Main points:
In terms of China's macro economy, this week's national Standing Committee emphasized promoting consumption, stabilizing foreign trade and reducing reserve requirements, and the policy will be accelerated; The central bank cut the reserve requirement by 25bp in an all-round way and 50bp in a targeted way, with a relatively restrained range. After the reduction, interest rates may be reduced again, of which the one-year LPR may be reduced by 5bp, and the MLF may still be reduced. The time point remains to be observed; The short-term RRR reduction is more effective in relieving entities than boosting domestic demand, and it is necessary to be vigilant against idling funds and borrowing new to repay the old; Overall, the RRR reduction is good for equity, but the range is limited, and may rise after interest rate shocks. In addition, all ministries and commissions responded to the national epidemic prevention and control policies to ensure smooth logistics, and proposed financial support such as extending the repayment period for logistics related.
1. Li Keqiang presided over the executive meeting of the State Council (hereinafter referred to as the "meeting") to deploy policies and measures to promote consumption, help stabilize the economic fundamentals and ensure the improvement of people's livelihood. After the two sessions, the national standing committee made comprehensive arrangements for the troika of monetary policy, fiscal policy and stimulating the economy around steady growth. It is not only the implementation of this year's work arrangement, but also reflects that under the repeated disturbance of Russia Ukraine conflict outside and epidemic situation inside, the policy may speed up the promotion. On the whole, the national standing committee meeting since the two sessions has generally released several signals: first, there are more concerns about the economy, but "we will not relax our commitment to the goal", and the 5.5% probability still needs to be achieved; Second, the established policies will come out early and quickly, and plans will be made for problems beyond expectations, pointing to the acceleration of monetary and fiscal forces in the second quarter, and easing may be increased at the upcoming April Politburo meeting; Third, the policy focuses on accelerating the issuance of bonds, retaining the main body of the tax rebate and insurance market, rescuing industries in extreme poverty due to the epidemic, re lending, RRR reduction and other monetary policies; Fourth, the key to steady growth is infrastructure (including water conservancy), in addition to promoting consumption and stabilizing foreign trade. Considering steady growth, stable bank liabilities, coordinated bond issuance, enterprise rescue under the epidemic and other considerations, as well as the requirements of the financial committee meeting and the national standing committee meeting on monetary policy since March, the RRR reduction is in line with expectations. (for details, please refer to the report "RRR reduction is coming, and then?"
2. The people's Bank of China announced its decision to reduce the deposit reserve ratio of financial institutions by 0.25 percentage points on April 25, 2022. The overall reserve requirement reduction of 25bp + targeted reserve requirement reduction of 50bp is restrained, which is lower than the market expectation. It may be due to the consideration of abundant liquidity, policy space and peripheral environment. The policy reflects the characteristics of structural and epidemic relief, with limited demand in the short term. We should be vigilant against idling funds and borrowing new to repay the old. The central bank mentioned that it pays attention to prices and internal and external equilibrium, but we believe that the price performance excluding the cost of raw materials continues to be CPI deflation + PPI inflation, "the core of stagflation is deflation", pointing to poor total demand, and the subsequent currency may still be relaxed at a small pace. The calculation shows that the LPR may be lowered as soon as this month (3.8 + 0.5 + others ≈ 5bp). If it does not decline, the subsequent window is still in progress; MLF is still possible to be lowered, and the time point needs to be observed; The total space for subsequent RRR reduction may be 310bp, the space for comprehensive RRR reduction may be more limited, and the step size of RRR reduction may also be adjusted to 25bp. This RRR reduction is expected to be good for equity, but the range is limited; Be neutral to the bond market and be vigilant against the rise of subsequent interest rates. (for details, please refer to "the core of stagflation is deflation, and it is still possible to relax by jogging in small steps")
3. The people's Bank of China held a press conference on financial statistics in the first quarter of 2022. Emphasize maintaining the basic stability of the RMB exchange rate at a reasonable and balanced level, pay close attention to the establishment of scientific and technological innovation refinancing and inclusive pension special refinancing, make good use of inclusive small and micro loan support tools, increase small refinancing to support agriculture, implement carbon emission reduction support tools and special refinancing to support the clean and efficient utilization of coal, adhere to the positioning that houses are used for living rather than speculation, and focus on the goal of stabilizing land prices, house prices and expectations, Due to the city's policies, cooperate with the local government to fulfill the territorial responsibility and better meet the reasonable housing needs of property buyers; The people's Bank of China will do a good job in macro and micro cross cycle management and strive to stay ahead of the financial risk curve.
In terms of overseas macro, the monetary policies of major overseas central banks were tightened due to high inflation this week; In terms of energy, IEA lowered the demand for crude oil and natural gas in 2022, and Russia said it would strive to shift its energy exports to the East.
1. The Bank of Canada, the Bank of Korea and the Federal Reserve of New Zealand raised interest rates, the European central bank confirmed to speed up the withdrawal from the bond purchase plan, Singapore and Poland tightened monetary policy, and the Bank of Japan maintained monetary easing. The Bank of Canada issued an interest rate resolution to raise interest rates by 50 basis points and began to shrink the table two weeks later; The monetary policy committee of the Bank of Korea raised the benchmark interest rate by 25 basis points to 1.5%; The monetary authority of Singapore reset the middle level of the nominal effective exchange rate policy range of the Singapore dollar, slightly increased the gradient of the range, but maintained the width of the policy range unchanged; The Monetary Commission of the Federal Reserve of New Zealand announced a 0.5 percentage point increase in interest rates, raising the official cash rate (OCR) from 1% to 1.5%; The European Central Bank announced the latest interest rate resolution and kept the three major interest rates unchanged, that is, the marginal loan interest rate was still 0.25%, the main refinancing interest rate was still 0%, and the deposit convenience interest rate was still a historical low of - 0.5%. The European bank reiterated its accelerated exit asset purchase plan formulated last month. The management committee judged that the data since the March meeting strengthened its expectation of completing the app in the third quarter. At the same time, the management committee reiterated that the "gradual" interest rate increase will be carried out "after a period of time". In addition, the reinvestment of PEPP will be at least until the end of 2024. Tokuhiko Kuroda, governor of the Bank of Japan, pointed out that the cost driven inflation caused by the rise in import costs is a negative factor dragging down the economy. The central bank will continue to firmly implement a strong monetary easing policy to support the economic recovery from the impact of the epidemic.
2. IEA released the April oil monthly report and the second quarter natural gas report, and lowered the global crude oil demand expectation in 2022. In terms of oil demand, in the case of frequent outbreaks in China, the severe new blockade measures have led the IEA to lower its expectations for global oil demand in the second quarter and the whole year of 2022. Demand in OECD countries was weaker than expected at the beginning of this year, exacerbating the decline. Therefore, compared with last month's report, IEA's estimate of global oil demand this year decreased by 260 KBD to 99.4 MBD, an increase of 1.9 MBD over 2021. On the supply side, driven by non OPEC +, the global oil supply increased by 450 KBD to 99.1 MBD in March. Russian oil supply is expected to decline by 1.5 million barrels per day in April, and the shutdown is expected to accelerate to about 3 million barrels per day from May. Despite the interruption of Russian oil supply, the expected decline in demand, the steady growth of production in OPEC + member countries and the United States and other non OPEC + countries, and the release of large inventories in IEA member countries should prevent large deficits. Due to the new capacity and normal seasonal growth, the global refinery throughput is expected to increase by 4.4 million barrels per day from April to August. This will increase the product inventory for the first time in two years and provide some breathing opportunities for the tight market. Overall, it is expected that the operation volume in 2022 will increase by 3 million barrels per day year-on-year, but it will still be lower than that in 2017. In terms of inventories, global oil inventories fell for 14 consecutive months. Inventories in February were 714 million barrels lower than the level at the end of 2020, with OECD countries accounting for 70% of the decline. It is now expected that non OPEC + production will increase by 2 million barrels per day in 2022, 100000 barrels per day lower than that in last month's report. With regard to natural gas, IEA said that the conflict between Russia and Ukraine has brought considerable pressure to the natural gas market and increased uncertainty under the already tense market background.
Since the beginning of the heating season, Europe has been at the center of market tension. The resulting tight supply, high prices and increased market uncertainty have led to a downward correction in the growth of global natural gas consumption. Therefore, IEA expects the growth of natural gas consumption to turn negative in 2022.
3. John Williams, chairman of the New York Fed, responded to the March CPI and retail sales data released by the United States this week. In terms of retail sales, we saw some early signals of the paradigm shift of consumer consumption (switching from goods to services). This paradigm shift is expected to continue this year as the impact of the epidemic subsides and consumers return to a more normal spending pattern. In terms of CPI, it will not predict whether inflation will peak, because food and energy prices fluctuate greatly and are still affected by the situation in Russia and Ukraine. Monetary policy can alleviate the imbalance between supply and demand and the imbalance between goods and services. It is believed that the underlying trend in inflation may peak soon and begin to decline later this year. On the whole, the short-term inflationary pressure in the United States is large, but the subsequent month on month increase will be reduced. Considering that the current US job market has achieved full employment and is relatively hot, we expect that the Federal Reserve will announce an interest rate increase at the FOMC meeting from May to June, of which the interest rate may be increased by 50bp in May and announced the reduction of the table, which will also be faster. At present, the fundamentals of the US economy are strong, and raising interest rates will not trigger a short-term recession in the US economy. (for details, please refer to the report "inflation acceleration under geopolitical conflict - Comments on us CPI data in March" and "will the United States usher in the" Volcker moment "again? - the path and impact deduction of the current round of interest rate increase by the Federal Reserve")
In addition, important documents issued by local governments and ministries this week include:
1. Notice on actively responding to the epidemic and further doing a good job in ensuring stable employment and benefiting the people
2. Notice on several measures taken by Guangxi to actively respond to the impact of covid-19 pneumonia epidemic and consolidate and expand the achievements of poverty alleviation
3. Notice on printing and distributing the list of social assistance services purchased by the government
4. Key points of revitalization and development of old revolutionary base areas in 2022
5. Great Wall Protection Plan of Inner Mongolia Autonomous Region (20212035)
6. Implementation plan for the incentive work of the river lake long system in Sichuan Province in 2022
7. Several opinions on vigorously cultivating and promoting the high-quality development of "specialized, special and new" small and medium-sized enterprises
8. 2022 work plan of industrial Internet special working group
9. Notice on implementing the joint procurement and use of pacemaker and coronary artery drug balloon medical consumables in Beijing Tianjin Hebei "3 + n" pharmaceutical procurement Alliance
10. Notice on the application of Beijing fuel cell vehicle demonstration application project from 2021 to 2022
11. Several policies and measures to promote the recovery and development of consumption
12. Guidelines on care services for people in extreme poverty in Anhui Province
13. Implementation plan for accelerating the construction of rural delivery logistics system in Tianjin
14. Implementation plan for the reform of the division of financial powers and expenditure responsibilities between provinces, cities and counties in the field of public culture in Sichuan Province
15. Notice on promoting the relief and development of market entities and the preferential policies of real estate tax and urban land use tax
16. Notice on issues related to the withdrawal of housing provident fund for the purchase of the first set of housing and indemnificatory housing
17. Several measures on Comprehensively Strengthening epidemic prevention and control and scientific and technological support for economic and social development
18. Notice on carrying out the special action of bank enterprise financing docking of scientific and technological small and medium-sized enterprises
19. Several measures on promoting the high-quality development of engineering survey and design industry in the province
20. Implementation measures for further strengthening supervision and incentive of water conservancy construction
21. Notice on strengthening the quality and safety supervision and management of the reconstruction project of old urban communities in the province
22. Implementation plan for further improving the linkage mechanism between social assistance and security standards and price rise
23. Construction plan of high quality development demonstration area in Ganzhou old revolutionary base area
24. Construction plan of high quality development demonstration area in old revolutionary base areas in Western Fujian
25. Implementation plan of Beijing Municipality on accelerating the development of affordable rental housing
26. Several measures on strengthening the sharing and application of credit information and promoting the financing of small, medium-sized and micro enterprises
Risk tip: the economic downturn exceeded expectations, and the implementation of policies was less than expected.
