China: sluggish demand, "structural inflation" pressure still exists
February is a traditional data vacuum period. Common economic indicators only publish financial data and price data. In January, social finance increased by 6.17 trillion yuan, credit "made a good start", direct financing increased, and the off balance sheet pressure drop slowed down, which jointly supported social finance far more than expected. In January, CPI was weaker than seasonal month on month, and PPI fell and slowed down year-on-year. Driven by factors such as abnormal weather and geopolitical events in South America, the Nanhua Shenzhen Agricultural Products Group Co.Ltd(000061) index hit a record high. The Nanhua industrial products index has rebounded 12% year to date (as of the 24th), only 6.5% lower than the historical high in October 2021. The Ministry of Commerce has not released the retail sales data of retail and catering enterprises during the golden week of the Spring Festival. Judging from China's tourism revenue, film box office revenue, non cash payment data of the central bank and other indicators, the consumption of the Spring Festival is low. In January, the operating hours of excavators decreased by 35.0% year-on-year. After the Spring Festival, the operation rate of cement mill and the operating rate of petroleum asphalt unit were weaker than seasonal. Overall, the current domestic demand is relatively sluggish, and the pressure of "structural inflation" still exists.
Policy: steady growth is not as strong as expected. Pay attention to the deployment of the two sessions
After the central economic work conference reiterated the focus on "economic construction", the market has high expectations for steady growth in 2022. However, up to now, in addition to the financial data in January exceeding expectations driven by "full force, accurate force and forward force", the actual steady growth is not strong. We pay attention to how to deploy the government work report released next week. We believe that: 1. The focus of active finance in 2022 may not be on the expenditure side, but on the income side. We should not expect too much about the rebound of infrastructure investment; 2. More cities will relax the regulation of real estate and continue to deregulate real estate financing; 3. China's monetary policy adheres to the principle of "focusing on me". If the risk of economic slowdown increases, it will not rule out fine-tuning the policy interest rate.
Overseas: the Federal Reserve is about to raise interest rates
The inflation data of the United States in January exploded, and the market expectation of raising interest rates increased. Since February (as of the 24th), the interest rates of two-year and 10-year US bonds have increased by 36bp and 17bp respectively. The Fed's first interest rate hike in March was basically determined, but the rate hike range is still controversial. Due to the impact of geopolitical events, the necessity and urgency of the Fed's radical interest rate hike in the short term may decline. We expect the fed to raise interest rates by 25bp in March. However, in the future, the rising prices of energy and Shenzhen Agricultural Products Group Co.Ltd(000061) exacerbate the medium-term inflationary pressure, and guard against the risk that the subsequent tightening of the Federal Reserve will exceed expectations.
