Brief comment on January social finance data: the impact of January social finance data on the trend of interest rate in February

Information or event: on February 10, the central bank released the social financing and financial data of January

According to preliminary statistics, the increment of social financing scale in January 2022 was 6.17 trillion yuan, 984.2 billion yuan more than the same period last year. Among them, RMB loans to the real economy increased by 4.2 trillion yuan, a monthly statistical high, an increase of 380.6 billion yuan year-on-year; Foreign currency loans to the real economy increased by 103.1 billion yuan, a year-on-year decrease of 6.7 billion yuan; Entrusted loans increased by 42.8 billion yuan, an increase of 33.7 billion yuan year-on-year; Trust loans decreased by 68 billion yuan, a year-on-year decrease of 16.2 billion yuan; Undiscounted bank acceptance bills increased by 473.1 billion yuan, a year-on-year decrease of 17.1 billion yuan; The net financing of corporate bonds was 579.9 billion yuan, a year-on-year increase of 188.2 billion yuan; The net financing of government bonds was 602.6 billion yuan, a year-on-year increase of 358.9 billion yuan; Domestic stock financing of non-financial enterprises was 143.9 billion yuan, an increase of 44.8 billion yuan year-on-year.

At the end of January, the balance of broad money (M2) was 243.1 trillion yuan, a year-on-year increase of 9.8%, 0.8 and 0.4 percentage points higher than that at the end of last month and the same period of last year respectively. The balance of narrow money (M1) was 61.39 trillion yuan, a year-on-year decrease of 1.9%. Excluding the influence of the wrong timing of the Spring Festival, M1 increased by about 2% year-on-year.

After the data were released, as of 19:40, the yield of 10-year Treasury bond active bond (210017) rebounded to 2.7650%, with a short-term jump of more than 3bp.

The social finance data in January exceeded market expectations, and our main analysis of the impact on the subsequent trend of treasury bond interest rate in February is as follows:

(1) the social finance data exceeded expectations, combined with the high level of m2-m1 scissors difference, supported the expectation that China's treasury bond interest rate will rise limited from February to April.

Before the data was released, the market had differences on the direction of yield in the first quarter. The main logic supporting the further decline of 10Y treasury bond interest rate comes from the expectation that the central bank will continue to cut interest rates, especially in the short term.

The social finance data exceeded expectations, reflecting the initial effect of the wide monetary environment supporting wide credit, which helps to alleviate the pressure of further interest rate cuts in the short term. From the practice of China's monetary policy, in most periods, the central bank does not tend to cut interest rates continuously month by month. From the perspective of monetary policy theory, monthly continuous interest rate cuts can sometimes have side effects, such as poor information communication. Sometimes, the market interprets the short-term continuous interest rate cuts as a signal that the economic environment is more tense than expected, resulting in reverse tightening effect.

From the M2 and M1 data released at the same time, the scissors difference is at a high level, further reducing the probability of continued interest rate cuts in the short term. Although steady growth is still under pressure and the possibility of further short-term interest rate cuts cannot be ruled out, from the logic of probability, the high m2-m1 scissors difference reduces the urgency of further short-term interest rate cuts.

(2) if the interest rate picks up from February to April, we expect two technical pressure resistance levels of 2.78% and 2.89% for the yield of 10Y treasury bonds.

If the yield of 10Y treasury bonds rebounds, the first technical pressure resistance level is about 2.78%. We believe that in the recent months of February or March: if the Central Bank continues to cut interest rates, the recovery of yield may stop at the Fibonacci quantile corresponding to 2.78%; If the central bank does not further cut interest rates for the time being, the yield will have the probability to break through the first line of 2.78% and rise further to the second pressure resistance area of 2.85% - 2.89%.

For example, if the yield of 10Y treasury bonds rebounds, the pressure resistance area of the second technical side is the first line of 2.85% - 2.89%, and 2.89% constitutes an endogenous strong resistance level. We believe that 2.85% - 2.89% is also possible if the central bank does not further cut interest rates from February to March, and the upcoming US January CPI data continues to remain at 7% or higher, or 10Y US bonds continue to test at the front line of 2.0-2.15% in the direction of 1.9%. However, unless there is a significant exogenous impact of US inflation or the upward range of US bonds significantly exceeding expectations, China expects that the endogenous recovery of yield in the first half of the year will be difficult to break through the important technical level of 2.89%.

The social finance data provides a preliminary forward-looking signal for China's economic and monetary environment in the first quarter. For the next important node of the U.S. economic and monetary environment, we remind to pay attention to the CPI to be released in recent days and the next stage of the Fed's economic outlook to be released in early March. At that time, the new US inflation interest rate hike and the forward-looking signal of the bond market will determine the new dynamic balance point of China's currency and bond market between China and the United States and the coordination of major countries through the paths of China US interest rate spread, exchange rate trend and import and export expectations.

Risk tips: epidemic trend, economic and inflation data, overseas uncertainty exceeding expectations, etc.

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