Brief comments on the focus of this week: 1) Fed officials made intensive hawkish remarks, and the market expectation of raising interest rates increased. From March 21 to 25, many officials of the Federal Reserve such as Powell, Bostick, Brad, Meister, Evans, Waller and Williams spoke intensively. Cmefedwatch shows that the Fed has a high probability of raising interest rates by 225bp in 2022. At present, Fed officials are generally open to a one-time interest rate increase of 50bp. We believe that the Fed may raise interest rates by 100 or 125bp in the first half of the year, but the pace of interest rate increase in the second half of the year may slow down. At present, the market has a high probability of overheating the expectation of interest rate increase in the whole year. 2) The European Central Bank said its pace would not be in line with the Fed, suggesting that it would not raise interest rates as aggressively as the Fed. We believe that compared with the United States, the European economy is one step closer to "stagflation", and the European Central Bank's administrative policy is more difficult. The ECB will be more cautious in its decision to raise interest rates. Too radical tightening may not only fail to solve the problem of inflation dominated by supply factors, but will trigger an economic downturn or even recession. 3) Russia Ukraine negotiations have made limited progress, and the G7 calls for greater sanctions against Russia. We believe that the current situation in Russia and Ukraine is still one of the main concerns of the overseas market. As the situation in Russia and Ukraine continues to be anxious, the market's sensitivity to relevant information is expected to decline and market volatility is expected to weaken, but the bullish sentiment on commodity prices and risk aversion in asset allocation may continue.
Overseas economic tracking: 1) U.S. economy: high frequency data show that the marginal strength of the U.S. economy, and the latest Wei still shows that the real GDP growth of the United States in the first quarter can reach about 5% year-on-year. The number of Americans applying for unemployment benefits has set a new record low, reflecting the tight labor market and the solid economic fundamentals. The sales of existing and new homes in the United States decreased significantly in February, and the rise of market interest rates was "indispensable". As of March 19, the U.S. 30-year mortgage interest rate reached 4.42%, the highest since January 2019. 2) European economy: the initial PMI values of Markit manufacturing and service industries in the eurozone in March were better than expected, but there are still hidden worries about supply chain pressure and rising inflation after geographical conflict. 3) Overseas epidemic: the cumulative diagnosis growth rate of covid-19 in the world has decreased in the past week, and the diagnosis growth rate in Germany, Japan, South Korea, Vietnam, Hong Kong, New Zealand and other regions has dropped. Who warned that Europe's "rough unsealing" caused a resurgence of covid-19 epidemic. Covid-19 variant ba The infectivity of 2 is about 30% higher than that of the original virus.
Global Asset Performance: 1) most of the world's major stock indexes continued to rise, but the increase was slower than last week. The Nasdaq, S & P 500 and Dow rose 2.0%, 1.8% and 0.3% respectively throughout the week, with financial stocks contributing the most. Germany's DAX and France's CAC40 index fell 0.7% and 1.0% respectively throughout the week. The Hang Seng index was basically flat throughout the week and rose 4.2% last week. 2) The yield of each year's US bonds continued to jump, and the increase increased. The 10-year US bond yield rose above 2.5% on March 25 and rose 34bp throughout the week, of which the real interest rate rose 25bp to -0.47% and the implied inflation expectation rose 9bp to 2.95%. The spread between 10-year and 2-year US debt maturity is 18bp. With the US bond yield curve on the verge of upside down, the market is worried about the US economic recession. 3) The situation between Russia and Ukraine was deadlocked in market transactions, and the related prices of energy and Shenzhen Agricultural Products Group Co.Ltd(000061) rebounded sharply. Brent crude oil closed at US $120.7/barrel. CBOT soybean and wheat futures prices rose 2.5% and 3.6% respectively throughout the week. 4) The dollar index rose above 98.8, while the yen and the euro weakened. The market's expectation of raising interest rates stimulated the strength of the US dollar, but the prospect of the US economy was unclear, and US bonds were sold off, limiting the rise of the US dollar exchange rate. The monetary policy of the eurozone and the Bank of Japan is looser than that of the Federal Reserve.
