Key investment points
On March 21, 2022, the quoted interest rate (LPR) of the loan market is: 1-year LPR is 3.7%, and more than 5-year LPR is 4.6%, which is the same as the previous time.
The failure of the intense LPR interest rate cut expected by the market may mean that the benchmark interest rate instrument is no longer the first choice. The main reasons are as follows: first, the creation and positioning of LPR is a credit pricing Anchor Based on the qualification level of credit customers. It does not reflect the difference of credit investment, so it has the universality of the whole market, which makes the central bank have a lot of concerns when guiding the reduction of LPR, and it is difficult to grasp the actual effect in accuracy; Second, from the changes of loan interest rates of commercial banks after previous reductions, there is an obvious lag and stickiness in the transmission of credit interest rates after the LPR reduction, which is still a gap from the practical reduction of financing costs required by the government report; Third, from the perspective of expected transmission to entities, LPR interest rate cut may be less favorable to enterprises than to residents' medium and long-term loans, which may bring many unnecessary interference to the current achievements in real estate regulation.
The total operation space of monetary policy is limited, and structural adjustment will become a realistic choice under many constraints. This year's government work report puts forward higher requirements for monetary policy, "maintaining the basic stability of macro leverage", and "giving full play to the dual functions of the aggregate and structure of monetary policy tools to provide stronger support for the real economy." This means that there is no strong desire to "release water" in the total amount of monetary policy, and the focus is mainly on entity direct and credit directional operation. This poses a great challenge to the cognition that the monetary policy transmission formed by the long-term accumulation of the market should "drive credit easing through the reduction of the benchmark interest rate, and then through the transmission of the interest rate system and market expectation". From the perspective of the market, since the epidemic in 2020, the high-level and the central bank have repeatedly stressed not to engage in flood irrigation, and the interest rate market has also experienced repeated fundamental decline - the expectation of reducing reserve requirements and interest rates has become stronger - the expectation has failed, and the shock adjustment has been repeated.
The policy expectation game competition has increased the swing of interest rate trend. Generally speaking, the trend of medium and long-term interest rates reflects the comprehensive evaluation of fundamentals, liquidity, inflation, monetary policy and many other aspects. However, under the current pressure of fundamentals and constant impact of external environment, the factor that can form a lifting effect on economic growth in a counter cyclical or cross cyclical way is macro-control policy. Considering that macro policies are also contingent decisions on economic fundamentals, the market also began to participate more actively in the "pre judgment of pre judgment policies" competition through the empirical laws observed by previous policies. The market gave too high expectations for LPR reduction, and then quickly adjusted back. After a short sorting, it continued to form similar expectations for the next operation window.
Investment strategy: Based on the weakening of recent policy expectations and the narrowing of the callback range of interest rate market, we can consider entering the market in batches and stop the profit in time after the market sentiment becomes stronger again.
Risk tip: the policy stimulus is stronger than expected, the fundamentals are improved, and the China US relations are restored
