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Report Title: Over-Labeled "General Floodgates" – Interest Rate Debt Watch, November 21, 2021
Report release date: November 21, 2021
Analyst: Zhang Xu practicing certificate number: S0930516010001
Analyst: Wei Wei Xiao practice certificate number: S0930519070001
1. The "general gate" that is over-labeled
Each quarterly Monetary Policy Implementation Report (hereinafter referred to as the "Report") has attracted the attention of the market, and investors hope to gain insight into the orientation of monetary policy through repeated reading. Unwinding is beneficial and cares about care. When studying, we should devote ourselves to understanding the deep meaning of the full text of the report, and should not mechanically stick to the words in it. For example, we should not over-label words such as "manage the general gate of money" and think that the central bank mentions these words to tighten, and instead to "release water".
The idea of "labeling" is not scientific, but at best it complements our investment decisions. Whether the approach works depends on whether the central bank is actually sending information to the market through these labels or code words, but there is no answer to this question. In fact, for a long time in the past, investors have been suffering from the lack of a "grip" to judge the direction of monetary policy. Therefore, market players have "developed" some specious methods on their own, such as the above-mentioned "labeling" idea. As we all know, the accuracy of these methods is generally low, and some of them are even logically difficult to make sense.
Ask the canal to be as clear as promised, for there is a source of living water. We should keep up with the innovation of the monetary policy framework and continuously introduce advanced research methods. At present, the central bank has clarified the policy interest rate status of MLF and OMO interest rates, and has focused on guiding market benchmark interest rates such as DR007 to operate at the policy rate as the center. Well, we can focus on policy rates and DR007, and there is no need to go farther and farther to adopt those specious approaches. For example, the MLF rate did not fall on Monday (November 15), and DR007 has been fluctuating around the 7D OMO rate during this time, which clearly shows that the current direction of monetary policy has not changed.
For the orientation of monetary policy in the next stage, the "Report" also has a clear explanation. At the narrow level of liquidity, the report points out that "maintaining reasonable and sufficient liquidity and guiding market interest rates to fluctuate up and down around the policy interest rate center". This expression is basically consistent with the previous period, highlighting the "stability" of narrow liquidity.
At the broad level of liquidity, the report points out that "enhancing the stability of the growth of total credit, maintaining the growth rate of money supply and social financing scale and basically matching the nominal economic growth rate", which is a common reference in recent times, and all correspond to "stable credit" (rather than the so-called "big release"). Among them, "Enhancing the Stability of Total Credit Growth" was first seen at the symposium on the analysis of the monetary and credit situation of financial institutions on August 23; "Maintaining the growth rate of money supply and social financing scale basically matching the nominal economic growth rate" was written into this year's "Government Work Report" and "14th Five-Year Plan Outline", which is also the monetary policy intermediary goal highlighted by Director Sun Guofeng in the article "Improving the Framework of Modern Monetary Policy".
In addition, the judgment of monetary policy in a longer-term perspective should be based on macroeconomic fundamentals, and should not be overly dependent on words such as the "general floodgates". Although it seems that there is new downward pressure on China's economy, it faces many challenges to continue to maintain smooth operation on a high base. However, China is a super-large economy with strong resilience, and the fundamentals of the long-term economic improvement have not changed. Therefore, the current pessimistic expectations of the economy in the market are more likely to be corrected for some time to come. One of the questions worth pondering at this point is that if a 2.90%-2.95% 10Y Treasury yield is appropriate under the current consensus pessimistic expectations, what if the expectations are corrected?
2. Risk warning
Irrational expectations trigger rapid market volatility.
►Interest Rate Bonds (Zhang Xu/Li Shuchuan)
Take the LCD theory as the starting point to observe monetary policy
There is no need to worry about rising interest rates
Focus on the actual lending rate, not the LPR
The big problem of "stable credit" is solved
The central bank's speech sent a signal that monetary policy should adhere to the word steady
Is the central bank hinting at a RRR cut?
Real lending rates are falling
The volume of MLF operations is higher than the market expectations, and the reasonable and abundant liquidity will not change
Where did the liquidity released by the RRR cut go?
The direction of prudent monetary policy has not changed
Three consecutive questions: Why the reduction? Why the comprehensive RRR cut? Why is it a neutral RRR reduction?
Exchange rate fluctuations in both directions, do not bet on one-way appreciation or depreciation
China's fiscal policy regulation and control: stage division, evolution law and follow-up prospects
It is not appropriate to equate the size of MLF operations with the orientation of monetary policy
The initial financial constraints were gradually forgotten
It is recommended to analyze financial data with a two-year average growth rate
China's central bank is far ahead – written at a time when US Treasury yields are soaring
Revisiting the "Immunity" of Yield to Bearish Factors
What should we focus on? ——Interest Rate Bond 2021 Spring Investment Strategy
We are more concerned about deposit rates than LPR
It is not advisable to pay too much attention to the number of OMOs
Financial data "high increment, growth rate reduction" is inevitable; it is better to pay attention to OMO and DR007 interest rates.
The increase in the DR007 opening price is not intended to steer the price of funds upwards
January's credit data is vulnerable to disruption
Technical cash strasching
Why can't the 14-day reverse repurchase wait?
Should the Deposit Rate Guide be removed?
► Credit Debt (Wei Xiao Wei /Dong Nai Rui)
Look at the rating of inflated and the cliff effect
Hebei province to open up the future - 65 bond issuers in Hebei Province have been sorted out
Yiwen walked into the beautiful Xinjiang
Look at Zunyi's debt from a developmental perspective
Sink to the main body of credit analysis of Shaanxi Coal Industry Chemical Group
Sink to the main body of credit analysis of the Shanxi Coking Coal Group
Sink to the main body's credit score analysis of the same coal group
Recent status of perpetual bonds by banks
Key points of credit analysis of railway investment entities
Coal Industry Credit Research Framework
Should urban investment bond financing in "red" areas be strictly prohibited?
Disorderly defaults increase the cost and difficulty of financing the bond market as a whole
► Convertible Bonds (Fang Yuhan / Mao Zhenqiang)
The increase in the transfer of bonds is ahead of the main stock, is there any ability to predict the subsequent increase of the main stock? -- Analysis of the forecasting ability of the convertible bonds on the main stocks
How positive stock dividends affect the transfer of bonds - pay attention to the allocation opportunities of high parity and high dividend bonds
Trading rules, terms and special varieties for the issuance of U.S. convertible bonds
The charm of the transfer clause
The downward revision of the debt is a facetious view
Why does the valuation level of the bond transfer change?
There are three factors that affect the valuation of the convertible bonds: conversion value, volatility of the underlying stock and credit rating
The cause of the debt break is solved
The "Evolutionary History" of Convertible Bond Issuance
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