Haitong Jiang Chao: The growth rate of social financing is picking up
Source: Jiang Chao Macro Bond Research Co., Ltd.’s financial growth has picked up, and interest rate decline has been hindered (Haitong Bond Weekly Exchange and Thinking No. 313, Jiang Chao, etc.)Interest rates on corporate bonds and urban investment bonds increased by 6, 4, and 4bp, respectively, and convertible bonds fell by 2.
The economy remained stable in April and inflation continued to pick up.
In March of 19, the economy showed a marked improvement. The growth rate of exports, which represented external demand, rebounded rapidly, while the growth rate of real estate and automobile sales, which represented domestic demand, also improved.
However, considering that the spring festival is late this year, the economic recovery in March cannot be ruled out due to the later factors of returning to work after the festival this year.
However, since April, the growth rate of downstream demand such as real estate and automobiles has continued to improve, and although the growth rate of coal consumption in power plants has fallen, it is still much higher than the negative growth in the first two months of the year, indicating that the overall economy has remained stable.
In March, there was a short-term rise in inflation, of which the CPI rose sharply to 2.
3%, while the PPI rose slightly to zero.
As food prices and prices of means of production continue to increase since April, we predict that the CPI will rise to 2 in April.
At 6%, the PPI rose back to zero.
6%, short-term inflation will continue to rebound.
Social financing has picked up, and currency loosening has weakened.
The total amount of new social financing increased sharply to 2 in March.
86 trillion, an increase of more than ten years.
The growth rate of social financing rose to 10 in March.
7%, once again confirms that the growth rate of financial integration has bottomed out at the end of 18 years.
According to the historical law that the growth rate of social finance is about half a year ahead of the economic growth rate, this indicates that the Chinese economy is hopeful to bottom out in the second quarter of 19 and stabilize.
The obvious pick-up in the growth rate of social finance, coupled with a significant rebound, means that the need for gradual monetary policy easing has dropped significantly.
The gradual continuation of the reverse repurchase operation last week also showed that the expansion or the reduction of the speed of capital injection, indicating that the probability of a short-term reduction in standards is significantly reduced.
The decline in interest rates has been blocked and remains supported for a long time.
Since entering April, the bond market has fallen sharply for two consecutive weeks, until the current 10-year government bond rate has risen to 3.
33%, an increase of 10bp from the end of last year.
In the short term, the bond market is still threatened by many factors: First, the rebound in economic fundamentals is not good for the bond market; second, the high rise in social integration means that the strength of broad credit is increased, which has diverted the bond market.The increase in the supply of local debts has also increased the supply of bond markets. Third, the returns on risky assets such as the stock market have increased the flow of funds into the bond market.
However, in the medium to long term, we believe that this round of policies has re-taken the old path of borrowing and stimulating debt. The current recovery of social financing is still mainly based on short-term loans, but there is no possibility of continued soaring thereafter.
In addition, the pick-up in infrastructure investment growth is due to the early issuance of local special bonds, but the regulation of local hidden debt is still in the space for infrastructure investment to rise.
Coupled with the substantial downsizing of the shed reform target, real estate sales in cities below the third tier have been adjusted, and the current rebound in real estate sales is also difficult to sustain.
In general, whether it is currency growth or economic growth, there will be more L-shaped reversals than V-shaped reversals in the future. As a result, the transition of the low-interest rate era is over, and interest rate opportunities may be brought after the overshoot.
Risk assets are still good, and credit-to-debt allocations are deployed.
Looking ahead, the gradual landing of reduced tax and fee reductions, and the steady recovery of the economy and growth, the debt risk of the corporate sector will improve expectations, and corporate earnings growth is expected to bottom out, which is beneficial to both credit and convertible bonds.
Last week, CDB and Zunyi City reached a consensus to use Zunyi as a pilot for CDB to participate in local development and debt resolution.
The governor of the Air China Development Bank has stated that practical measures need to be taken to assist local governments in handling debt problems in a safe manner.
We believe the use of low-interest CDB loans to replace high-interest local government hidden debt, thereby reducing the debt risk of local governments, which is beneficial to the stock of urban investment debt.
Taken together, we still recommend 成都桑拿网 that credit bonds and convertible bonds be the first choice for asset allocation in the bond market, while interest rate bonds need to wait patiently for opportunities after overshoot.
I. Monetary interest rate: Increased disturbance of funds 1) Monetary interest rate first decreases and then rises.
Last week, the fund faced a gradual contraction from affluence to gradual change. The interest rate on the funds dropped first and then rose, and the overnight and seven-day interest rates reversed.
Last week, the average net return was 0 trillion.R007 average goes up 17BP to 2.
59%, R001 average goes up 35BP to 2.
The average value of DR007 is 20BP to 2.
54%, with an average DR001 up 34BP to 2.
2) The policy lag is coming to an end.
Sheng Songcheng published an article a few days ago saying 北京SPA会所 that this round of policy lag is nearing completion, and the economy strives to stabilize in the second quarter.
The main reasons are: China-US negotiations have achieved phased results, and trade tensions have tended to ease; the financial industry ‘s comprehensive and strong supervision has made breakthroughs, and the existing easing has been eased; the reform dividends for the optimization and upgrading of the economic structure have been gradually released.
The reform dividends in key areas such as state-owned and state-owned enterprises, finance and taxation, land, market access, and social management will stimulate market vitality, increase endogenous momentum, increase the potential for domestic demand, and promote the continued development of the economy. The development of private enterprises has received policy support.
The economy is stabilizing the gradual growth of the uplink, and loose monetary policy will temporarily warn of this phase.
The rebound of monetary and social data in March indicates that the future economic achievements will stabilize and the probability of lowering the probability will decline again.
3) MLF terminates as a disturbance.
In mid-April, 367.5 billion MLFs expired. There is uncertainty about the replacement of quasi-reductions or sequels. Basically, centralized tax payment and accelerated issuance of local debts will disturb the fund.
We expect that the volatility of capital will increase next week, and the transition or restart of reverse repurchase will ease the volatility.
2. Interest rate debt: The bond market adjustment is not complete. 1) The bond market continues to decrease.
Last week the one-year Treasury note closed at 2.
52%, up 4BP from the previous week; 10-year government bonds closed at 3.
33%, up 7BP from the previous week.
The one-year CDB bond closed at 2.
66%, up 6BP from the previous week; 10-year CDB bonds closed at 3.
81%, up 5BP from last week.
2) Supply is reduced and demand is weak.
Last week, book-entry government bonds were issued 102 billion US dollars, due 46 billion US dollars; policy financial debt was 89 billion US dollars, due 90 billion US dollars; local government bonds were issued 55.1 billion US dollars, 39.4 billion US dollars due.
Last week, the net supply of interest rate debt was 264.1 billion, an increase of 180.8 billion from the previous month. Credit debt wassuance was 187.6 billion, maturity was 124.6 billion, and net supply was 63 billion.
3) Production rebounded and demand improved.
Industrial production rebounded steadily. In March, coal consumption for power generation increased, and crude steel output growth rates both rebounded. The operating rates of major industries generally increased. However, since April, the growth rate of coal consumption for power generation has declined, and the operating rates have also turned up and down.Demand may have begun to build a bottom. Since April, although the growth rate of real estate sales is still differentiated, it continues the upward trend, and the zero growth rate of passenger car approvals has also changed from a mixed trend to a synchronous upward trend.
4) Adjustments are still in progress.
The growth rate of the company’s financial stock rebounded to 10 in March.
At 7%, M2 previously recovered to 8.
6%, the stability of the currency society indicates that the economy is expected to stabilize and improve in the future, reducing the probability of continued monetary policy easing; fiscal efforts to support the economy, and therefore, personal resistance has been introduced, small and micro enterprises inclusive tax reduction, reducing manufacturingTax reduction policies such as growth rate, social security contribution rate, etc., total tax reduction1.
7 trillion, the speed of policy sanctions is unprecedented.
In addition, the issuance of local bonds in the first quarter has advanced, infrastructure investment has picked up, and the economy has bottomed out. Active finance has reduced the burden of steady growth in monetary policy. CPI and PPI have risen more than three months. Pork and vegetable prices have remained high for four months.Prices, steel prices are rising, it is expected to continue to rise in April, the currency will be difficult to relax, interest rate declines are blocked; the current one-year Treasury bond yields and China Treasury bond yields have fallen to 0, and the United States has sometimes suspendedRaising interest rates, but the time to leave interest rates is too early, which means that there is limited room for further decline in the domestic short-term.
From a long-term perspective, the spread between China and the United States is currently around 70 BP, while the spread center has been around 110 BP over the past decade, which means that it is impossible and not too large for the spread to continue to expand and shrink.
Taken together, the short-term negative factors in the future will worsen, and the adjustment of the bond market is still in progress.
Third, credit bonds: urban investment risks tend to decline 1) Credit bond yields have increased.
The yield on credit and debt followed the rise of interest rate debt last week, and the credit spread widened slightly.
The average yield of AAA corporate bonds increased by 4BP, the average yield of AA corporate bonds increased by 4BP, and the average yield of urban investment bonds increased by 4BP.
2) Risk appetite picks up.
Since March, the net financing amount of low-level entities in the primary market has decreased, but the situation of private enterprise issuance has improved, the number of replacements or cancellations has decreased, the transaction activity in the secondary market has increased, and the spread of high- and low-level credit bonds has fallen.Overall, the market credit risk has improved, mainly due to the continued development of the broad credit policy and improved macroeconomic expectations.
3) Urban investment risks tend to decrease.
Recently, Zunyi and the China Development Bank Guizhou Branch reached a consensus on piloting Zunyi for the China Development Bank to participate in local debt resolution.
CDB’s participation in debt resolution is conducive to increasing the value of market risk and reducing the risk of existing urban investment debt.
The current round of debt will be composed of provinces. CDB pilots or prefecture-level cities. It is recommended to focus on provinces with higher debt ratios and their subordinate prefecture-level cities, such as Guizhou, Hubei, Hunan, Jiangxi and other provinces.Zunyi, Yichang, Xiangyang, Zhuzhou, Yueyang, Ganzhou, Shangrao and other cities.