New overseas diagnoses have reached a new high since the outbreak, and many countries have upgraded blockade measures; Judging from the overseas diagnosis, the Omicron variant has become the mainstream strain in many countries; China's epidemic broke out point by point, and the two major rectifications of real estate and production restriction continued to work. High frequency data show that industrial production and real estate have improved, and the policy emphasizes stabilizing the economic market. So, how to follow up the economy and policies? In view of the above problems, we track the high-frequency data and major policies at home and abroad every half month: 1) vaccines, epidemic situations and resumption of work at home and abroad; 2) China's economy (high frequency); 3) Important meetings and policies. This period is the data tracking since nearly half a month (2021.12.20-2022.01.03).
1、 Epidemic situation and vaccine: the overseas epidemic reached a new high, and Omicron became the main epidemic strain in many countries; Point outbreak in China
1. Epidemic situation: the overseas epidemic situation has deteriorated significantly. The number of newly diagnosed cases in a single day has reached a record high. In the past half month, the global daily average has increased by 1.097 million cases, with the previous value of about 624000 cases. Among them, the number of newly added cases in the United States and Europe on December 30 reached 596000 and 727000 respectively, both of which have reached a new high since the epidemic situation. According to the WHO report, Omicron has become the main epidemic strain in Britain, the United States and other countries. China's epidemic broke out point by point, with more than 100 new local confirmed cases in a single day for 9 consecutive days. There are 78 medium and high-risk areas in China (including 2 high-risk areas).
2. Vaccines: 9.15 billion doses of vaccines have been vaccinated in the world, and the proportion of people vaccinated at least once has reached 58.3%; China has inoculated 2.84 billion doses; In the past half a month, the average daily vaccination increased to 12.174 million doses, the previous value was about 9.068 million doses, and the vaccination speed was further accelerated.
2、 Global resumption of work: transportation and personnel activities generally fell, and Asia was stronger than Europe and America; The US economy recovered slightly
1. Transportation: the number of global commercial flights dropped to about 86% before the epidemic; Congestion indices in Europe and the United States decreased significantly.
2. Personnel activities: affected by factors such as the deterioration of the epidemic situation and Christmas holidays, personnel activities in the United States and Europe decreased significantly; Asian personnel activities are stronger than those in Europe and the United States.
3. U.S. economy: the Wei index rose 0.2 percentage points to 7.9%, indicating a small increase in the repair speed of the U.S. economy; Employment continued to improve.
3、 Liquidity: liquidity is tight at the end of the month, and the central bank increases investment; Interest rate bond issuance dropped sharply; The interest rate gap between China and the United States narrowed
1. Money market: in order to maintain stable liquidity at the end of the month, the central bank invested a net liquidity of 650 billion yuan through Omo in the past half month. Most of the average money market interest rates rose, and the average spread between R007 and dr007 expanded by 56.2bp month on month, indicating that the overall liquidity was tight at the end of the month, and the financing premium of non bank financial institutions increased significantly. The maturity yield of interbank certificates of deposit with different ratings increased slightly.
2. Bond market: 174.7 billion yuan of interest rate bonds were issued in the past half month, 649.8 billion yuan less than the previous month. Among them, 29.2 billion yuan of local government bonds were issued, 217.2 billion yuan less than the previous month, mainly because the local special bonds have been issued in 2021. According to the introduction of the relevant person in charge of the Ministry of finance at the briefing of the National Information Office on December 16, recently, the Ministry of finance has issued some new special bonds in advance. All localities should issue and use them early in the first quarter of 2022. It is expected that local special bonds will be issued in large quantities from January. The average yield to maturity of 10Y treasury bonds fell 3.5bp to 2.770% month on month, the average yield to maturity of 1y treasury bonds rose 4.9bp to 2.232% month on month, and the term spread narrowed by about 8.4bp.
3. Exchange rate and overseas markets: as of December 31, the US dollar index closed at 95.970, and the average value in the past half month fell 0.1% month on month. Among them, the US dollar against RMB was about 6.376, with a month on month appreciation of 0.1% in the last half of the year; The yield of 10Y US bonds was about 1.52%, with a month on month average increase of 3.4bp, and the average interest rate spread between China and the United States narrowed by 7.1bp to about 125.0bp in the past half a month.
4、 China's economy: the recovery of construction starts and the improvement of real estate, and the correction effects of real estate and production restriction appear
1. Upstream: except for the continued decline in coal prices, the prices of most raw materials have rebounded. Brent crude oil price rose 3.1% month on month, mainly due to the easing of market concerns about Omicron and the intensification of geopolitical game; The coal price continued to fall by 6.7% month on month, mainly due to the strength of the supply guarantee policy and the loose supply and demand. In absolute terms, the coal price has returned to the same period last year; Iron ore prices rose 7.3% month on month, and the increase narrowed slightly, which continued to suggest that there was no significant improvement in iron ore demand in the short term, and the subsequent price trend remains to be observed. Copper prices rose 0.5% month on month, continuing high shocks.
2. Middle reaches: the start-up of most key varieties picked up, and the start-up of blast furnace continued to reach a new low. In the past half month, the operating rate of blast furnace decreased by 0.6 percentage points month on month to 46.0%, continuing to hit a record low (except for the "July 1" shutdown this year); The operating rates of coking enterprises and PTA rose by 3.3 and 7.7 percentage points respectively month on month. Prices of major industrial products continued to diverge. Rebar prices rose 4.9% month on month; Cement prices continued to fall by 3.5% month on month. BDI index fell again and CCFI index rose slightly. BDI index fell 27.0% month on month; The CCFI index rose slightly by 2.4% month on month, indicating that China's exports may still be strong in December.
3. Downstream: the trading volume of commercial housing has increased and the price has fallen, and the land market has warmed up. In the past half month, the transaction area of commercial housing increased by 25.9% month on month, and the second-hand house price decreased by 0.1% month on month, narrowing the decline; The land transaction area of 100 cities increased by 57.4% month on month, and the transaction premium rate decreased slightly month on month. Automobile production fell slightly and sales improved slightly. In the past half month, the operating rate of half steel tire decreased slightly by 0.2 percentage points to 63.7%; The average daily sales in December was 60000, higher than the previous value of 57000, but lower than the same period in previous years (the average daily sales in December 2018-2020 were 61000, 62000 and 71000 respectively). Food prices continued to diverge. In the past half month, pork and vegetable prices fell by 2.6% and 4.5% month on month respectively; Fruit prices rose by 0.9% month on month, of which the increase in pork prices slowed down, and the pull on CPI is expected to be weakened.
5、 China's major policies: the core is to make greater efforts to improve efficiency and stabilize the macro-economic market
1. Important meeting: National regular meeting: continue to implement three individual income tax reduction measures, and it is estimated that the annual tax reduction will be 110 billion yuan (12.29); Do a good job in cross cycle adjustment, strive to maintain orders and stabilize expectations, and promote the steady development of foreign trade (12.23); National tax work conference: the large-scale, phased and combined tax reduction and fee reduction policies should be certified and implemented in 2022 (12.30).
2. Monetary and fiscal policy: the central bank: once again lowered the one-year lpr5bp (12.20) after 20 months; Comprehensively use a variety of monetary policy tools to maintain reasonable and sufficient liquidity (12.27); More proactive and promising monetary policy to stabilize the macro-economic market (12.24); Ministry of Finance: actively launch policies conducive to economic stability, and the policy force should be appropriately advanced (12.27).
3. Industry and industrial policy: the conditions for comprehensive registration system have been gradually met; Financial Supervision: China Securities Regulatory Commission: the conditions for a comprehensive registration system have been gradually met, and efforts are being made to formulate a reform plan for the whole market registration system (12.30); Central bank and bancassurance: banks should steadily carry out mergers and acquisitions of real estate projects and support high-quality real estate enterprises to acquire projects in danger and difficult real estate enterprises (12.20). > Industrial policy: SASAC: define the carbon peak and carbon neutralization objectives of central enterprises (12.30); China office and state office: strengthen the supply and price stability of key commodities during the "double festival" (12.23); Ministry of industry and information technology, etc.: intensive release of the "14th five year plan" for key industries (12.31).
6、 Policy Outlook: rectification is working, and the combination of steady growth still needs to be further strengthened. Short term attention is focused on 7. Recent high-frequency data and PMI data show that rectification of real estate and production restriction policies is working, but the service industry and consumption are still weak, infrastructure has not been developed, and the economy as a whole has recovered, but the pressure is still great. Looking back, we will make every effort to stabilize growth in 2022, and the policy combination is on the way, including monetary easing (further reduction of reserve requirements and interest rates can be expected), positive finance, front rhythm, loose real estate, great efforts in infrastructure, double carbon will not be "one size fits all", etc. Focus on seven key points in the short term: the rhythm of interest rate reduction (around the Spring Festival or March, the reserve requirement may be reduced again; the MLF or Omo interest rate may be reduced as soon as mid January; whether the five-year LPR is reduced may depend on the real estate sales in the next 1-2 months); Enthusiasm of local governments (Progress of local term change and implementation of special debt projects); The annual work meetings of ministries and commissions / local "two sessions" will be held successively (layout of economic work in 2022); Further loosening of real estate (the pull of affordable housing should not be overestimated); Production restrictions continue to be corrected (the supply constraints of traditional energy are open). In addition, attention should also be paid to the action plan for promoting common prosperity and the carbon peak action plans of some provinces / industries will be introduced one after another.
Risk tips: the evolution of epidemic situation, deterioration of external environment and tightening of policies exceeded expectations
