Recently, the overseas financial situation has been significantly tightened, but due to the slight rebound of major stock indexes and the decline of Ted interest rate spread compared with the previous period, the European and American financial situation index rebounded slightly during May Day. The S & P 500, Dow and Nasdaq rose one after another, with yields of 1.05%, 0.46% and 1.86% respectively in the past two days. Although the US Ted interest rate spread is still high, it has fallen slightly, driving the US financial condition index to rise slightly; The UK FTSE 100 index rose by 0.22% in the past two days. In the past five days, DAX in Germany, FTSE 100 in the UK and CAC40 in France all rebounded. The EU Ted interest rate spread decreased slightly compared with the previous two weeks, and the financial condition index of the eurozone rebounded.
During May Day, the maturity yields of us, German and Australian government bonds rose one after another and hit a new high:
Germany's policy towards Russia turned and supported the "gradual ban" on Russian crude oil for the first time. On Monday, the EU foreign minister Burke said that Russia was gradually stopping the new oil import measures from Germany on the same day. However, Russian energy was not included in the previous German sanctions list against Russia. Since then, the maturity yield of German 10-year Treasury bonds rose again, hitting 1% for the first time since 2015. According to WSJ, the EU is expected to propose to implement an embargo on Russian crude oil within six months, ban the import of Russian refined oil by the end of this year, and remove more Russian banks from swift.
The RBA raised interest rates by 25bp more than expected, and overseas central banks collectively turned eagle. Following the unexpected turn of the European Central Bank and the Federal Reserve, the RBA also decided to follow suit on May 3. At the interest rate meeting after the CPI exceeded the expectation of 5.1% year-on-year in the first quarter, it decided to raise the cash rate by 25bp to 0.35%, and announced that it would no longer reinvest the income of maturing government bonds. This is the first interest rate hike by the RBA since 2010. Since then, the Australian dollar has risen against the US dollar. Australia's 10-year and 2-year maturity yields have increased by 28bp and 33bp respectively compared with the end of April, the highest since October 2014. The RBA's policy decision shows that the pace of normalization of its monetary policy has accelerated, and the inflation expectation in April has reached 5.2%. If the inflation pressure rises further in the future, it is not ruled out that the RBA will expand the pace of interest rate hike at the interest rate meeting in June.
The resolution of the US UK interest rate meeting is about to be announced. The market is expected to raise interest rates and shrink the table in advance, and the yield to maturity of 10-year Treasury bonds has risen one after another.
The market has reached a consensus on the expectation that the Federal Reserve will raise interest rates by 50bp in May and announce the start of table contraction in June. The focus of this interest rate meeting lies in the choice of the tightening path of the Federal Reserve. From the perspective of market pricing, the expectation of raising interest rates by 50bp in May and June has been basically price in, and some investors even bet on the possibility of raising interest rates by 75bp in June. The yield to maturity of 10-year US bonds fell back to 2.95% in the next two days after breaking through 3% on Monday.
The Bank of England will announce the resolution of the interest rate meeting in the evening of May 5. During the May Day holiday, the maturity yield of UK 10-year Treasury bonds exceeded 2% again. It is generally expected that the Bank of England will continue to raise interest rates by 25bp and announce the scale reduction plan. On the one hand, like other European countries, Britain is facing soaring energy and food prices. On the other hand, the problem of wage rise caused by insufficient labor supply also exists. From the previous choice of interest rate increase path, the Bank of England chose to strictly tighten monetary policy, but the downward pressure on UK economic growth is not small. Weill, an economics professor at King's College London, also said that the potential growth rate of the UK economy is at least the slowest level since the 1970s.
Risk tip: Overseas central banks tightened more than expected, geopolitical risks intensified, and epidemic disturbance exceeded expectations
