Summary:
I. The National standing committee will deploy the policies of retention tax rebate and stabilizing market expectations. Premier Li Keqiang chaired an executive meeting of the State Council on March 21 to determine the policy arrangements for the implementation of large-scale value-added tax rebate (about 1.5 trillion yuan this year), so as to provide strong support for stabilizing the macro-economic market; Deploy comprehensive measures to stabilize market expectations (take five major measures such as increasing the support of prudent monetary policy to the real economy) and maintain the steady and healthy development of the capital market. This week’s national standing committee made specific arrangements for the retention tax rebate policy, which is conducive to the direct and efficient rescue of various market entities. At the same time, under the background of the gradual opening of the tightening wave of overseas central banks, a lot of uncertain factors such as International Geopolitics, the repeated sporadic epidemic in China and the increasing pressure to stabilize growth, the five measures proposed by the national standing committee to stabilize market expectations are further confirmation of the spirit of the meeting of the financial committee of the State Council, Or boost market confidence.
2. The epidemic situation in China has an impact on both supply and demand. The transmission of this round of epidemic shows the characteristics of faster transmission speed and wider coverage. The impact of the epidemic has once again disturbed economic activities, which have been affected to varying degrees in terms of demand recovery and industrial production. But at the same time, this round of epidemic situation also obviously tends to be “mild and asymptomatic”. Although the wide spread has brought trouble, the Omicron variant also has the characteristics of severe disease and significant reduction in mortality – at present, the severe disease rate of this round of epidemic is only 0.2%, and the mortality rate is 0.01%, which is far lower than that of any previous round. Therefore, so far, due to the improvement of prevention and control experience and the increase of vaccine coverage, the overall negative impact of the epidemic on production activities has been weakened, and the disturbance of the current epidemic to the supply chain is generally controllable. However, it cannot be ruled out that if the epidemic prevention and control is further upgraded, the disturbance to production will rise.
III. The central banks of major developed countries have different positions on monetary policy. 1) On March 21, Federal Reserve Chairman Powell delivered an important speech entitled “restoring price stability”, saying that the Federal Reserve will take necessary measures to ensure that prices return to stability. It is appropriate to take more positive action by raising interest rates by more than 25bp at one or more meetings. If it is decided that monetary policy needs to be tightened and exceed the usual neutral standard, the Federal Reserve will do the same. This statement was interpreted by the market as a signal supporting the announcement of a one-time interest rate increase of 50bp after the FOMC meeting in May. 2) European Central Bank President Lagarde said that the monetary policies of Europe and the United States will not be synchronized. The European Central Bank will maintain policy flexibility. It may not raise interest rates immediately after stopping asset purchase, and “additional space” will be reserved between the end of asset purchase and the first interest rate increase. 3) At the time of the weakening of the yen, the governor of the Bank of Japan, Toshiko Kuroda, still maintained the ultra loose monetary policy position, insisting that the weakening of the yen is still beneficial to the overall economy.
IV. supply chain problems continue to plague the commodity market. At present, supply chain problems continue to plague the global commodity market. On the one hand, although the situation between Russia and Ukraine has eased, there is a large gap between the negotiating positions of the two sides, and the possibility of reaching a ceasefire agreement in a short time is low. While the West continues to increase pressure on Russia, the risk of supply interruption of energy, metals, Shenzhen Agricultural Products Group Co.Ltd(000061) and other main products of Russia and Ukraine has gradually turned from expectation to reality; On the other hand, the epidemic broke out in a large area in China, and epidemic prevention measures were tightened in many places. The risk of logistics interruption continued to increase. Commodity supply faced major problems in the short term, supporting the operation of strong prices. Therefore, despite the risk factors such as the increased risk of global recession, the opening of the interest rate hike cycle by the Federal Reserve and the new difficulties faced by China’s economic recovery, the market seems to pay more attention to the risks of the supply chain, and the commodity index may continue to fluctuate upward in the short term.
