In March, the macro level still focused on the geopolitical crisis of Russia and Ukraine and the trend of major monetary policy authorities. The former once brought a sharp rise in commodity prices, but it has dropped recently. In March, the Federal Reserve raised interest rates by 25bp as expected, but the subsequent statements were partial to hawks. The market's expectation of raising interest rates during the year continued to strengthen. The 10-year US bond interest rate rose sharply, and now it has exceeded 2.7%. The interest rate of 3-year, 5-year and 7-year US Treasury bonds is inversely linked to the 10-year interest rate, which shows that the market has great differences on the long-term interest rate and economic outlook, and is worried about the possibility of the US economy falling into recession next year. In China, the transmission capacity of Omicron virus is strong, which has brought the most severe round of rebound of the epidemic. Since March, Shenzhen, Shanghai and other cities have taken sealing and control measures, and the economic situation has weakened. PMI fell below the boom and bust line, the demand of the real estate market continued to be weak, and the market had strong expectations for the people's Bank of China to take measures such as interest rate reduction to further ease monetary policy. At present, the people's Bank of China is more cautious, focusing on structural monetary policy tools such as refinancing, and it is still unclear whether to cut interest rates. We believe that the possibility of interest rate reduction is still considerable. The market may play a game around the expectation of interest rate reduction at the time of financial data release and MLF and LPR interest rate release in April. Following the inverted interest rate of short-term treasury bonds in the early stage, the interest rate spread of China US 10-year Treasury bonds has been inverted. The RMB exchange rate may tend to fall in the future.
In March, the global stock market performance was divided, the Russian stock market rebounded, and the A-share and Hong Kong stock markets lagged behind. The allocation value of the stock market appeared, and the short-term bottom fluctuated. In March, most industries in the A-share market fell. Coal and real estate industries, which only benefited from the rise of commodity prices and steady growth policies, rose, while automobiles, household appliances, nonferrous metals, consumer services and electronics performed the weakest. In the first half of March, geopolitical tensions and the strengthening of the delisting risk of stocks in the United States and China drove a large outflow of foreign capital in a short time and led to panic selling in the market. In mid March, marked by the statement made at the meeting of the financial stability Committee, the panic eased and the market stabilized after a rapid rebound. We believe that the current allocation value of A-Shares and Hong Kong shares has been more obvious. Recently, China's economic situation has been strongly impacted by the epidemic, and the stock market is expected to maintain a bottom shock trend in the short term. China's bond market showed a volatile market in March, with an overall slight decline. In the middle of the month, there was a violent shock before and after the release of economic and financial data in February.
In March, the overall performance of major global assets was commodities bonds equity, mainly reflecting the drag on the economic outlook caused by the continuous fermentation of geopolitical crisis. This month, we recommend medium and high allocation of equity, standard allocation of bonds and medium and low allocation of commodities. The most volatile period of commodity prices may have passed, and it has dropped significantly since the beginning of the month. In terms of the stock market, it is suggested to be over allocated. Under the background of continuous decline in the early stage and the impact of the epidemic on the economic situation, A-Shares and Hong Kong shares are weak for a continuous period of time, and have good allocation value. The short-term fundamentals of China's bond market are favorable. After the rapid rise of US bonds in the short term, the adjustment pressure has been released to a large extent. We recommend changing to standard configuration.
Risk tips: (1) inflation is higher than expected, and the global central bank's monetary policy is forced to accelerate the shift; (2) The epidemic situation is repeated, the effectiveness of the vaccine is reduced, and the recovery progress of the epidemic situation is delayed.
