Industrial high frequency periodicity observation. 1) Inflation. This week, the price of pork dropped to 23.77 yuan / kg, the price of pig grain continued to decline to 5.90, the price of chicken and mutton decreased, the price of beef increased, the price of vegetables decreased and the price of fruit increased. 2) Industry. Blast furnace operating rate fell this week, and only the operating rate of medium-sized coking enterprises rebounded; Rebar prices rose and inventories fell this week; Copper prices rose and inventories accumulated. 3) Consumption. The year-on-year growth rate of Automobile wholesale and retail has improved, and the film box office revenue and film viewers have increased this week. 4) Real estate. The transaction area of commercial housing in 30 cities increased slightly on a weekly basis, and the transaction area of land in 100 cities rebounded on a weekly basis.
Weekly observation of financial markets. 1) The stock market. The Shanghai Composite Index closed at 3618.05 this week, down 0.39% from last Friday; The gem index closed at 3297.11, down 4.00% from last Friday. From the industry sector, agriculture, forestry, animal husbandry and fishery, food and beverage, building materials and other sectors led the rise, while electrical equipment, non-ferrous metals, steel and other sectors led the decline. 2) Bond market. The yield of interest rate bonds rose and fell, the term interest spread of interest rate bonds narrowed, and the interest spread between China and the United States narrowed. On December 24, the yields of 1y treasury bonds, 10Y treasury bonds, 1y CDB bonds and 10Y CDB bonds closed at 2.34%, 2.82%, 2.44% and 3.09% respectively, with changes of 2bp, – 3bp, 0.1bp and -0.4bp on a weekly basis; This week, the term spreads of 10y-1y treasury bonds and CDB bonds were 48bp and 66bp respectively, and the week on week ratio changed by – 5bp and – 0.5bp respectively; The interest rate difference between China and the United States closed at 132bp this week and narrowed by 12bp. 3) Commodities. Commodity prices rose and fell this week, rebar, thermal coal and white granulated sugar futures prices fell, coke, PTA, cathode copper, soybean meal and soybean oil futures prices rose, cement price index fell, Nanhua metal index rose, and ine crude oil futures prices rebounded to close at 474.9 yuan / barrel.
Weekly observation of macro policy. 1) Monetary policy. This week (12.20-12.24), a total of 100 billion yuan was invested in reverse repurchase in the open market, 50 billion yuan was due for reverse repurchase, and a total of 50 billion yuan was invested in the broad open market in the whole week. Dr001 and dr007 closed at 1.80% and 1.90% respectively. In March, Shibor and 1y interbank certificate of deposit yields closed at 2.50% and 2.72% respectively. 2) Policy developments. The regular monetary policy meeting of the central bank in the fourth quarter pointed out that we should give full play to the dual functions of the total amount and structure of monetary policy tools, and structural monetary policy tools should actively “add” and make accurate efforts.
Core view. 1) Pork prices fell and ine crude oil prices rebounded. From the perspective of inflation, the excess supply of pork combined with the weakening of seasonal demand, the price of pork fell this week, and the price ratio of pig to grain continued to decline. In terms of supply, the operating rate of blast furnace continued to decline this week, and the operating rate of coking enterprises with various levels of capacity rose and fell. Only the operating rate of medium-sized coking enterprises continued to rise. Affected by the weak demand for infrastructure and real estate and the dual control of energy consumption, the operating rate level remained weak, and the supply side constraints were still in place; Rebar prices continued to rise, inventories continued to fall, copper prices rebounded this week, and inventories continued to accumulate. In terms of demand, the consumption improved this week, and the film box office revenue and person times rebounded this week; The release of chip production capacity weakened the year-on-year decline of Automobile wholesale and retail; The transaction area of commercial housing in 30 cities increased slightly month on month, and the transaction area of land in 100 cities rebounded month on month. 2) The interest rate cut releases a loose signal and a wide credit pattern is expected. On December 20, the central bank lowered the one-year LPR to 3.8%, 5 percentage points lower than that in November. The five-year LPR remained unchanged at 4.65%. The five-year LPR of the real estate market interest rate did not change, indicating a cautious attitude towards real estate. The interest rate cut is intended to stimulate the financing willingness of the real economy, reduce the comprehensive financing cost, and help enterprises operate steadily and accelerate recovery. Although China’s economy is facing great downward pressure, it has continuously cut reserve requirements and interest rates this month. The Ministry of finance has delegated 1.46 trillion yuan of special bonds to local governments in advance, and the central bank’s regular monetary policy meeting in the fourth quarter said that it should “give full play to the dual functions of the total amount and structure of monetary policy tools, be more proactive and promising, increase support for the real economy and maintain reasonable and abundant liquidity”, All reflect the full force of the counter cyclical adjustment policy. It is expected to form a pattern of “stable currency + structural wide credit” in 2022.
Risk tip: the risk of epidemic spread in China and the risk of inflation exceeding expectations.
