due to the replenishment of power plants and the upside down of imported coal prices; Iron ore prices rose 3.6% month on month, mainly due to loose production restrictions of steel mills and rising demand expectations; Copper prices continued to fluctuate at a high level, rising 1.2% month on month in the last half of the year, mainly due to the mismatch between supply and demand and the expected rise in infrastructure development.
\u3000\u30002. Midstream: due to factors such as limited production during the Winter Olympics, the start-up of key industrial products fell. In the past half month, the operating rates of Tangshan blast furnace, coking enterprises and PTA decreased by 13.5, 5.5 and 3.8 percentage points month on month respectively to 36.5%, 63.8% and 75.3%. The price differentiation of key industrial products continued. Rebar prices continued to fluctuate upward, with a month on month increase of 2.1% in the last half of the month. Stable growth is expected to be the main support; Cement prices continued to fall, down 1.9% month on month in the past half, narrowing the decline. The BDI index rebounded sharply and the CCFI index fell slightly. In the past half month, the BDI index rose 34.8% month on month, and the CCFI index fell slightly by 0.6% month on month. The overall trend is still strong, indicating that China's exports are not weak in the near future.
\u3000\u30003. Downstream: commercial housing sales and land acquisition by real estate enterprises are still in the doldrums. During the Spring Festival, the transaction area of commercial housing in 30 cities and the transaction area of land in 100 cities fell sharply, which was significantly lower than the level of the Spring Festival in 2021. It rebounded after the festival, but it was still weak; Second hand house prices fell 0.1% month on month, and the land premium rate rose slightly by 1.6 percentage points month on month. Automobile production and sales are still weak. In the past half month, the operating rate of half steel tire rose by 1.1 percentage points to 36.2%, which is still a big gap compared with that before the Spring Festival; According to the passenger Federation, 26000 vehicles were sold on the first three Sundays of February, down from 34000 in the same period last year. Food prices continued to diverge. In the past half month, the price of pork continued to fall by 3.9% month on month, and the prices of vegetables and fruits rose by 3.7% and 4.3% month on month respectively. Among them, the prices of pork and vegetables both hit new lows in the same period for many years.
V. China's major policies: industrial recovery and service relief policies are implemented, and the combination of steady growth is strengthened; Do a good job in ensuring the supply and price of large quantities
\u3000\u30001. Important meetings: the national Standing Committee: take multiple measures to promote steady industrial growth and the relief and development of industries with special difficulties in the service industry; Continue to ensure the supply and price of bulk commodities (2.14); National Development and Reform Commission: continue to ensure the supply and price of coal, and interview some enterprises with falsely high coal prices (2.9).
\u3000\u30002. Monetary and fiscal policy: the central bank: strengthen cross cycle regulation. The goods policy report implies that it will increase leverage to stabilize growth, with seven specific signals (2.11); Ministry of Finance: the financial department must shoulder the responsibility of stabilizing the macro-economy and appropriately move forward (2.18).
\u3000\u30003. Industry and industrial policy: "counting from the east to the west" was officially launched; The steel industry postponed the carbon peak for five years
Financial Supervision: China Securities Regulatory Commission: comprehensively study and promote the whole market registration system and support the listing and financing of qualified new energy vehicle enterprises (2.18); Central bank and China Banking and Insurance Regulatory Commission: loans related to indemnificatory rental housing are not included in the loan concentration management (2.8).
Industrial policy: 12 departments including the national development and Reform Commission: do a good job in pre adjustment, fine adjustment and cross cycle adjustment to ensure that the industrial economy operates within a reasonable range and contribute to steady growth (2.18); 14 departments including the national development and Reform Commission: strengthen the rescue of catering, retail, tourism, transportation, civil aviation and other industries (2.18); Network information office, Ministry of industry and information technology and other four departments: "counting from the east to the west" was officially launched (2.17); National Development and Reform Commission: vigorously promote energy conservation and carbon reduction in the field of energy (2.10); Three departments including the Ministry of industry and information technology: postpone the carbon peak time of the iron and steel industry for five years to 2030 (2.8).
Vi. Policy Outlook: steady growth needs to be strengthened. The next few weeks are an important observation window, with five major concerns in the short term
High frequency data show that the effect of steady growth policy has been shown, but the strength is still insufficient. The next few weeks will be an important observation window, especially whether real estate and infrastructure can recover effectively. Continue to remind that we should not underestimate the determination and strength of the country to make every effort to stabilize growth. A series of combination boxing are being introduced one after another. There are five major concerns in the short term: 1) real estate is expected to be further substantially loosened, especially demand side policies such as purchase, sale and loan restrictions; 2) Infrastructure progress, especially the implementation of major projects; 3) It is still possible for China to cut the reserve requirement and interest rate again; 4) The pace of the Fed's interest rate increase and contraction, tracking the changes in the expectation of recent interest rate increase & FOMC meeting on March 15-16; 5) The national "two sessions" will be held on March 4 and March 5 as planned (the premier will make the government work report).
Risk tips: the evolution of the epidemic, the deterioration of the external environment and the tightening of policies exceeded expectations.
