Original title: The medium-term bullish idea of futures bonds remains unchanged
Since the beginning of November, as the prices of bulk commodities represented by the black series have dropped significantly, domestic inflation expectations have cooled, and the market’s expectations for further easing of monetary policy have revived. Superimposed on the continuous release of dovish signals by the US and British central banks, the global bond market Yields generally declined, and futures bonds rebounded from low levels, hitting a new high in the past two months. In the later stage, under the continuous influence of the dual control of energy consumption and the spread of the new crown pneumonia epidemic, the economic pressure remains unabated. Inflation expectations have eased, policy easing expectations have resumed, and the bond market may strengthen again under the logic of “weak fundamentals + loose expectations + insufficient credit demand”. Pay attention to the October economic data and the MLF sequel on the 15th.
Imports strengthened slightly
Exports continue to be resilient, while domestic demand remains weak. The latest trade data show that in October, China’s exports increased by 27.1% year-on-year, 24.2% expected, and the previous value was 28.1%; imports increased by 20.6% year-on-year, expected 27.0%, and the previous value was 17.6%; the trade surplus expanded from the previous value of US$66.76 billion to 84.54 billion. Dollar. With the recovery of overseas demand and the support of rising prices, the growth rate of exports in October remained resilient. First, since June 2021, the contribution of price factors to exports has gradually emerged. The contribution of price factors to export growth in October was 82.66%. Although it has fallen from 90.71% in September, it is still at a relatively high level. The export volume and price index also reflects the downward trend of the quantity index and the upward trend of the price index. Second, since 2021, production in the United States and Europe has continued to recover, driving the maintenance of the export resilience of my country’s production (electromechanical, high-tech) products and becoming an important support for exports. Third, since the outbreak, the United States and Europe have continued to demand China’s electromechanical and high-tech products in the process of production recovery, reflecting that China has become an important part of the global supply chain and trade chain, which is also the “basic plate” of China’s exports. .
Imports strengthened slightly, mainly due to the expansion of energy imports. In October, the year-on-year growth rate of my country’s imports rose slightly. Judging from the year-on-year contribution of bulk commodity imports, the volume contribution continues to be negative and has been in the negative range for six consecutive months; the price contribution continued to fall from September, but the rate of decline was slightly reduced. From the perspective of sub-commodities, the most obvious change in October was the import of energy products. The increase in the volume and price of coal imports indicates that the country is restricting the supply of hedging by expanding imports; the decline in crude oil imports and the rise in prices may be mainly affected by the increase in crude oil prices. In addition, in addition to the expansion of coal imports, the year-on-year decline in imports of copper, steel, and crude oil has eased compared with September, indicating that the pressure on bulk commodity imports has not continued to deteriorate.
Overseas central banks “dove loudly”
The Fed’s November interest rate meeting decided to start reducing the scale of monthly net purchases of assets, reducing the size of monthly purchases of US Treasury bonds and agency mortgage-backed securities by US$10 billion and US$5 billion, respectively. Starting later this month, the committee will increase its holdings of at least $70 billion in U.S. Treasury bonds and at least $35 billion in institutional mortgage-backed securities each month. It is worth noting that after the implementation of Taper in 2014, the Fed adjusted the size of bond purchases for the next month at each FOMC meeting, but at this meeting, the Fed believed that it is appropriate to maintain the same pace of reduction every month. Based on a monthly reduction of 15 billion U.S. dollars, the Fed will end its bond purchases in June 2022. However, if the scale of debt purchases is reduced at each Fed meeting, and debt purchases are to be terminated in June 2022, it will be necessary to reduce the amount of 20 billion U.S. dollars at each meeting, and a total of 480 billion U.S. dollars of treasury bonds and MBS will be purchased before the complete end of debt purchases. According to the monthly reduction of 15 billion U.S. dollars announced at this meeting, although the end time is the same, it is necessary to purchase a total of 540 billion U.S. dollars of national debt and MBS. Therefore, the Taper plan announced at this meeting of the Fed is even more dovish.
Unexpectedly, the Bank of England kept the 0.10% interest rate unchanged on Thursday, and the overall statement was also biased, and investors’ expectations for interest rate hikes fell through. The Bank of England maintains the prospect of tightening monetary policy soon, saying that if the economic performance is in line with expectations, it may have to raise its benchmark interest rate from a historical low of 0.1% in the “next months”. However, seven of the nine decision makers voted not to raise interest rates temporarily in order to see the number of unemployed after the government recently ended the employment insurance subsidy program. The Governor of the Bank of England Bailey said that between now and the next interest rate meeting on December 16, two labor market data will be released, which may eliminate this uncertainty, but he added that this does not imply that action will be taken. . After the meeting, the market’s expectation of the Bank of England to raise interest rates declined significantly.
Rare increase in reverse repurchase at the beginning of the month
For a long time, the amount of market liquidity at the beginning of the month was relatively abundant, and it was rare for the central bank to increase the amount of reverse repurchase operations. However, from November 3 to 8, the central bank launched 50 billion yuan, 50 billion yuan, and 100 billion yuan respectively. , 100 billion yuan 7-day reverse repurchase. The central bank has increased its reverse repurchase efforts and consistent words and deeds to maintain reasonable and sufficient liquidity, which will help stabilize market expectations and keep money market interest rates running smoothly around the central bank’s operating interest rates. Entering November, DR007 did not fall sharply at the beginning of the month as in other months, reflecting the overall tightness of funds at that time. To this end, the Central Bank implemented a 50 billion yuan reverse repurchase on November 3, which changed the previous month’s practice of implementing reverse repurchase of 10 billion yuan per trading day at this point in time, reflecting the central bank’s fine-tuning through open market operations. Maintain reasonable and adequate market liquidity and avoid higher-than-expected rises in market interest rates. The current shortage of funds in the inter-bank market may be related to the imminent peak of the issuance of new local government special bonds this month and the acceleration of credit allocation. In the middle and late of this month, 1 trillion MLF will mature, local bond issuance is in the sprint stage, and bond payments will also bring certain pressure on liquidity. Many factors have superimposed and liquidity has been under pressure this month, and how the monetary policy “decisive” has attracted much attention from the market.(Author’s unit: Xinhu Futures)
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