The epidemic control in Europe and the United States continued to be relaxed, and more and more countries followed up; There is still no inflection point in this round of China's epidemic, PMI fell almost across the board in March, and high-frequency data show that real estate has not improved significantly. So, how will the follow-up economy and policies go? In view of the above problems, we track the high-frequency data and major policies every half month: 1) epidemic situation, vaccine and resumption of work outside China; 2) China's economy (high frequency); 3) Important meetings and policies. This period is the data tracking since nearly half a month (2022.3.21-4.5).
I. epidemic vaccine: China's epidemic situation rebounds and adheres to dynamic zero clearing; Europe and the United States continue to relax control, and some Asian countries follow up
\u3000\u30001. Epidemic situation: the shock of newly diagnosed overseas in a single day fell, but the epidemic situation in Europe rebounded. In the past half month, the global daily average increased by 1.449 million cases, with the former value of about 1.699 million cases. Among them, the daily average newly diagnosed cases in the United States decreased to 30000 cases, with the former value of 35000 cases; In Europe (Britain, France, Germany, Italy and West), the average daily diagnosis increased to 506000 cases, compared with the previous value of 431000 cases. The epidemic broke out again in China, and the epidemic prevention situation is more severe. In the past half month, a total of 25000 local cases were newly diagnosed, with a previous value of 18000 cases; There were 96000 new asymptomatic infections, compared with 17000 before.
\u3000\u30002. Vaccines: a total of 11.29 billion doses of vaccines were vaccinated worldwide, with 64.5% of people vaccinated at least once; China has inoculated 3.28 billion doses in total; The average daily vaccination in the past half month fell back to 3.78 million doses, with the previous value of about 4.736 million doses.
\u3000\u30003. Epidemic prevention measures: European and American countries continue to relax control, Germany, Britain, Switzerland and other European countries basically cancel all epidemic prevention measures, and entry restrictions are also greatly relaxed; Asia, South Korea, Japan and other countries followed up and relaxed. For example, Japan lifted all domestic epidemic prevention restrictions from March 21.
II. Global resumption of work: the European and American transportation index continues to differentiate, and personnel activities are flat; The US economy continues to slow down
\u3000\u30001. Transportation: the number of global flights rebounded to about 89% before the epidemic; Due to the differences in epidemic prevention and control, the European and American congestion index continued to differentiate.
\u3000\u30002. Personnel activities: in the past half month, the personnel activities in Europe and the United States were basically the same; In Asia, Japan rose slightly, India continued to be strong, and South Korea fell slightly.
\u3000\u30003. US economy: the Wei index fell 0.1 percentage point to 4.6%, indicating that the US economy continues to slow down; The employment situation improved slightly.
III. Liquidity: liquidity is slightly tight at the end of the month; The issuance of special bonds continued rapidly; The interest rate gap between China and the United States continued to narrow
\u3000\u30001. Money market: in order to maintain stable liquidity at the end of the month, the central bank invested a net 470 billion yuan through Omo in the past half month; Most of the average interest rates in the money market rebounded, and the average spread between R007 and dr007 expanded by 31.1bp month on month, which is also related to the tight liquidity at the end of the month and the rise of the financing premium rate of non bank institutions; The maturity yield of three-month AAA + and AA + interbank certificates of deposit decreased by 1.9bp month on month.
\u3000\u30002. Bond market: in the past half month, 691.5 billion yuan of interest rate bonds were issued, 306.9 billion yuan less than the previous month. Among them, local special bonds issued 203.9 billion yuan, 12.8 billion yuan less than the previous month; Since the beginning of the year, a total of 1.30 trillion local special bonds have been issued, accounting for 35.6% of the annual quota. The issuance speed is the fastest since there are data. The average yield to maturity of 10Y treasury bonds decreased by 2.4bp to 2.773% month on month, the average yield to maturity of 1y treasury bonds increased by 4.1bp to 2.144% month on month, and the term spread narrowed by about 6.6bp.
\u3000\u30003. Exchange rate and overseas markets: as of April 4, the US dollar index closed at 99.012, flat month on month in the past half, but with obvious fluctuations in the middle. Among them, the US dollar was about 6.351 against the RMB, corresponding to the RMB devaluation of 0.3% month on month; In the past half month, the average yield of 10Y US bonds was about 2.38%, up 33.8bp month on month, and the interest rate spread between China and the United States narrowed by 31.4bp to about 39.3bp, close to the low point in November 2018.
IV. China's economy: the epidemic continues to disturb industrial production, and real estate has not improved significantly
\u3000\u30001. Upstream: crude oil, coal and other energy prices have fallen. Brent crude oil closed at US $107.5/barrel, up 2.4% month on month in the last half of the month, but it has dropped recently, which is attributed to the fact that the conflict between Russia and Ukraine is still the main disturbance of oil price; The power coal price fell 6.8% month on month, mainly due to the off-season demand + the disturbance of the epidemic situation, downstream construction and transportation; Iron ore prices continued to rise by 7.1% month on month, mainly due to the resumption of production of downstream steel mills and the expected rise in demand; Copper prices continued to fluctuate upward at a high level, rising by 1.5% month on month in the last half of the month. The strength of China's steady growth policy is the macro support.
\u3000\u30002. Midstream: most of the start-ups of key industrial products picked up. Due to the end of heating in the north and the relaxation of production restrictions, the operation rate of blast furnace in Tangshan has risen by 6.7 percentage points to 52.4% in the past half month. However, the recent epidemic in Tangshan has led to blockade and limited logistics, and the operation rate of blast furnace has dropped slightly; The operating rates of coking enterprises and PTA rose by 2.3 and 0.9 percentage points to 71.7% and 72.2% respectively. Coal consumption for power generation in eight coastal provinces fell slightly. In the past half month, the average daily coal consumption of power generation in eight coastal provinces was 1.802 million tons, a month on month decrease of 0.8%, a decrease of about 4.0% compared with the same period in 2021. The epidemic situation in China was the main drag. Prices of key industrial products continued to rise. In the past half month, the prices of rebar and cement increased by 2.1% and 0.2% month on month respectively, which was slightly narrower than the previous value. The expectation of stable growth policy is still the main support at the macro level. Both BDI index and CCFI index fell. In the past half month, BDI and CCFI indexes fell by 7.2% and 2.8% month on month respectively. The decline of CCFI index can be mutually confirmed with the decline of PMI export orders in March, indicating that China's exports may fall in March, but they are still resilient.
\u3000\u30003. Downstream: commercial housing sales have not improved significantly, and land acquisition by real estate enterprises has decreased again. The transaction area of commercial housing in 30 cities increased by 21.4% month on month, but the absolute value was still low. The year-on-year decrease in March was nearly 50%, the transaction area of land in 100 cities continued to decrease by 30.6% month on month, and the year-on-year decrease in March reached 43.5%. Second hand house prices continued to fall by 0.2% month on month, and the land premium rate decreased slightly by 0.8 percentage points month on month. Automobile production continued to pick up, and the operating rate of semi steel tire reached a new high since May 2018; Car sales fell again. In the past half month, the operating rate of steel tire has rebounded by 2.7 percentage points to 74.5%, a new high since May 2018. According to the passenger Federation, the average daily sales of passenger cars in March was 39000, a year-on-year decrease of 19.7%, which was also lower than the previous value of 45000. Food prices rose steadily. In the past half month, pork prices were flat month on month, and the prices of vegetables and fruits increased by 3.2% month on month, which may be related to the shortage of vegetables and fruits in some areas caused by the recent epidemic.
V. China's major policies: insist on the annual development goals and do not relax. Take the initiative to respond to monetary policies and introduce measures to stabilize the real estate market in many places
\u3000\u30001. Important meetings: the national Standing Committee: we will not relax our commitment to the annual development goals, put steady growth in a more prominent position, and implement policies to stabilize the economy sooner and faster (3.29); Clarify the rhythm of the 1.5 trillion value-added tax rebate, and speed up the introduction and implementation of policies to stabilize economic operation (3.21); Q1 monetary policy regular meeting of the central bank: give full play to the dual functions of the total amount and structure of monetary policy tools and respond actively (3.30); Vice Premier of the State Council: adhere to the policy of "dynamic clearing" (4.2).
\u3000\u30002. Monetary and fiscal policy: Central Bank: hold the bottom line of no systemic financial risk (4.1); Financial institutions shall not blindly limit loans, withdraw loans, cut off loans and suppress loans to ensure the stable operation of the industrial chain and supply chain (3.31); LPR interest rate released, flat before value (3.21).
\u3000\u30003. Industry and industrial policy: promote cross-border listing supervision cooperation; Many places have introduced measures to stabilize the property market
Financial Supervision: CSRC: promote cross-border listing supervision cooperation. If overseas regulators conduct investigation and evidence collection or inspection in China, they shall conduct it through the cross-border supervision cooperation mechanism (4.2); Cbcirc: for some industries and small, medium-sized and micro enterprises greatly affected by the epidemic, we will help them solve difficulties by means of loan renewal and extension, so as to avoid industrial loan restriction, loan withdrawal and loan interruption (3.25).
Industrial policies: Fujian Province, Quzhou, Zhejiang Province, Qinhuangdao, Hebei Province, etc.: successively introduce measures to stabilize the real estate market and cancel purchase and sale restrictions (4.2); The State Council: set up a special additional deduction of individual income tax for the care of infants and young children under the age of 3, with 1000 yuan (3.28) per month for each infant and young child.
Vi. Policy Outlook: the end of the economy has not yet arrived, the end of the policy has been reconfirmed, and there are four major concerns in the short term
Combined with the recent repeated epidemic situation in China, the decline of PMI across the board, the more worried about the epidemic situation and the conflict between Russia and Ukraine at the March 29 regular meeting of the National People's Congress and the Q1 regular meeting of the central bank, it is once again reminded that the end of China's policy is now, and the economic bottom and market bottom are expected to be formed one after another, but it will take time; Especially after the "high opening" of the economy from January to February, there is a high probability of "low going" from March to April. The "trick" of steady growth is still "releasing water, real estate and infrastructure". However, the most critical thing is to avoid the "hard landing" of real estate, and further loosening of the demand side (residents) and supply side (real estate enterprises) is expected, including: reducing the interest rate of housing loans, loosening more restrictions on purchase, sale and loan of the first and second lines, moderately relaxing the "three red lines", establishing the rescue mechanism of real estate enterprises, supporting policies of "new citizens", transformation of new development model, etc. In addition, in the short term, attention should also be paid to: the possibility of reducing reserve requirements and interest rates again in April; The evolution of the conflict between Russia and Ukraine, especially the progress of negotiations, European and American sanctions and oil prices; Changes in the rhythm of the Fed's interest rate increase and contraction.
Risk tips: the evolution of the epidemic, the deterioration of the external environment and the tightening of policies exceeded expectations.
