Market hotspots
(1) According to the information on the website of the National Bureau of Statistics on April 27, from January to March, the total profit of industrial enterprises above designated size was 1,505.53 billion yuan, a year-on-year increase of 4.3%.
Taking into account the Spring Festival factor, it is actually very good to be able to complete this data in the first quarter, showing signs of economic stabilization, and laying a certain foundation for the achievement of the annual GDP growth rate target.
(2) As the Fed's preferred inflation indicator, the core PCE price index in the United States rose by 2.8% year-on-year in March, although it was consistent with the previous value, it was higher than the expected value of 2.7%; The PCE price index rose by 2.7% year-on-year, which was higher than the market expectation of 2.6% and higher than the previous value of 2.5%.
Judging from the first-quarter GDP data released by the United States recently, its annualized growth rate was 1.6% quarter-on-quarter, which was not only lower than market expectations, but also significantly narrower than the fourth quarter of last year, and the annualized growth rate of personal consumption expenditure in the first quarter was 2.5%, which was also lower than market expectations and the previous value. In this regard, some institutions pointed out that the larger-than-expected slowdown in the U.S. economy in the first quarter was inseparable from the expansion of the trade deficit, and the inflation rebounded more than expected, delaying the market's expectations for the timing of the Fed's interest rate cut, and also increasing the market's concerns about the U.S. economy falling into stagflation.
(3) In the early morning of May 2, Beijing time, the Federal Reserve will announce its latest interest rate decision, and in view of the resilience of inflation, market institutions are more unanimously expected that the Fed will continue to keep the existing interest rate decision unchanged. Fed Chairman Jerome Powell has continued to take a hawkish stance on the topic of interest rate cuts, and it will be interesting to see what kind of signal Powell will send at the press conference after the Fed's interest rate meeting next week.
(4) The yen fell to a 34-year low against the dollar after the Bank of Japan said it would maintain its loose monetary policy, fueling speculation that the Japanese authorities may soon intervene to stem the yen's decline. On the day, the Japanese yen fell 1.8% against the dollar, hitting an intraday low of $158.33, and the decline intensified in late trading in New York. The yen began to fall earlier in the day, after the Bank of Japan said at its policy meeting that it would keep the key interest rate unchanged and the governor of the Bank of Japan made few remarks in support of the yen at his press conference.
In the context of the Sino-US game, the Fed has an incentive to pressure the Bank of Japan to continue to adopt easing policy if it wants to maintain high interest rates, and it is expected that the yen may continue to remain weak before the Fed actually cuts interest rates.
Funding side
The central bank announced that in order to maintain reasonable and sufficient liquidity in the banking system, a 7-day reverse repurchase operation of 2 billion yuan was carried out in the form of interest rate bidding on April 26, and the winning interest rate was 1.8%. Wind data shows that 2 billion yuan of reverse repurchase expired on the same day, so the maturity volume was fully hedged in a single day. Last week, the central bank carried out a reverse repurchase operation of 10 billion yuan, because 10 billion yuan of reverse repurchase expired, and the maturity amount was fully hedged throughout the week.
Last Friday, the capital side of the interbank market slightly converged, and the lending of banking institutions decreased, especially the supply of cross-month varieties declined, and the weighted rate of major repo increased slightly.
The overnight repo rate of the bank
Source: Wind, Bond Investment Department of Great Wall Fund, time range: 2024.04.22-2024.04.27.
Bills market
In the bill market, the short-end funding rate continued to rise, and the capital side converged. Last Friday, the benchmark big bank entered the configuration, the morning quotation was stable compared with the previous day, the buying sentiment was moderate, the selling export was slowly released, the market trading activity declined compared with the previous day, and the ticket price fell steadily and shortly under the supply and demand game. In the afternoon, some major banks entered the market to increase fees, and the closing price picked up slightly, and the ticket price fell slightly. As of the close, the reference quotations of national stocks of various maturities were: 1.70%-1.72% in May, 1.53% in June, 1.53%-1.55% in July-August, 1.38%-1.39% in September, and 1.43%-1.44% in October.
The state-owned stock bank's half-year bills are directly discounted at the interest rate
Source: Wind, Bond Investment Department of Great Wall Fund, time range: 2024.01.01-2024.04.27.
Looking ahead, the supply of bills will be steadily replenished, the bank discount maturity will be basically replenished, and the superimposed supervision may have the guidance of reducing the use of bills to offset loans, the demand for buying and collecting bills will slow down, the market trading activity is not high, and the bill interest rate is expected to form a range-bound shock.
Bond market
Certificates of deposit: The latest trading volume of one-year interbank certificates of deposit of state-owned and major joint-stock banks was around 2.12%, up about 6-7 bp from the end of the previous day.
AAA rated interbank CD interest rate
Source: Wind, Bond Investment Department of Great Wall Fund, time range: 2024.01.03-2024.04.27.
Interest rate bonds: On April 26, the bond market continued to pull back deeply, with the yield of 30-year treasury bonds returning to above 2.5% in the interbank market, and in terms of spot bonds, 2-7 year active bonds rose by 5-7bp, and 10-year and 30-year treasury bond active bonds rose by about 4bp. In terms of futures, the main contracts closed down across the board, with the 30-year down 0.46% and the 10-year down 0.26%.
Judging from Friday's situation, the 10-year should actually be considered to be more down than the 30-year. This may reflect the fact that the bears have changed from the trading speculation that fell sharply the day before yesterday (the 30-year period is long) to the allocation order (the 10-year period is long). This change deserves attention, but due to a certain lag, it is not possible to look at only one day, but at least three days of volume and price changes to be confirmed.
1-year vs. 10-year Treasury rates
Source: Wind, Bond Investment Department of Great Wall Fund, time period: 2024.01.02-2024.04.27.
How long will the follow-up adjustment last, and how big it is, we need to pay attention to two aspects: one is the situation of the short-term capital side, whether R007 will be directly raised by 10-20BP on the existing basis, and it is necessary to observe where the certificate of deposit will stabilize; the other is whether the central bank will cooperate with the Ministry of Finance to exert pressure on the supply side, the special treasury bonds were not over-issued in April, and if the supply exceeds expectations in May, it will bring greater pressure. The positive for now may be that the redemption wave has not yet begun, so the power to sell is limited to active defense.
Convertible bond market
Last week, the CSI Convertible Bond Index closed up 0.53%, and the Wind Convertible Bond Equal Rights Index rose 0.88%.
Rumors of loosening of real estate policies, coupled with the large-scale buying of northbound funds, indicate that the market bulls are playing at a higher point. Against the backdrop of a relatively weak bond market, equity assets are gaining momentum and are expected to continue to gain momentum next week.
CSI Convertible Bond Index
Source: Wind, Bond Investment Department of Great Wall Fund, time range: 2024.01.03-2024.04.27.
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