Ping An View:
Brief comments on the focus of this week: 1) many Fed officials continue to "release the eagle". This week, Fed officials such as brennard, Evans, Waller and Williams made speeches and continued to release "Hawk" signals to the market. We believe that there is a great possibility for the fed to raise interest rates by 50bp at one time in May. This is shown in the minutes of the Fed's interest rate meeting in March and the recent "Hawk" statements of Fed officials. However, with the deepening of interest rate hikes and the uncertainty of geopolitical conflicts, the downward pressure on the US economy is also increasing. We still believe that the pace of the Fed's interest rate hike throughout the year may be "fast ahead and slow behind". If there are external shocks or unexpected changes in the fundamentals of the US economy, the Fed may slow down its interest rate hike and increase its policy flexibility, which is also in line with the Fed's policy style of "walking and watching" since the epidemic. 2) The European Central Bank announced the interest rate resolution, maintained the three benchmark interest rates unchanged, and accelerated the process of withdrawing from net asset purchase, which basically met market expectations. In addition, in this resolution, the European central bank reiterated that the specific timetable for the first interest rate hike has not been determined. It may be "any time from one week to several months" after the end of bond purchase. The money market generally expects the European Central Bank to raise interest rates by 25 basis points in September and December respectively. After the announcement of the interest rate resolution, the exchange rate of the euro against the US dollar fell below the 1.08 mark, a new low since May 2020. From the signal released by the resolution of this interest rate meeting, the overall tightening pace of the European Central Bank still lags behind the Federal Reserve.
Overseas economic tracking: 1) U.S. economy: the year-on-year growth rate of CPI and PPI in the United States continued to rise in March, and the month on month growth rate of CPI exceeded 1% for the first time since June 2008. However, the month on month growth rate of core CPI excluding energy and food prices decreased from 0.5% in February to 0.3% in March. The growth rate of retail sales in the United States in March was lower than expected. The rise in gasoline prices led to a significant increase in consumption related to cars and gas stations, with a month on month increase of 8.9% in March. Except for cars and gasoline, retail sales in the United States increased by 0.2% in March. 2) European economy: in April, the euro zone ZEW Economic prosperity index continued to decline to - 43, a new low since March 2020, indicating that the economic prosperity of the euro zone further declined, and the more high-frequency Citigroup economic accident index also continued to decline, which continued to be lower than that of the United States.
Global Asset Performance: 1) most of the world's major stock indexes closed down, the Russian stock market plummeted, and the China US growth sector continued to adjust. Fed officials "hawks" said that they would continue to suppress the China US science and technology growth sector. China's gem index and the US NASDAQ index fell 4.0% and 2.6% respectively throughout the week. 2) The yield of 10-year US bonds broke above 2.8%, and the yield curve continued to steep. The sharp rise in real interest rates pushed up the yield of long-term US bonds, the upside down risk of US bond yield curve continued to fall, and the difference between 10-year and 2-year US bond yields rose to 36bp. 3) International crude oil and precious metal prices have significantly warmed up. The conflict between Russia and Ukraine is heating up, crude oil prices rise again after two weeks, and the prices of gold and wheat are also affected. Meanwhile, OPEC said this week that it was impossible to make up for Russia's potential supply loss, which also pushed up international oil prices. 4) The dollar index continued to rise and the yen depreciated significantly. The dollar index continued to rise this week, rising 0.68% to 100.52 for the whole week, a new high since April 2020. The differentiation of monetary policy orientation between the Federal Reserve, the European Central Bank and the Bank of Japan this week is the main force driving up the US dollar index.