General situation
Macro Liquidity: 1 Last week, the net return of reverse repo was 570 billion, and MLF did not operate; 2. In terms of market interest rate, dr007 increased slightly to 1.94% and R007 decreased to 2.01%; 3. The yield of 10-year Treasury bonds fell to 2.75%; 4. USD / RMB rose to 6.37; 5. The expected rate of return of financial products (three months) is maintained at 1.92%.
Capital and sentiment of A-share market: 1 Last week, the turnover of A-Shares increased and the turnover rate remained unchanged; 2. The balance of the two financial institutions decreased slightly to 1.66 trillion yuan; 3. A small net outflow of funds from Beishang was 6.56 billion yuan; 4. Last week, the scale of A-share net reduction and repurchase decreased slightly, and the scale of sales restriction and lifting this week increased; 5. In terms of style, large cap stocks, low PE stocks, low-cost stocks and blue chip stocks performed best last week.
A-share and global Valuation: from the perspective of pb-roe, the industries whose valuation level is far lower than the profitability are banking, steel, coal, building decoration, non bank finance, petroleum and petrochemical, building materials, transportation, household appliances and light industry manufacturing.
Recently, the interest rate spread between China and the United States has shown a continuous upside down trend. At present (April 11), the interest spreads between China and the United States for 2-year, 3-year, 5-year, 7-year and 10-year periods are inverted by 21bp, 34bp, 24bp, 5bp and 2bp respectively. On April 11, the 10-year interest rate difference between China and the United States upside down for the first time, becoming the focus of the market. The short-term interest rate of bonds is largely affected by the policy interest rate or policy interest rate expectation of the central bank, while the long-term interest rate of bonds more reflects the trend and changes of medium and long-term economy, inflation and monetary policy. The core of the upside down of China US medium and long-term interest rate spread reflects the deviation from the economic fundamentals of China and the United States.
The upside down of interest rate difference between China and the United States is mainly due to the rapid rise of US bond interest rate. This round of rapid convergence of interest rate spread between China and the United States began in March this year. From the change of treasury bond yields of China and the United States, the core reason for this round of rapid convergence of interest rate spread between China and the United States lies in the rapid rise of US bond yields. Since March 1, the yield of US bonds has increased by 90bp-110bp, while the yield of treasury bonds has changed from - 5bp-10bp. The recent rapid rise in US bond yields is mainly the result of the market's increasing expectation of the Fed's interest rate hike. According to CME fed observation data, the probability of the Fed raising interest rates to the range of 2.50% - 2.75% and above by the end of this year exceeded 85%.
