Macro: structural “wide credit” policy
Overseas: inflation concerns intensified and the US dollar index strengthened
1. Global inflation concerns have intensified. The CPI of the United States in October increased by 6.2% year-on-year, the highest in 31 years; CPI was 0.9% month on month, unchanged from the annual high in June this year and the highest since June 2008. In October, the euro area HICP rose 4.1% year-on-year, reaching a new high since statistics, showing an accelerated upward trend. 2. The Federal Reserve officially announced taper, but the European Central Bank and the Bank of England put pigeons. The Federal Reserve announced taper at its November interest rate meeting, and the strength basically met market expectations. However, the European Central Bank and the Bank of England put pigeons. Lagarde said that as inflation remains low, the European Central Bank is unlikely to raise interest rates next year; In the interest rate resolution of the Bank of England in November, the benchmark interest rate and the total scale of asset purchase remained unchanged. 3. Biden officially signed a $1.2 trillion infrastructure bill. The infrastructure bill will add about $550 billion in infrastructure, of which about $280 billion will be used for transportation infrastructure such as roads, bridges and ports, and about $270 billion will be used to upgrade broadband Internet, clean drinking water and other infrastructure. In October, global inflation concerns intensified, and market expectations for the Fed’s interest rate hike next year strengthened, while the European Central Bank was relatively pigeon, and the US dollar index broke through the 96 mark, a new high since this year.
China: supply constraints are relaxed, and the economy is warm but not warm
China’s economy rebounded moderately in October. On the demand side, the growth momentum still mainly depends on exports. In terms of external demand, the cumulative delivery value of industrial exports from January to October further increased by 0.1 percentage point to 7.7% year-on-year, but the growth rate of industrial added value decreased slightly by 0.1 percentage point to 6.3%, reflecting the outward trend of economic growth momentum. In terms of investment, with the accelerated decline of real estate investment, the start of infrastructure investment is still less than expected. Only manufacturing investment maintains a good momentum, which may not be enough to offset the negative impact of the real estate decline on China’s economy. In terms of consumption, due to the temporary decline of the impact of the epidemic, consumption showed a moderate recovery. From January to October, the total retail sales of social consumer goods increased moderately by 0.1 percentage point to 4% year-on-year, mainly because the growth rate of catering revenue rebounded by 0.3 percentage point to – 0.3%. On the production side, the industrial added value increased by an average of 5.2% in two years, up 0.2 percentage points from the previous month, mainly relying on the relaxation of supply constraints on the upstream, especially raw coal.
Policy: structural policy will be strengthened and more relaxed in the medium term
1. The people’s Bank of China launched the “carbon emission reduction support tool” and adopted the direct mechanism of “loan before loan”, providing financial support at 60% of the loan principal, with an interest rate of 1.75%; 2. The executive meeting of the State Council established a special refinancing of 200 billion yuan for clean and efficient utilization of coal to support the green transformation of coal enterprises and promote the efficiency of traditional energy use. 3. In October, the growth rate of social finance showed signs of stabilizing after the structural stability credit policy and the temporary relaxation of residents’ real estate loans. We believe that the central bank’s monetary policy implementation report reflects the policy orientation of more easing in the medium term and the policy state of “focusing on stability” in the short term. Monetary policy in the fourth quarter may still focus on structural force, waiting for the central economic work conference to set the tone and observe the changes in the licensing of the Federal Reserve’s monetary policy, leaving more policy bullets until the upward pressure on inflation weakens next year.
