In terms of China's macro economy, this week's policies focus on stabilizing growth, employment, prices and foreign trade. The strategy of Rural Revitalization continues to be promoted. The petrochemical industry optimizes its structure and broadens its credit. The implementation of policies may be accelerated. The national Standing Committee clearly proposed to maintain the economic operation within a reasonable range, mainly to achieve the basic stability of employment and prices, and proposed that policies and measures can be implemented in advance. In addition, Premier Li Keqiang's Symposium on economic situation, experts and entrepreneurs and vice premier Hu Chunhua's Symposium on foreign trade situation both proposed stabilizing foreign trade. The central bank solicited public opinions on the financial stability law of the people's Republic of China (Draft for comments). The introduction of the financial stability law will consolidate the responsibilities of all parties, provide a solid institutional guarantee for preventing and resolving major financial risks, help to improve the ability of systemic financial risk prevention and control and enhance the expectation of market stability; The CBRC focuses on Rural Revitalization, strengthens financial support for the development of small and micro enterprises, emphasizes increasing the investment of credit loans, and strives to achieve the continuous growth of the balance of agriculture related loans of the same caliber. The national development and Reform Commission and the China Banking and Insurance Regulatory Commission jointly issued a notice on strengthening the sharing and application of credit information and promoting the network construction of financing credit service platform, coordinating and promoting the strategy of Rural Revitalization; The national development and Reform Commission, together with relevant parties, carried out the collection and storage of the fourth batch of central frozen pork reserves during the year, and plans to collect and store another 40000 tons of frozen pork. Six departments including the Ministry of industry and information technology proposed to give full play to the advantages of carbon fixation and carbon consumption and jointly promote carbon emission reduction in the industrial chain. Orderly promote energy conservation and carbon reduction in key areas of the petrochemical and chemical industry, and improve the energy efficiency level of the industry.
1. Li Keqiang presided over the executive meeting of the State Council (hereinafter referred to as the "meeting") and decided to implement the policy of phased deferred payment of endowment insurance premiums for industries in extreme poverty, and strengthen the support of unemployment insurance for job stabilization and training. First, in terms of macro environment, the meeting pointed out that "the increasing complexity and uncertainty of China's external environment" should refer to the conflict between Russia and Ukraine and the rebound of China's epidemic situation. Overseas, the Federal Reserve has accelerated the rate of table contraction and intensified its efforts, and may raise interest rates faster, causing disturbance to the market; Global food and energy prices fluctuated sharply. The impact of the local rebound of China's epidemic is still on. "The smooth economic cycle has encountered some constraints, and the new downward pressure has further increased". It may be more difficult to achieve the growth target. Second, the meeting emphasized "putting steady growth in a more prominent position" and "mainly achieving basic stability in employment and prices", and further defined the main objectives of steady growth. Possible measures include higher fiscal expenditure, accelerating the issuance of new special bonds and the construction of infrastructure projects, and further enhancing the certainty of high growth in infrastructure; The meeting pointed out that "optimizing affordable housing financial services" and the follow-up real estate policy is expected to be broadened; In addition, more policies should be introduced to help enterprises in the event of the epidemic, such as structural support for key areas of the epidemic, industries and small and micro enterprises greatly affected by the epidemic, such as catering, retail, tourism and transportation; Third, the meeting pointed out that "we should make timely and flexible use of various monetary policy tools such as refinancing, give better play to the dual functions of aggregate and structure, and increase support for the real economy". It emphasized the use of refinancing, and clearly put forward "increasing small refinancing for supporting agriculture" and "establishing two special refinancing for scientific and technological innovation and inclusive pension". The reduction of reserve requirement mentioned at the level of previous national regular meetings can be implemented within two weeks, and can be implemented as soon as 1-2 days; Although the meeting did not explicitly propose the RRR reduction, it pointed to the need for monetary policy to do something. It may be the RRR reduction or other monetary policies, such as the structural monetary policy to help enterprises rescue from the epidemic (similar to 2020). From the perspective of coordinating the issuance of bonds, stabilizing real estate and stabilizing the cost of bank liabilities, reducing reserve requirements and interest rates is a better choice. In addition, the meeting pointed out that "we should do a good job in supplementing the capital of small and medium-sized banks with special government bonds and enhancing the credit capacity of banks", indicating that there is still room for "widening credit". We maintain our previous judgment that the steady growth policy should have continuity, and the subsequent policies are expected to accelerate the introduction of overweight, and the expectation of reducing reserve requirements and interest rates is enhanced. We pay close attention to the operation of monetary policy around mid April and the statement of the Politburo meeting in April.
2. Li Keqiang presided over the Symposium of economic situation experts and entrepreneurs. The general tone of the meeting was consistent with that of the national standing committee, which made it clear that "maintaining economic operation within a reasonable range is mainly to stabilize employment and prices". Affected by the conflict between Russia and Ukraine and the rebound of the epidemic in China, "some unexpected factors in the current international environment in China exceed expectations, and the economic operation is facing greater uncertainty and challenges". Therefore, "the policy depends on the front force, timely increase the force, and study the new plan", that is, the subsequent policy easing may be increased, including more fiscal advance (accelerating the issuance of special bonds, etc.), loose monetary stability (possibly further reduction of reserve requirements and interest rates) We will continue to introduce policies to stabilize real estate and help enterprises to rescue themselves. Pay close attention to the statement made at the Politburo meeting in April. The policy may speed up the introduction of overweight and make steady growth more sustainable; In addition, the conference once again stressed the need to "stabilize the level of foreign investment and maintain the stability of the RMB exchange rate on the basis of energy and stability".
3. The people's Bank of China solicits public opinions on the financial stability law of the people's Republic of China (Draft) (hereinafter referred to as the draft). The draft mainly defines the following matters: first, establish institutional arrangements for financial risk prevention, resolution and disposal, and strengthen institutional norms for financial risk prevention and resolution. In recent years, the construction of financial rule of law in China has been continuously strengthened, but there are also deficiencies. There is a lack of overall design for financial risk prevention, resolution and disposal and cross industry and cross department overall arrangement. The relevant provisions are scattered in financial laws and regulations such as the people's Bank of China law, the banking supervision and administration law, the commercial banking law, the securities law and the insurance law, Therefore, the formulation of the financial stability law will help to strengthen the top-level design and overall coordination of the financial stability legal system. Second, improve the working mechanism of financial stability and consolidate the responsibilities of all parties. The draft defines the responsibilities of the national financial stability and development coordination mechanism (the financial commission of the State Council), and stipulates that the national financial stability and development coordination mechanism is responsible for coordinating financial stability, reform and development, studying major policies to maintain financial stability, directing the prevention, resolution and disposal of major financial risks. Major matters are submitted for approval according to procedures, and relevant departments and localities will follow the division of labor and the requirements of the financial commission, Close coordination and cooperation. The financial stability law compacts the responsibilities of all parties, including small and medium-sized financial institutions, shareholders and actual controllers, local governments, financial supervision departments, etc. Third, it defines the arrangement of disposal funds and the matching of rights, responsibilities and interests. The draft clearly stipulates the disposal fund pool and use arrangements, emphasizes that the disposal of risks should be self rescued by financial institutions first, followed by external assistance, and reduce dependence on public funds. It also proposes to establish a financial stability guarantee fund and a market-oriented and legalized risk disposal mechanism, so as to provide a solid institutional guarantee for the prevention and resolution of major financial risks and help to improve the ability of systemic financial risk prevention and control. On the whole, the introduction of the financial stability law helps to reduce the probability of systemic financial risks and improve the expectation of market stability.
4. The China Banking and Insurance Regulatory Commission issued the notice on further strengthening financial support for the development of small and micro enterprises in 2022 (hereinafter referred to as the notice). The "notice" is consistent with the "opinions on doing a good job in the key work of financial support and comprehensively promoting rural revitalization in 2022" issued by the central bank on March 30. The "notice" emphasizes the financial support for small and micro enterprises, which is a part of the structural support of the central bank.
In terms of overseas macro, this week's overseas focus is on sanctions against Russia and central bank policies. The G7 decided to increase sanctions against Russia. The United States, Britain, Japan and the European Union have issued sanctions, including banning Russian coal imports. The IEA issued the detailed rules for the release of the fifth round of oil reserves, announcing the release of 120 million barrels of oil reserves, of which the United States will release 60.559 million barrels. Affected by the news, the price of crude oil fell somewhat.
Iran's nuclear talks are drawing to a close, and attention will be paid to the attitude of the United States in the future. The Federal Reserve released the minutes of FOMC meeting in March. The minutes showed that the table reduction was carried out as soon as may, with faster speed and stronger strength. However, the table reduction process was highly uncertain and the method changed slightly, so MBS may be sold on its own initiative; In terms of interest rate increase, the minutes show that the interest rate increase will be carried out faster, and the interest rate increase may be 50bp for many times.
1. The Iranian foreign minister said that the Vienna talks were close to reaching an agreement and that the "ball is in the hands of the United States". Iranian foreign minister abdullahiyan said that the Vienna talks are close to reaching an agreement. Iran has conveyed Iran's suggestions on the remaining issues to the United States through a senior EU negotiator. At present, the "ball is in the hands of the United States". UN Secretary General Guterres stressed the importance of the Vienna talks and expressed the hope that all parties would reach relevant agreements as soon as possible. In its report in February, the IEA predicted that the lifting of Iran's sanctions would increase by 1.3 million barrels / day, and in March, it predicted that Iran's oil exports might increase by about 1 million barrels / day within six months after the lifting of sanctions. According to comprehensive judgment, after the lifting of the sanctions, Iran can recover to the highest level before the sanctions (i.e. about 3.8 million barrels / day), bringing about 1.25 million barrels / day of new supply to the crude oil market.
2. Minutes of the European Central Bank meeting: monetary policy needs to be normalized immediately, and the interest rate hike can start as soon as the third quarter. According to the minutes of the ECB's monetary policy meeting in March, central bank policymakers believe that the current monetary policy position is still very loose, and inflation is expected to remain above the target level in 2023. Many members believed that the current high inflation level and its persistence required immediate and further measures to normalize monetary policy, and the end of the asset purchase plan in the summer could pave the way for an interest rate increase in the third quarter. Some members believed that the longer the inflation exceeded the target, the more likely it would lead to runaway inflation. For all practical purposes, the three forward-looking guidance conditions have been met, and even if the forward-looking guidance standards can be evaluated as achieved, the uncertainty is high. In terms of the impact of Russia and Ukraine, central bank policymakers believe that the conflict between Russia and Ukraine may lead to inflation or deflation. In this case, the ECB management committee can no longer bear the consequences of turning a blind eye to the rise of inflation. It is hard to imagine that geopolitical conflict will lead to stagflation. Some decision makers believe that the asset purchase plan has now achieved the set objectives; The occurrence of geographical conflicts is accompanied by strong economic growth, and the previously reached view that "the pace of net purchase is proportional" is no longer clear. But members were divided about the persistence of inflation. Many members hoped to take further normalization measures immediately. Some members hoped to determine the exact date of the asset purchase plan, while others preferred a "wait-and-see" attitude.
3. The Federal Reserve released the minutes of FOMC meeting in March. The Federal Reserve released the minutes of the FOMC meeting in March at 2 a.m. Beijing time on April 7. The contents of the minutes are generally in line with market expectations. In terms of table reduction, the minutes show that the table reduction can be carried out as soon as may, faster and stronger. Set the upper limit of reducing US $60 billion of treasury bonds and US $35 billion of MBS per month, and implement it in stages in three months or a little longer when market conditions permit. However, the uncertainty of the table reduction process is strong, and the mode has changed slightly, so MBS may be sold on its own initiative. In terms of interest rate hikes, the minutes show that interest rate hikes will be carried out faster, and interest rates may be raised 50bp many times, especially in the case of high or intensified inflationary pressure. We believe that with the Fed tightening faster, there is still pressure on US stocks to adjust. In terms of US bonds, due to the impact of the situation in Russia and Ukraine, US inflation continues to rise. The Fed's accelerated tightening will raise the real interest rate. In the short term, there is still upward pressure on 10-year US bonds, or they may remain high. (for details, please refer to the report "faster action fed - Comments on the minutes of FOMC meeting in March")
4. IEA announced the release of 120 million barrels of oil reserves, of which the United States will release 60.559 million barrels. After the IEA Member States reached an agreement on the new emergency release of oil stocks on April 1, the IEA confirmed the total release on April 7. The total amount promised so far is 120 million barrels, making it the largest inventory release in the history of the IEA. Among them, the United States will release 60.559 million barrels of oil, which is part of the total release of 180 million barrels of strategic oil reserve (SPR) announced on March 31. In the next six months, about 240 million barrels of emergency oil stocks will be provided to the global market, equivalent to more than 1 million barrels a day. At the beginning of the conflict between Russia and Ukraine, IEA Member States had 1.5 billion barrels of public reserves and about 575 million barrels of industrial reserves. Therefore, the two collective actions of IEA this year, namely 62.7 million barrels reached on March 1 and 120 million barrels reached on April 7, equivalent to 9% of the total emergency reserves of Member States. Despite the limited ability of reserve selling to supplement the structural shortage of oil, the release of reserves still boosted market confidence, and oil prices fell in the short term. This week, the settlement price of Brent crude oil futures fell by 1.54% and that of WTI crude oil futures fell by 1.02%.
5. The United States and Britain announced a new round of sanctions against Russia on the 6th. On the 8th, the European Union officially approved the fifth round of sanctions against Russia, and Japan added sanctions. The United States announced additional sanctions against Russian financial institutions and the daughter of Russian President Vladimir Putin, the Russian Foreign Minister and his wife, and will implement a comprehensive blockade and sanctions against Russia's largest financial institution, the savings bank of the Russian Federation, and its largest private bank, alpha bank. According to the US side, the United States has now completely blocked "more than two-thirds" of the Russian banking system. British Foreign Secretary trass announced that Britain will implement a new round of sanctions against Russia. The new sanctions include: comprehensively freezing the assets of Russia's largest banks, the savings bank of the Russian Federation and the Credit Bank of Moscow; Terminate all British investment in Russia; The UK will stop all coal and oil imports from Russia by the end of 2022 and end natural gas imports as soon as possible; Take action against key strategic industries and state-owned enterprises in Russia, including banning the import of steel products; Sanctions were imposed on eight Russian oligarchs active in these industries. On the 8th local time, the EU officially adopted the fifth round of sanctions against Russia. The EU decided to ban coal imports from Russia from August this year. Data show that at present, the EU imports 8 billion euros worth of coal from Russia every year. The coal embargo against Russia will take effect after the end of the 120 day "transition period". EU Member States will also close ports to Russian ships, except for the transportation of humanitarian supplies, food and energy. The EU has also expanded the list of prohibited Russian products, including Russian timber, seafood and other products with a total amount of 5.5 billion euros, and banned the export of 10 billion euros of high-tech products to Russia. The EU will take measures against Russia for cryptocurrency wallets, banks, currencies and trust funds, including banning the provision of high-value cryptoasset services to Russia, banning the sale of transferable certificates such as stocks denominated in the official currencies of EU Member States to Russia and Belarus, and banning all transactions with four Russian banks, including vtbbank. The leaders of the group of seven (G7) issued a joint statement on the 7th, saying that "the plan including phasing out or banning the import of Russian coal will be rapidly promoted". On the 8th, Japanese Prime Minister Fumio Kishida announced a series of additional sanctions against Russia, including banning the import of coal from Russia, mainly including: banning the import of coal, vodka, machinery products and some timber from Russia; Prohibit new investment in Russia; Freeze the assets of the Russian Federal Savings Bank and alpha bank. According to the report, 11% of the coal imported by Japan in 2021 came from Russia; According to the public data of IEA, Japan's dependence on Russian coal imports was 14% in 2020. The Japanese government is taking measures to find import sources such as Australia or Indonesia to replace Russian imports to ensure supply. Affected by this, coal prices rose again by 12.12% this week, and American coal has increased since 2013 last week
