A week's events
China: the policy of stabilizing the economy comes out early and quickly, and the heat of the first round of local auction has increased marginally. Recently, the national development and Reform Commission and others will start the collection and storage of the third batch of central frozen pork reserves in the year. It is expected that the pork price adjustment will be relatively mild in the short term and will rise slightly in the medium term. The reversal of this round of pork cycle needs to wait; 28, China's one belt, one road, and other green development projects were released by the national development and Reform Commission and other departments. China's related green industry chain is expected to gain new growth points. It is suggested that we should pay attention to investment opportunities in clean energy, new energy vehicles and green materials. On the same day, the State Council issued a notice on the establishment of a special additional deduction of individual income tax for the care of infants and young children under the age of 3. Families with infants and young children under the age of 3 will benefit from it. In order to boost the fertility rate, supporting policies in childcare, education, medical treatment and housing are expected to be introduced in the future; On the 29th, the opinions on promoting the construction of social credit system, high-quality development and promoting the formation of a new development pattern made provisions in China's circular economy and financial service entities, which will optimize the business environment, create a good credit foundation for the development of market economy and smooth the efficient development of national economy; As of the 29th, Beijing, Fuzhou, Hefei, Qingdao, Xuzhou, Xiamen and other six cities have completed the first round of centralized land supply this year, mainly benefiting from the relaxation of the overall land auction policy, the improvement of the marginal trend of transaction heat, and the subsequent trend is determined by the land auction rules, the sales and financing of real estate enterprises, which is still uncertain; On the 29th, the layout of the national standing committee was stable, and economic policies came out early and quickly. On the 30th, the central bank strengthened the implementation of prudent monetary policy at its regular meeting in the first quarter. It is expected that the follow-up countercyclical adjustment will be strengthened, or focus on the fields of monetary policy, real estate, infrastructure and so on.
Substantial progress was made in the negotiations between Russia and Ukraine on raising taxes on overseas enterprises. On March 28 local time, the Bank of Japan proposed to purchase 10-year Japanese government bonds indefinitely at a fixed interest rate of 0.25%, which is the second intervention of the Bank of Japan this year. The pressure of economic recovery is large and the inflation pressure is relatively small. It is expected that the Bank of Japan will still reverse the Fed's interest rate hike and maintain an ultra loose position; On March 28 local time, US President Biden announced the annual budget of US $5.8 trillion for fiscal year 2023, emphasizing deficit reduction, providing more funds for police and veterans, and proposing to increase taxes on the rich and enterprises, which may be blocked by Republicans. It is unknown whether Congress will approve it; On March 28 local time, German Deputy Prime Minister habek said that the member countries of the group of seven rejected Russia's request to pay for energy in rubles. If Russia cut off the supply of European natural gas, it will continue to push up the inflation level of the EU and aggravate the energy crisis of EU countries; On March 29 local time, Russia and Ukraine held the fifth round of face-to-face negotiations. Russia confirmed Ukraine's willingness to maintain a neutral and nuclear free status. The negotiations made substantial progress and sent a signal of easing the crisis. However, the two sides did not reach an agreement on national security measures, the statements of the United States and the European Union in the future are still crucial, and the situation in Russia and Ukraine remains uncertain; On March 30 local time, the data showed that the final annualized quarter on quarter value of real GDP in the fourth quarter of 2021 was 6.9%. In March 2022, ADP employment increased by 455000, the smallest increase in employment since August last year. At present, the U.S. economy and employment are still recovering. Supported by high inflation and strong data, it is expected that the tightening pace of the Federal Reserve may accelerate in the first half of the year.
High frequency data: upstream: Brent crude oil increased by 80.88% year-on-year in March, and the prices of iron ore and cathode copper decreased by 24.78% and 9.16% year-on-year respectively; Midstream: the operating rate of blast furnace fell by 3.97 percentage points this week, and the price of rebar increased by 0.60% month on month; Downstream: real estate sales rose 19.76% month on month (MOM), and monthly auto retail performance was weak; Prices: the prices of vegetables and pork increased by 2.33% and decreased by 9.19% month on month respectively.
Focus next week: US February trade account (Tuesday); China's Caixin service industry PMI and comprehensive PMI in March (Wednesday); US consumer credit changes in February (Friday).
Risk tip: the epidemic situation has further deteriorated, the geopolitical impact has exceeded expectations, and overseas inflation is high.
