Monthly observation of industrial high frequency. 1) Inflation. In March, the price of pork fluctuated and fell to 18.25 yuan / kg, and the specific price of pig grain was 4.36. The de capacity of pigs is still in the process, and the supply is still in the stage of surplus; The price of chicken and beef rose, while the price of mutton fell; Both vegetable and fruit prices rose. 2) Industry. In March, the blast furnace operating rate rose, the operating rate of coking enterprises with various production capacity rose and fell, the rebar price rose and the inventory fell; Copper prices rose and inventories accumulated. 3) Consumption. The year-on-year growth rate of Automobile wholesale and retail fell sharply, and the film box office revenue and film viewers fell sharply. 4) Real estate. The transaction area of commercial housing in 30 cities and the transaction area of land in 100 cities rebounded month on month.
Monthly observation of financial markets. 1) Stock market. At the end of March, the Shanghai Composite Index closed at 325220 points, down 6.07% month on month; The gem index closed at 265949, up 1.10% month on month. Real estate and other sectors led gains, while electronics and other sectors led declines. 2) Bond market. The yield of interest rate bonds rose, the term interest rate spread narrowed, and the interest rate spread between China and the United States narrowed. On March 31, the yields of 1y treasury bonds, 10Y treasury bonds, 1y CDB bonds and 10Y CDB bonds closed at 2.13%, 2.79%, 2.28% and 3.04% respectively, with month on month changes of 9bp, 1bp, 17bp and 0bp respectively; The term spreads of 10y-1y treasury bonds and CDB bonds were 66bp and 76bp respectively, with month on month changes of – 7bp and – 17bp respectively; The interest rate difference between China and the United States closed at 47bp and narrowed by 48bp. 3) Commodities. In March, bulk prices rose, rebar, coke, thermal coal, PTA, cathode copper, soybean meal and white granulated sugar futures prices rose, soybean oil futures prices fell, cement prices and Nanhua metal index rose, and ine crude oil futures prices rebounded.
Monthly observation of macro policies. In March, a total of 1060 billion yuan was invested in reverse repurchase in the open market, 70 billion yuan was invested in fixed cash deposit of the state treasury, 200 billion yuan was invested in MLF, 1460 billion yuan was invested in reverse repurchase when it expired, 100 billion yuan was withdrawn from MLF, and 230 billion yuan was withdrawn from the broad open market in the whole month. Dr001 and dr007 closed at 1.95% and 2.24% respectively, and the yield of Shibor and 1y interbank certificates of deposit closed at 2.37% and 2.58% respectively in March.
Core view. The spread of the epidemic in many places disturbs the economy, and steady growth is China’s macro main line. The main line of China’s macro development lies in steady growth. There were too many market influencing factors in March. Under the disturbance of the epidemic, the conflict between Russia and Ukraine and the Fed’s interest rate hike, the downward pressure on the economy increased. 1) Epidemic situation. At present, the cumulative number of confirmed cases of this round of epidemic is still rising. The epidemic in Shanghai has not yet ushered in an inflection point. Production, consumption and exports have been impacted, and the pressure for steady growth has increased. 2) Russia Ukraine conflict. The conflict between Russia and Ukraine has pushed up commodity prices, increased global inflationary pressure, and the imported inflation has affected China’s price stability. 3) The Federal Reserve raised interest rates. At present, the yield of us 2-5-year treasury bonds has been upside down with China, and the Fed’s position is more hawkish. It may raise interest rates by 50bp in May and after, and the external uncertainty has increased, which has caused some disturbance to China’s monetary policy. 4) The pressure for steady growth has increased. Under the joint action of internal and external factors, the pressure on China’s steady growth is increasing. The economic data from January to February were better than expected, but the social finance in February was lower than expected, the medium and long-term loans of residents were negative for the first time since 2008, and the demand for residents’ consumption and house purchase was insufficient; In March, the manufacturing PMI fell below the boom and bust line. In terms of real estate, there has been marginal relaxation in the supply and demand side policies recently, from relaxing the loan limit to standardizing the supervision of pre-sale funds, encouraging M & A loans, reducing the five-year LPR, and then to the continuous efforts of “one city, one policy”, reducing the down payment ratio, reducing the housing loan interest rate and liberalizing the sales restriction policies. However, it may still take some time to transmit to the sales side, and the sales side has not stabilized. In addition, Zhengrong Yango Group Co.Ltd(000671) and rongchuang and other real estate enterprises have liquidity risks. Later, they face the peak of the maturity of real estate corporate bonds, and the risks of the real estate industry still exist. Overall, China’s steady growth is facing dual pressures from both inside and outside. Looking ahead to April, the epidemic has not yet ushered in an inflection point, there is great uncertainty in the conflict between Russia and Ukraine, there is no suspense about the Fed’s interest rate hike, which has a certain disturbance to the economy. In the follow-up, we need to pay attention to the first quarter economic data and the Politburo meeting. The difference between the economic growth target of 5.5% and the actual downward pressure on the economy determines the strength and rhythm of the policy. The steady growth policy may continue to exert force. In the short term, there is little pressure on the bond market to adjust, We can remain moderately optimistic. In the medium and long term, we should pay attention to the joint impact of epidemic recovery, epidemic prevention policies and economic policies.
Risk tip: there is a risk of epidemic spread in China, and the overseas situation has changed more than expected.
