Summary:
I. the central bank's RRR reduction came as scheduled, but the range was lower than expected. The central bank announced its decision to reduce the reserve requirement by 0.25bp on April 25, and further reduce the reserve requirement by 0.25bp for qualified urban commercial banks and rural commercial banks. The RRR reduction is a comprehensive RRR reduction, releasing a total of about 530 billion yuan of long-term funds. In addition, the central bank carried out 150 billion yuan of one-year MLF operation and 10 billion yuan of reverse repurchase operation on April 15, and the bid winning interest rates were 2.85% and 2.10% respectively, which were flat with the previous value.
We believe that the central bank's operation this time is significantly lower than the market expectation. Before that, the market generally expected that the central bank's overall RRR reduction rate would be 50bp, and the MLF operation would cut interest rates by 10bp. As the central bank said, at present, liquidity has been at a reasonable and sufficient level, and the market is not short of money. The signal significance of this RRR reduction is stronger. For the subsequent monetary policy will be further relaxed, the central bank said it will pay close attention to the changes in price trends, pay close attention to the monetary policy adjustment of major developed economies, and take into account the internal and external balance. This may mean that at a time when the price center is gradually rising and the Federal Reserve accelerates the tightening of monetary policy, China's monetary policy has limited room for further easing, and will adopt more structural policies (such as small refinancing of agricultural expenditure, carbon emission reduction support tools and two new tools). At the same time, guide the financial system to make reasonable profits (reduce LPR interest margin space, etc.) to increase support for real enterprises and stabilize the macro-economic market.
II. National epidemic tracking. At present, as many as 45 cities are still under partial or total closure. This round of epidemic has seriously dragged down the economy, and it is difficult for growth to return to the target level in the first half of the year. However, there are signs of improvement in the current epidemic prevention and control. Vice Premier sun Chunlan said that the anti epidemic in Shanghai has achieved phased results, and the transmission index of the epidemic has been reduced from 2.27 to 1.23. It is just around the corner to achieve the goal of clearing the social surface at an early date. With the epidemic gradually under control, it is expected to expand investment and speed up relevant policies in the second quarter. Supply chain dredging and consumption stimulation will be carried out at the same time, and the economy is expected to usher in rapid repair.
3. US inflation continued to rise. In March, the CPI of the United States increased by 8.5% year-on-year, 7.9% higher than expected and the previous value, and increased by 1.2% month on month. Among them, the gasoline, housing and food index increased the most. After excluding food and energy prices, the core CPI also increased to 6.5% year-on-year, higher than 6.4% in February. CME fed observation tool shows that the market expects the probability of the Fed raising interest rates by 50bp in May to rise to 89.9%, or continue to push up the yield of 10-year Treasury bonds.
IV. the supply chain problem remains unsolved in the short term. In China's view, the central bank's RRR reduction came as scheduled, although it was slightly lower than expected, but it showed that the strength of steady growth has increased. At the same time, the anti epidemic in Shanghai has achieved phased results, and all parties have actively coordinated to help resume work and production. However, at present, as many as 45 cities are still under partial or full closure, and transportation and logistics are still a major problem restricting the resumption of work and production, which needs to be further dredged. Overseas, Russia and Ukraine gathered heavily in the Donbas region, and a decisive battle was imminent. The western countries led by the United States increased military assistance to Ukraine and threatened to further escalate sanctions against Russia. The global supply chain problem remained unresolved in the short term. On the whole, internationally priced goods face a pattern of short strength and long weakness, while Chinese demand dominated goods face a pattern of short weakness and long strength.
