Ping An View:
Brief comments on the focus of this week: 1) the minutes of the Federal Reserve and the speeches of officials continue to be hawkish. The minutes of the Fed's March meeting suggested that one or more interest rate hikes of 50 basis points may be needed in the future; It may be appropriate to reduce the asset ceiling of $95 billion per month (60 billion treasury bonds + 35 billion MBS). Brennard, the "second in command" of the Federal Reserve, said that monetary policy may shift to a "more neutral position" later this year and said it would tighten policy further as needed. We believe that the Fed's monthly contraction rate of $95 billion is basically in line with expectations; It is expected that the Fed may choose to raise interest rates by 50bp in May and June, but if the pressure of "stagnation" starts to be greater than "inflation" in the second half of the year, the Fed may still slow down the pace of raising interest rates. 2) The European central bank lacks confidence in tightening. The minutes of the European Central Bank's monetary meeting in March showed that there were differences within the central bank on how to deal with inflation. Some officials advocated a "wait-and-see" position and worried that the conflict between Russia and Ukraine might lead to a "technical recession". We believe that the ECB's monetary policy is even more in a dilemma in the face of the pressure of "stagflation". The ECB is likely to design new tools to "continue" the seven-year bond purchase plan in a relatively mild manner, and try to achieve gradual progress and avoid a "hard landing" of the economy. 3) The situation in Russia and Ukraine is even more anxious. On April 5, the president of Ukraine said that if NATO proposed Ukraine to join, Ukraine would be ready to join. The Secretary General of NATO warned on the 7th that the war in Ukraine may continue for weeks, months or even years. We believe that the recent progress of the Russian Ukrainian negotiations is less than our expectations, and the market may need to recognize the risk that the Russian Ukrainian conflict may evolve into a "protracted war". If the situation in Russia and Ukraine continues to be anxious, the fluctuations in overseas markets may intensify: the sanctions around Russia are expected to continue, the supply of energy, food and other products in Russia and Ukraine may be more affected, and the global inflationary pressure affects the choice of monetary policies of various countries.
Overseas economic tracking: 1) US economy: US ism non manufacturing PMI and Markit service PMI in March were better than those in February, but less than expected. The number of initial jobless claims in the United States hit a 54 year low in the latest week. Us durable goods orders fell 2.1% month on month in February, shrinking for the first time in five months. The US trade deficit remained high in February, with exports growing faster than imports. 2) European economy: the PPI of the euro zone in February was 31.4% year-on-year, the growth rate slowed down month on month, and the energy sector rose 87.2% year-on-year. Germany's industrial output rose 0.2% month on month in February and France's - 0.9% month on month. The euro zone's industrial confidence index fell in March.
Global Asset Performance: 1) most of the global stock markets closed down, and the China US science and technology growth sector was significantly under pressure. U.S. NASDAQ and A-share gem fell 3.9% and 3.6% respectively throughout the week. 2) The 10-year US bond yield rose above 2.7%. As the Fed continues to "Hawk", the yield of each year's US bonds continues to rise, among which the yield of long-term US bonds has jumped sharply, and the interest rate difference between 10Y and 2Y US bonds has rebounded to 19bp. At present, the market is still digesting the impact of the Fed's interest rate hike and table contraction on liquidity. 3) International Shenzhen Agricultural Products Group Co.Ltd(000061) prices rose sharply and energy prices continued to cool. CBOT wheat and soybean rose 7.5% and 6.7% respectively throughout the week. WTI and Brent oil prices closed at US $98.3 and US $102.8 / barrel respectively, and continued to decline by 1-1.5% throughout the week. CRB commodity index rose 3.3%, Comex gold rose 1.1% and LME copper rose 0.7%. 4) The dollar index rose above 100 points in the session. The US dollar index closed at 99.84 for the whole week and rose to 100.19 on April 8. The policy direction differentiation between the Federal Reserve and the European Central Bank intensified, and the euro fell 1.54% against the US dollar throughout the week. The anxious situation in Russia and Ukraine and the "double killing of stocks and bonds" in the United States also increased the demand for us dollars.
