Key investment points:
Core view. Because only after raising interest rates nine times, the Fed’s monetary policy can be regarded as completing the transition from withdrawing easing to starting tightening, and the impact on aggregate demand can be regarded as decreasing from easing to tightening inhibition. However, under the benchmark assumption, some leading economic indicators at the end of Q3 will indicate greater recession risk (sufficient condition for weakening austerity), and the risk of runaway inflation will be significantly mitigated (necessary condition for passivating interest rate hike). The probability of monetary policy of the Federal Reserve in the whole year shows a trend of tightening before loosening.
Be wary of the Fed’s incremental tightening signal, causing the upside down of China US debt interest spread. In terms of interest rate hikes, we expect that there will be five interest rate hikes in the whole year, in March, may, June, July and September respectively, and the interest rate hikes will be 25, 50, 50, 25 and 25bps respectively, with a total interest rate hike of 175bps; In terms of table reduction, we predict that the opening node of table reduction will be further advanced. The FOMC minutes of March released on April 6 will disclose the detailed table reduction plan with high probability. Taking this as the vanguard, the Federal Reserve will release the expectation of opening table reduction in May to the market in April. Assuming that it will continue to include the incremental interest rate increase and table contraction expectations from April to may, there is a possibility that the 10-year US bond interest rate will stand firm at 2.7% and break through 2.8%. For China, this may exacerbate the market’s concern about the upside down of China US interest rate spread.
Risk tips: ① the escalation of the war between Russia and Ukraine has led to the intensification of various geopolitical frictions around the world (North Korea, South Korea, Russia and Japan, etc.), and the market has entered the risk aversion trade again; ② Inflation in the United States is completely out of control, and the Federal Reserve is forced to adopt a more radical tightening monetary policy, which leads to a sharp tightening of global macro liquidity, and the offshore dollar market is facing depletion; ③ The emergence of new strains has deepened the stagflation pattern of the global macro-economy.
