The Fed's statement is more hawkish, and shrinking the table is put on the agenda. The minutes of the FOMC meeting in December show that officials believe that the pace of monetary policy normalization may be faster than before, and the time of shrinking the table will be closer to the time of interest rate increase. All participants agreed that inflation had reached the target and employment maximization would be achieved soon. Several officials even said that employment maximization had been basically achieved, which further enhanced the certainty of rapid interest rate increase after March 2022. This meeting increased the discussion on the reduction of the table, which enhanced the market's expectations for the hawks of the Federal Reserve. It is expected that the hawkish Fed has strengthened the macro risks overseas. We should pay attention to the possible impact of the shock of international assets and the return of overseas funds on China. But at the same time, it should be noted that the market environment faced by the Fed's interest rate increase and table reduction is different. In 2022, the Fed realized the three steps of ending QE, interest rate increase and table reduction, and supported the rise of long-term US bonds in the short term, which requires sustained and substantial economic optimism, and whether this optimism can last until the fourth quarter of 2022 is still uncertain.
The State Council held a symposium on tax reduction and fee reduction. Premier Li Keqiang held a symposium on tax reduction and fee reduction on January 5 to summarize past experience and listen to opinions for the further implementation of tax reduction and fee reduction. We will give priority to supporting the upgrading of manufacturing industry and small, medium and micro enterprises, giving birth to market players and expanding the tax base. The state will increase transfer payments to local governments, promote financial resources to the grass-roots level, and provide guarantee for tax reduction and fee reduction.
The US PMI declined, but the economy is still expanding. In December 2021, the US ism manufacturing PMI was 57.8, down from 61.1 last month. As the recent epidemic has repeatedly interfered with production and consumption, the PMI of manufacturing and non manufacturing industries in the United States has declined, but the service industry has been more affected. On the whole, the two indexes are still much higher than the prosperity and decline line of 50 and the average value in recent years, but the expansion speed is slowed down due to the interference of epidemic and other reasons.
The market interest rate is stable, and the funds are stable over the next year. This week, 40 billion yuan was invested in the open market, 700 billion yuan was recovered, and the net return was 660 billion yuan. Due to the tight market liquidity near the Spring Festival, the pressure caused by corporate tax payment, advance of government special bonds, cash needs and credit "good start" liquidity all require the central bank to increase the net investment in the open market in the future
Prices remained stable. Last week, prices were generally stable, pork prices fell and vegetable prices rose. The demand on New Year's day did not significantly raise the price. From the perspective of supply, farmers sold faster, driving the pork price down. In terms of vegetables, the cooling of the weather in the North intensifies, the output of facility vegetables continues to shrink, and some vegetables are gradually replaced by vegetables in southern provinces. Due to the long transportation distance, the transportation cost increases, and the overall price of vegetables also rises. On the eve of new year's day, terminal demand increased, market transactions were active, sales were smooth, and prices were driven higher.
At the same time, demand and supply are sluggish, waiting for steady growth measures, and international oil prices continue to rise. Although the impact of the epidemic is still expanding, the hospitalization and mortality of new variants are not high, and the market is expected to have better demand.
Tangshan's operating rate rose, and the steel inventory was stable. The downstream demand of black series is weak, the upstream operation is insufficient, and the supply and demand is still in the game, waiting for the steady growth measures.
(source: China Galaxy Securities Co.Ltd(601881) securities)
