Analysis: FED rapid interest rate cuts make global easing to reproduce

Source: Reuters

Author: Li Hongwei

The new coronary pneumonia's epidemic spread worldwide, and the central bank's teamedling of interest rate cuts began to emerge again. On Tuesday, the Federal Reserve was unexpectedly descended to 50 base points (BP).For the People's Bank of China, which has continuously released the intention of Ruddy and Loosteen after the Spring Festival, although it has not responded immediately in the open market on Wednesday, this month, the possibility of policy interest rates such as the interest rate (MLF) interest rate and loan market quotation (LPR) and other policy interest rates (LPR) this month.The increase in sex is greatly increased, and even the benchmark interest rate of deposit is not excluded.

Insiders also believe that under the continuous loose liquidity, the increase in the relaxation of Chinese monetary policy will benefit the bond market in the short term, and the 10 -year Treasury yield is expected to impact with 2.6%or even lower levels;After the channel stimulus, the Chinese economic recovery situation is to determine the duration of the bond market.

The FED interest rate cut should be the product coordinated by the G7 Group's policy.Although China is not in the G7 Group, as a global second largest economy, it lacks participation. The coordination effect of global macro policies will undoubtedly be greatly reduced.In terms of internal and external balance, China has a reason to follow up interest rate cuts.Li Miao, a macro person in charge of the asset -liability management department of Jiangnan Rural Commercial Bank, said.

He explained that China follow-up may be reflected in the public market's reverse repurchase interest rate, MLF interest rate and other levels (5-10bp). At the same time, considering the current cost of commercial bank deposits, especially medium- and long-term deposits, the cost is still high.Take measures to reduce the cost of deposit, such as appropriately reducing the benchmark interest rate of deposits, especially medium- and long -term deposit interest rates, and phased temporary temporary relaxation of the regulatory requirements of the upper limit of interbank liabilities.

The Federal Reserve (Federal Reserve/FED) emergency interest rate cuts 50 basis points on Tuesday to protect the impact of the world's largest economy in the world, but the Fed Chairman Powell hinted that the threat of the US economy will not weaken quickly.

The new crown pneumonia's epidemic is fermented during the Spring Festival holiday. On the first day of opening the market (February 3), the People's Bank of China conducted more than one trillion yuan of inverse repurchase operations at the open market.The one -year MLF interest rate also reduced 10 BPs to 3.15%; of the LPR interest rate in February 20th, the one -year variety was reduced by 10 BP, and only 5bp was reduced in five years.It means that China's policy interest rate is adjusted across the board in February.

Investment Bank Nomura issued a report expected that after FED emergency interest rate reduction at 50 base points on Tuesday, it will reduce the basis of 25 base points each this month and next month.It may expand.

Zhang Yu, the chief macro analyst of Huading Securities, added that compared with other central banks, China's domestic monetary policy itself has an incremental action.

Specifically, the decline in interest rates and decline in the benchmark deposit interest rates is required for the long logic that meets the medium economic restoration. It is expected to land in March.MLF's new interest rate cuts and rejuvenation interest rates are more to deal with fast -acting savior pills that respond to short -term emotional fluctuations. For example, domestic rights and interests are not large and the epidemic is not repeated. It may not be urgent to follow the United States.

After the Fed unexpected emergency rate cut, the People's Bank of China's open market continued to make static brakes on Wednesday and was absent for 12 consecutive days of reverse repurchase operations.According to traders, considering that the capital is very loose, the central bank may be reflected in subsequent operations.Overall, regardless of whether the central bank will reduce its standards, the market is expected to remain abundant, and the overall mentality is more optimistic.

In addition to the FED, the Australian Central Bank earlier at the Australian Central Bank at a record low earlier on Tuesday. It is expected to be the first of the economic impacts brought about by central banks around the world to fight against the economic impact of the new crown virus.The lowest level of 25 basis points was lowered to the lowest level of 2.50%to reduce the impact of the new crown virus epidemic on its economy.

** The bond market will benefit significantly in the short term, but you need to pay attention to economic recovery **

FED announced interest rate cuts, and industry insiders will have unprecedented expectations for the Chinese bond market as a result, and their views on the stock market are mainly based on watching.Specifically, the 10 -year -old national bond active coupon yield of the inter -bank bond market is expected to impact at the low point of more than 40 months, which will even form a breakthrough.

The latest report of CITIC Securities' Bond Research Team said that compared with the rapid fermentation of the new crown epidemic in overseas, the overall domestic crown epidemic has stabilized, and the global liquidity improvement brought by the Federal Reserve ’s interest rate cut is more conducive to domestic assets.Judging from the trend of large domestic assets, the impact on the domestic stock market still needs to be observed, and it is obviously that the domestic bond market is significantly beneficial.

The report believes that considering the sudden interest rate cut, referring to the experience of the global central bank in 2008, the central bank may also choose to follow up in time.In general, the interest rate in March will enter a new phase of the downward market. The target range of 10 years of national bond expiration rate is 2.4%-2.6%.

The impact of the new crown pneumonia's epidemic, China's macroeconomic advance indicators-February official manufacturing procurement manager index (PMI) drama dropped to 35.7, far lower than the medium value of the Reuters survey of 46 and January 50, and created the dataThere is a new low since records; Caixin's PMI in February also set the lowest record.

In the context of the CICC Harvest team that the epidemic has led to the relaxation of the global central bank, it is expected that the People's Bank of China will not be absent.If the impact of this global economy is close to subprime mortgage, monetary policy needs to increase the impact of buffer economy, including interest rate cuts and reduction, especially to reduce the cost of bank liabilities, in order to more effective bank entity financing costs decline.

CICC pointed out that if the global economy cannot be copied in 2009, it means that the level of loose monetary policy will remain for a long time. This is the key to whether the market dares to continue to buy bonds, especially long -term bonds.At present, the 10 -year national debt spread between China and the United States is very cost -effective. Overseas institutions will gradually increase the allocation of Chinese bonds. 10 years of national bonds are expected to reach a level of 2.5%or even lower.

Driven by the Federal Reserve's accident emergency rate cut, the yield of the main bonds of the Bank of China bond market fell by about 4-5 BPs on Wednesday, as expected to take further relaxation measures;Returning, the early trading rose by 0.06%.

However, a Shanghai brokerage analyst reminds that with the introduction and implementation of the impact of the epidemic situation in multi -channel, the recovery of the Chinese economy from the trough may be taken seriously on the adverse effects of the bond market.

With the accelerated progress of the work, interest rates also have a relatively high probability to bottom out.Local debt issued in many places from January to February (but because of the epidemic) cannot start construction, and will gradually improve after March, and the flow of funds will flow to the real economy.He said.

As for the exchange rate, Li Jinliu, a macro analyst of Haitong Securities, believes that the possibility of the epidemic impact on the global economic possibility has risen, and it is expected that it will once again trigger the trend of interest rate cuts.For China, the RMB exchange rate will be more stable.

Chinese Prime Minister Li Keqiang hosted a executive meeting of the State Council on Tuesday to pointed out that it should be more effective on the impact of the epidemic on economic operation.Maintain throughout the year in a reasonable range.