The RRR cut is coming
According to the current situation, the RRR cut is coming.
The RRR cut is coming, but it is impossible to say whether it is good news or bad news.
It's like a person who is sick and wants to go to the hospital, it's not good to be sick, but going to the hospital is.
1
July's social finance data announced:
New social finance in July was 528.2 billion yuan, lower than the consensus expectation of 1.1 trillion yuan and lower than the 778.5 billion yuan in the same period last year.
In July, new RMB loans amounted to RMB345.9 billion, a year-on-year increase of RMB349.8 billion;
The M2 balance was 285.4 trillion yuan, +10.7% year-on-year, and the growth rate also declined, much lower than the 11.3% in June;
The balance of M1 was 67.72 trillion yuan, +2.3% year-on-year, and the growth rate fell from 3.1% in June to 2.3%, lower than the consensus expectation of 3%;
New RMB loans amounted to RMB345.9 billion, a year-on-year increase of RMB349.8 billion, significantly less than the expected value of RMB848 billion, compared with RMB3,050 billion in June, and a new monthly low since November 2009.
In addition, the deposit has become less:
RMB deposits decreased by 1.12 trillion, an increase of 1.17 trillion yuan year-on-year, of which household deposits decreased by 809.3 billion.
A few key points revealed by this data are:
1. Whether residents or enterprises, the willingness to indebtedness is still very weak, which is vividly displayed.
Why not go into debt? The root cause, of course, is that residents lack confidence in their future income, while companies have reservations about their earnings expectations. At the end of the day, "I don't think there's any good investment opportunity to borrow money now," so of course I don't want to go into debt.
If everyone is not in debt, it will be difficult for the whole society to expand credit.
2. Deposits and loans, both decreased, which is a big change from a few months ago.
Since last year, there has been a phenomenon: deposits have increased at a high rate, while the growth rate of loans has declined, reflecting a decline in the willingness to indebtedness and an increased sense of crisis.
But now deposits have fallen by more than 1 trillion, which is still relatively rare in history. What are the reasons for the decrease in deposits?
One of the main reasons may be that people are spontaneously shrinking their balance sheets and paying off loans with deposits, so we see both deposits and loans sluggish. The reduction of loans, according to the principle of loan distribution, will lead to a decrease in income, so if the next spiral cannot be interrupted, there will be an intensifying situation.
The second reason may be that some of the deposits have been absorbed under the government deposit program and flowed through various indirect means. Fiscal deposits increased by 907.8 billion, an increase of 421.5 billion yuan year-on-year, and the year-on-year growth rate rebounded from -10.4% in June to -2.6%.
3. The growth rate of M2 is declining, and M1 has fallen even more, which directly leads to a significant expansion of the M2-M1 scissor difference.
What is the difference between M2 and M1?
Simply understood, M2 is a currency that includes paper cash, demand deposits and time deposits, while M1 is M2 after removing time deposits. The main difference between the two is whether or not a fixed deposit is included.
Therefore, the widening of these two scissors often indicates that the time deposit increases more, and the demand deposit is relatively small, which usually means that enterprises and residents tend to make conservative investment decisions, that is, a lot of money is temporarily not used, will not invest, expand production capacity, then save a regular interest rate.
That is to say, it is often said that the degree of capital activation is insufficient, the willingness to invest is low, and the market vitality is poor.
2
Here is a brief science popularization of the relationship between social finance and M2.
The total amount of social financing is the total amount of financing obtained by the entire real economy of the country (including enterprises and residents, but excluding financial institutions and governments).
It is related to M2, but different.
Originally, every loan from a bank will derive M2, and a loan from a bank corresponds to a financing of the enterprise, so it will form M2 and social finance at the same time.
This is the tail and back of a coin, and these two indicators are basically equivalent to both sides of the bank's balance sheet:
Social finance is a loan from enterprises and individuals, recorded as an asset of the bank;
M2 is the deposit of businesses and individuals, recorded as a liability of the bank.
So in this ideal situation, social finance, credit and M2 must be completely equal.
But in reality, they are very different. The difference comes from:
Bank loans are not the only channel for corporate financing.
For example, if an enterprise obtains a trust loan of 10 million yuan (invested by non-bank financial institutions in real enterprises), this 10 million yuan will be counted into social finance, but this statistic does not matter what the initial source of these trust funds is, whether it is a trust purchased by the bank's on-balance sheet funds, or a trust purchased by the bank's off-balance sheet funds, or a trust purchased directly by residents.
In this way, direct financing increases, and social financing increases, but it does not affect credit and M2 at all, because direct financing does not derive M2 - it is just a transfer of stock M2, one person's money to another.
On the other hand, some currencies are counted in M2 but not in the social finance. For example, foreign exchange accounts will directly form M2 but will not be counted into social finance, because it is not the financing obtained by enterprises.
This is why social finance data and M2 data are not completely consistent.
3
"I don't think there are any good investment opportunities to borrow money now", and that's because the cost of borrowing money is higher than the expected return on investment.
Because in the current state of the economy, everyone's expected return on the future has decreased.
Although the expected rate of return has become lower, as long as the cost of borrowing money (interest rate) is lower, it will still stimulate the demand for debt.
So next, RRR cuts will be an option on the table.
After the release of social finance data, government bond interest rates fell across the board, which is a reflection of this expectation of interest rate cuts.
This interest rate cut is not only a requirement of the market itself, but also an option with a high probability of policy - when the profits of real enterprises generally decline, the interest rate of the currency must also fall synchronously to be a regulating action in line with the laws of the market. Otherwise, there will be unintended consequences.
Now all aspects of society are demanding interest rate cuts and lower financing costs:
Local bonds need to be replaced with low interest rates to reduce repayment pressure.
The significant decrease in private economic loans is due to the higher cost interest rate of loans than the expected return on investment.
There are also instructions to reduce the interest rate of existing housing loans, which will directly compress the net interest margin of commercial banks, so who will make up for this loss, whether the commercial banks themselves can bear or are willing to bear, in fact, all need to give interest rate subsidies at a higher level.
The July CPI fell to negative territory as expected, which lifted real interest rates. The real interest rate is equal to the nominal interest rate minus inflation, usually we see the LPR and your mortgage interest rate are nominal interest rates, if the price index enters the negative range, your real interest rate will immediately go up to a level.
The real interest rate is the real factor for the private sector to consider the cost of funds and investment income.
Therefore, under the existing conditions, RRR cuts have come close to becoming a must.
4
What's more, the financial system will face liquidity pressure in the coming period:
On the one hand, the amount of MLF maturities jumped to 400 billion yuan in August, and the maturities continued to increase in the second half of the year.
MLF can be understood as the money that the bank borrows from the central bank, and when the money is due, the bank's cash flow will become tight;
On the other hand, the meeting proposed to accelerate the issuance and use of local special bonds, and the special bonds may be issued centrally in August and September in the second half of the year, which will directly form a pumping machine effect and drain the liquidity in the market.
This may deal a fatal blow to the long-rumored private financial management problem.
Finally, I will send you a toolbox of central bank management of foreign exchange that I have compiled myself, and specifically introduce what the mysterious countercyclical regulator is.
In addition, financial risk has reached an inflection point, more detailed explanation, we arranged a live broadcast on Monday, to tell you the current situation and the real general trend, the main content is as follows:
1. Financial risk has reached an inflection point
2. The bottom of social finance has been broken down, and the RRR cut is coming
3. Disassemble the mystery: disappearing foreign exchange
4. Disassemble the deep law of the middle-income trap
5. There is no turning back arrow from decoupling, and the impact is getting deeper and deeper