Approaching the May Day holiday, the market capital is still loose. As of the closing on April 28, the weighted average price of dr007 was 1.9023%, and the weighted average price of gc001 was 1.877%.
Most people in the industry believe that due to the disturbance of the spread of the epidemic, the contraction of enterprise credit demand, tax rebates and accelerated profits handed over by the central bank, there was liquidity deposition in the capital market, resulting in the continuous decline of capital interest rate in April. Looking forward to the capital situation in May, the institution expects that the total amount will remain reasonably abundant.
Since the middle and late April, the capital has remained loose, and the money market interest rate has been low. In terms of repo rate, dr001 has been below 1.4% for 11 consecutive trading days since April 15. Since April 8, dr007 has been below 2%, far below the policy interest rate.
The same is true for non banks. Gc001 has been below 2% since April 7.
In terms of the lending rate, the overnight interest rate of Bank Of Shanghai Co.Ltd(601229) inter-bank offered rate (Shibor) has been kept low below 1.4% since April 19.
Tan Yiming, chief fixed income analyst of Minsheng securities, said that the central bank’s investment in April was not small. Although it did not invest a large amount of liquidity in the open market, the continuation of medium-term lending facility (MLF) in the middle of the month was equivalent. Under the condition that the original liquidity was reasonably abundant, the additional liquidity was released by overlapping the reduction of reserve requirements and accelerating the payment of balance profits to the finance.
“The acceleration of fiscal appropriations such as tax rebate and central transfer payment is also an important reason for abundant liquidity.” Tianfeng Securities Co.Ltd(601162) fixed income chief analyst sun Binbin said.
For the situation of capital in May, most respondents said that in the short term, the pattern of loose capital may continue. Under the pressure of the economy, the current capital easing window has not been closed, and it is possible to reduce the reserve requirement and interest rate.
Huatai Securities Co.Ltd(601688) research report said that on the whole, loose capital is the biggest support for the bond market. In the medium term, we need to be vigilant about the return of capital interest rate to neutral. At that time, we need to be wary of the “bear flat” risk of the yield curve. In addition, we also need to observe leverage and arbitrage, the attitude of monetary policy to external constraints, as well as fundamental signals such as real estate and epidemic.
Sun Binbin believes that the possibility of the central bank’s “interest rate cut” in May is still there, but the key to market transactions is not a simple “interest rate cut”, but the inflection point of the epidemic and the resultant force of policies. According to the current situation, the bond market coupon strategy and urban investment leverage are the better choices, and there are many opportunities in the bond market in the second quarter.
“Under the pressure of China’s economy and the uncertainty of the epidemic situation, the window of monetary policy easing has not been closed, and the probability of reducing reserve requirements and interest rates in the future still exists.” Tan Yiming said.
