Source: China Fund News
Author: Zhao Xinyi, Ye Shijie
The U.S. debt limit crisis temporarily "come to an end" -Eye -Eastern Time, on May 31st in the United States, the US House of Representatives passed a bill on the upper limit of federal government debt and budget.It is restricted to the end of 2024, but it can avoid debt defaults.According to data from the US Congress Budget Office, the scale of US federal debt is currently about US $ 3.146 trillion (S $ 42.48 trillion), accounting for more than 120%of its domestic GDP, which is equivalent to US $ 94,000 per American liabilities.
In fact, since World War II, the United States has adjusted its debt limit 103 times. Although there have been no substantial debt defaults, the debt limit crisis can still act on global finance from market expectations, liquidity, risk preferences, loan costs and other mechanisms.,Physical assets.
A number of industry insiders told the China Fund News reporter that in the current high -limits of US debt, it is difficult to ignore the risk of the upper limit of US debt in the mid -to -long period.Will return to the Fed's monetary policy.
Crisis suspension of emerging market stock performance is more tough
Except for this time, the US government debt has touched the statutory limit 22 times since 1976. After each debt limit is touched, it has been raised or paused, but the length of the experience is different.
Bloomberg data shows that before and after the debt limit was resolved in 2011, the S & P 500 index fell 16.7%from the high point, while the MSCI emerging market index fell 16.3%; before and after the debt limit resolution in 2013, the S & P 500 index increased the maximum downward regulationIt is 4.1%, and the MSCI emerging market index is 3.4%.In the process of debt crisis negotiations, the Asian market responded, the Nikkei 225 index hit a new high since 1990, and the Hong Kong Hang Seng Index fell to a new low during the year.
The Office of UBS Wealth Management Investment (CIO) told reporters that although the possibility of completely breach of contract in the United States is very low, but because of market concerns, it is sold in many countries and industries.Compared with the United States and developed markets, it is more tough. Thanks to better profit growth prospects and attractive relative valuations, it is especially optimistic about China, Thailand and South Korea.
In terms of the Chinese market, UBS CIO believes that profitability is the key catalyst.The growth of profit in China's first quarter this year has improved compared with the fourth quarter of last year, which will help boost confidence in Chinese assets.Compared with other parts of Asia (except Japan), the valuation of the Chinese stock market seems to be underestimated.
Zhao Yaoting, a global market strategist in Jingshun Asia Pacific (except Japan), also told reporters that the successfulness of the debt agreement has eliminated an unknown factor facing the United States and the world, and then briefly boosted market emotions.Wu Zhaoyin, the director of Macro Strategy of AVIC Trust, told reporters that because investors have consensus on the two parties, they have not reached an excessive response to the upper limit of US debt in the United States and the global capital market recently, and their overall performance is stable.
It is difficult to ignore the risk of the upper limit of US debt at the upper and long -term view of US debt
At present, the narrative response to the mainstream assets on the US debt crisis is relatively bland, but Xiao Lingjun, general manager and investment director of Nomura Dongfang International Securities Asset Management Department told reporters that from the perspective of medium and long -term asset allocation, such as beauty, such as beautySimilar tail risk events such as debt limit are difficult to ignore.
"The downlink risk of hedging investment portfolio mainly considers two points: first, diversified and low correlation asset allocation, and the other is an alternative strategy for paying insurance premiums to provide downlink protection for the portfolio.Insurance assets such as US dollars, US debt, and gold show significant excess returns in general risk assets. Therefore, a certain proportion of hedidive assets in the combination allocation can help hedge investment portfolio fluctuations. "Xiao Lingjun further elaborated.
Yangtze Securities also mentioned in the quarterly outlook of gold and US debt that gold as a typical insurance assets, international gold prices will be supported, short -term or continue to rise, because the US bond interest rate will still fluctuate at a high level in the short term, and inflation is uncertain.Sexuality is still high, and the global overall risk factors are increasing.
Xiao Lingjun also mentioned that, on the other hand, under the environment of extreme crisis, large categories of assets will present the characteristics of the same ups and downs.Insurance assets fell with risk assets, so the downward risk of a combination of option protection is another way.US debt defaults are not our benchmark hypothetical. If such tail risks occur, derivatives strategies for multi -volatility and short -term risk assets will benefit significantly.
UBS chief American economist Jonathan Pingle believes that the best non -symmetrical hedging strategy of the global credit market is short -term U.S. high rating banks (rating downgrade, opponent, leveraged concerns), American life insurance companies (CRE open,High leverage, tight valuation) and US REIT (when there is a more serious recession, CRE is more sensitive).
FXTM special analyst Huang Jun told reporters that the increase in the upper limit of the US debt will promote the suspension of the Fed's tightening monetary policy, which is also a great benefit to US stocks.He also believes that the US government's fiscal expenditure is guaranteed and can continue to raise debt within two years.In the critical period of US debt negotiations in the past two weeks, the three major US stock indexes have risen, and the market newspaper of "voting with feet" is optimistic.It can be seen that as the dust of the U.S. debt is settled, U.S. stocks are still expected to perform further.
Market focus back to US fiscal policy and monetary policy again
The US Senate has voted to pass the debt limit bill, and the focus of market attention returns to the future fiscal and monetary policy of the United States again.Xiao Lingjun believes that if there is no black swan incident, the Fed is expected to implement the principle of data dependencies. The Fed may continue to pay attention to employment data and industrial and commercial operations, waiting for the market to cool down to the shallow depression before starting interest rate cuts.possible.
Xiao Lingjun also said: "From the perspective of economic data, the US economic toughness is better than expected. If the core PCE indicator of the year continues to rebound, it will not be ruled out that the Fed will continue to raise interest rates, butThe trend of basically the top will not change, so it is expected that the impact of interest rate hikes will slow down on the market. "
Zhao Yaoting believes that after the debt limit agreement is approved, the US Department of Finance is expected to issue more than $ 600 billion in Treasury bonds in the next seven months.As the market liquidity is tightened, this may have a significant suction effect.Bond yields may rise with capital outflow.
FXTM special analyst Huang Jun said that the next focus of the US Treasury's work is to find buyers for US debt. There are three important highlights, namely first, the Fed is still in the contraction cycle.Next, whether to adjust the monetary policy to stop retracting and selling US debt; second, whether the trade surplus country represented by China purchases U.S. debt; third, domestic ordinary families in the United States may be the power to purchase US debt -exotic forces.
Huang Junjin analyzed that the Fed is still in the dating cycle. Whether to adjust the monetary policy to stop the scaing of US debt.If the Fed sells U.S. debt, the US Department of Finance issues US bonds (sold to the market), which will undoubtedly cause great pressure on the US bond market.He concluded that the re -issuance of U.S. debt may promote the Federal Reserve to stop raising interest rates and shrinkage.In the May Federal Reserve FOMC statement, it deleted the wording that had previously hinted that it would still raise interest rates in the future. It is necessary to pay attention to whether the interest rate decision in June can further confirm the attitude of stopping tightening.
