European and American countries continued to relax epidemic prevention and control, the conflict between Russia and Ukraine intensified, and the international crude oil price hit a new high in recent 10 years; China's national "two sessions" were held, and the main economic objectives were determined in 2022. China's epidemic broke out point by point again. What are the follow-up economy and policies? 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 (2022.2.21-3.5).
I. epidemic vaccine: Overseas single day diagnosis continued to fall, China's epidemic broke out in spots, and European and American epidemic prevention further "lay flat"
\u3000\u30001. Epidemic situation: the number of newly diagnosed cases in a single day overseas continued to decline. In the past half month, the global average daily number of newly diagnosed cases increased by 1515000, with the former value of about 2122000. Among them, the average daily number of newly diagnosed cases in the United States and Europe decreased to 60000 and 150000 respectively, with the former values of 150000 and 466000 respectively. The epidemic situation in China broke out again in a point shape, with 175 local confirmed cases added in March, the second highest since March 2020, and the number of medium and high-risk areas in China rose to 180.
\u3000\u30002. Vaccines: a total of 10.83 billion doses of vaccines were vaccinated worldwide, and the proportion of people vaccinated at least once reached 63.2%; China has inoculated 3.15 billion doses in total; In the past half month, the average daily vaccination rose slightly to 5.642 million doses, with the previous value of about 5.204 million doses.
\u3000\u30003. Anti epidemic measures: Taiwan, Europe, Japan and China continue to relax restrictions on epidemic prevention in recent years, for example, all epidemic prevention has been cancelled in England area.
Measures: people with positive virus surveillance no longer need self isolation; New York will also lift most of the epidemic prevention restrictions from next week. 2、 Global resumption of work: the transportation index continued to differentiate, personnel activities in Europe increased steadily, and the United States fell slightly
\u3000\u30001. Transportation: due to the relaxation of overseas epidemic prevention and control, the number of global flights rebounded to about 90% before the epidemic; European and American congestion index differentiation.
\u3000\u30002. Personnel activities: personnel activities in Europe increased steadily, while those in the United States decreased slightly; Personnel activities in Asia, Japan and South Korea continued to differentiate.
\u3000\u30003. U.S. economy: the Wei index rose 0.4 percentage points to 5.8%, indicating that the marginal improvement of the U.S. economy; The employment situation continued to improve.
III. Liquidity: at the end of the month, the liquidity was slightly tight, the issuance of special bonds was relatively fast, and the interest rate gap between China and the United States widened again
\u3000\u30001. Money market: in the past half of the month, the central bank invested 330 billion yuan in liquidity through Omo, mainly because the central bank increased investment to maintain stable liquidity at the end of the month. Most of the average interest rates in the money market rose, and the average spread between R007 and dr007 widened by 7.1bp month on month, indicating that the liquidity was slightly tight at the end of the month, and the financing premium of non bank institutions rebounded; The yield of interbank certificates of deposit with different ratings rebounded slightly.
\u3000\u30002. Bond market: interest rate bonds issued in the past half month were 762.8 billion yuan, with an increase of 5.48 billion yuan month on month. Among them, 282.2 billion yuan of local special bonds were issued, 171.2 billion yuan more than the previous month; Since the beginning of the year, a total of 877.5 billion yuan of local special bonds have been issued, accounting for 24.0% of the annual quota. The issuance speed is second only to the same period in 2020, with obvious front-end characteristics. The average yield to maturity of 10Y treasury bonds increased by 5.1bp to 2.827% month on month, the average yield to maturity of 1y treasury bonds increased by 16.0bp to 2.106% month on month, and the term spread narrowed by about 10.9bp.
\u3000\u30003. Exchange rate and overseas markets: as of March 5, the US dollar index closed at 98.511, up 1.2% month on month in the past half. Among them, the US dollar was about 6.329 against the RMB, with a month on month depreciation of 0.4% in the past half month; The yield of 10Y US bonds was about 1.74%, down 9.8bp from the average month on month. In the past half month, the interest rate difference between China and the United States widened again by 14.7bp to about 108.7bp.
IV. China's economy: upstream prices have risen significantly, and oil prices have reached a new high in recent 10 years; Production rebounded and real estate remained in the doldrums
\u3000\u30001. Upstream: most of the prices of key raw materials have increased significantly. Brent crude oil closed at US $118.1/barrel, a new high since May 2012, with a month on month increase of 10.9% in the last half of the year, mainly due to the impact of supply expectations due to the conflict between Russia and Ukraine and the intensification of European and American sanctions; Power coal rose 14.7% month on month, mainly due to the increase in demand due to the resumption of work at the downstream and the reduction in imports due to the upside down of imported coal prices; Iron ore prices fell 6.2% month on month, mainly due to strengthened policy regulation; Copper prices continued to fluctuate at a high level, rising 0.3% month on month in the last half of the month. Geopolitical factors impacted supply expectations, which were the main support.
\u3000\u30002. Midstream: the Winter Olympics production limit eased, and most of the construction of key industrial products rebounded. In the past half month, the operating rates of Tangshan blast furnace and coking enterprises increased by 10.3 and 5.5 percentage points to 46.8% and 69.8% month on month respectively, and the PTA operating rate decreased by 4.5 percentage points to 71.4% month on month. Prices of key industrial products continued to diverge slightly. Rebar prices fell 0.4% month on month, but the recent steady growth is expected to rise and steel prices rebound; Cement prices ended the downward trend since October 2021 and remained flat month on month in the last half of the year. The BDI index continued to rebound and the CCFI index fell. In the past half month, the BDI index continued to rise by 16.1% month on month, and the CCFI index fell by 3.9% month on month.
\u3000\u30003. Downstream: Housing sales and land acquisition of real estate enterprises are still weak, which continues to suggest that local policies are expected to be further substantially loosened. In the past half month, the transaction area of commercial housing in 30 cities and the transaction area of land in 100 cities increased by 192.5% and 238.2% respectively month on month, mainly affected by the low base during the Spring Festival; In absolute terms, it is still only about 50% of the level in the same period in previous years, indicating that real estate sales and land acquisition by real estate enterprises are still weak, and the real estate policy still needs to be further loosened; Second hand house prices continued to fall by 0.1% month on month, and the land premium rate rose slightly by 3.2 percentage points month on month. Automobile production basically returned to the pre holiday level, and sales improved. In the past half month, the operating rate of half steel tire rose by 29.7 percentage points to 60.4%, basically returning to the level before the festival; According to the passenger Federation, the average daily sales in February was 45000, higher than 43000 in the same period in 2019 and 2021. Food prices fell significantly after the festival. In the past half month, the prices of pork, vegetables and fruits fell by 8.5%, 0.2% and 3.7% month on month respectively.
V. China's major policies: the "two sessions" are held, and the GDP target is about 5.5%, which is the expected upper limit and pragmatic progress
\u3000\u30001. Important meeting: the national "two sessions": determine the GDP growth target of about 5.5% in 2022, with 6 major signals (3.5, see the previous report "pragmatic progress - 6 major signals of the government work report in 2022" for details); Politburo meeting: continue to do a good job in "six stabilities" and "six guarantees", strive to stabilize the macro-economic market and keep the economic operation within a reasonable range (2.25).
\u3000\u30002. Monetary and fiscal policies: China Banking and Insurance Regulatory Commission and the central bank: increase support for public rental housing, affordable rental housing and jointly owned housing to meet the reasonable purchase credit needs of new citizens (3.4); Ministry of Finance and State Administration of Taxation: issued three documents on tax reduction and fee reduction on the same day (3.4).
\u3000\u30003. Industry and industrial policy: the real estate policy continues to be loose, and the down payment ratio of house purchase or housing loan interest rate are mostly adjusted
> Financial Supervision: China Securities Regulatory Commission: give more prominence to the bottom line thinking, implement accurate policies, and spare no effort to prevent and resolve the risk of bond default (2.18).
> industrial policy: Zhengzhou, Nantong and other places: reduce the down payment ratio of house purchase or housing loan interest rate (3.1); Ministry of housing and urban rural development: enhance the accuracy and coordination of real estate regulation policies, and it is expected to build 2.4 million affordable rental housing units (2.24) throughout the year; Ministry of Commerce: on the basis of doing a good job in epidemic prevention and control, introduce pragmatic and effective consumption promotion policies and carry out a series of innovative consumption promotion activities (2.28); Improve the coal price transmission mechanism (2.24).
Vi. Policy Outlook: the steady growth policy will continue to increase, focusing on the "three axes" (water, real estate and infrastructure). The government work report determines that the GDP target for this year is about 5.5%, which belongs to the expected upper limit. It points out that steady growth is still a hard requirement, and all kinds of policies will continue to increase. The key is the "three board axe", that is, "water, real estate and infrastructure". 1) "Releasing water": loose money, expand credit, increase leverage and broaden finance, and may cut interest rates as soon as March; 2) "Real estate release": the general requirement is to continue the "no speculation in real estate, support reasonable housing demand and implement policies according to the city"; Continue to suggest that local regulation is expected to be further substantially loosened, focusing on the "new citizens" house purchase policy; 3) "Releasing infrastructure": new and old infrastructure work together, focusing on water conservancy projects, three-dimensional transportation network, energy base and pipe network corridor; Continue to remind whether the expansion of infrastructure will be late or absent, and the growth rate of infrastructure may reach about 8% or even higher. In addition, in the short term, it will continue to prompt attention: the evolution of the conflict between Russia and Ukraine & the overweight of sanctions against Russia by European and American countries, as well as the changes in international commodity prices; The pace of the Fed's interest rate increase and contraction table, tracking the changes in the expectation of recent interest rate increase & FOMC meeting on March 15-16, etc.
Risk tips: the evolution of the epidemic, the deterioration of the external environment and the tightening of policies exceeded expectations.
