1.A list of structural monetary policy tools
11 November 8th Central Bank officially launched carbon emission reduction support tool, focusing on three areas of carbon emission reduction, clean energy, energy conservation and environmental protection and carbon emission reduction technology. my country has added a new structural monetary policy tool that directly reaches entities. Since the total policy cannot meet the needs of economic transformation, my country's monetary policy has shown obvious structural characteristics in recent years to target specific areas of support.
my country's structural monetary policy has a long time of practical experience, mainly focusing on key areas and weak links such as "agriculture, rural areas and farmers", small and micro enterprises, and carbon neutrality . Since the central bank innovated liquidity management tools in 2013, it has established a variety of structural monetary policy tools so far, including targeted reserve requirement ratio cuts, medium-term lending facilities (MLF and TMLF), short-term liquidity adjustment tools (SLO), standing lending facilities (SLF), mortgage supplementary loans (PSL), targeted re-lending and rediscounting, as well as the inclusive small and micro enterprise loan extension support tool and the inclusive small and micro enterprise credit loan support plan launched last year. Among them, SLF, MLF and SLO are liquidity support provided to financial institutions that meet macro-prudential requirements; support for agriculture, small businesses and other targeted re-lending, rediscounting, and newly launched carbon emission reduction support tools for credit structure adjustment; targeted reserve requirement ratio cuts can simultaneously increase the total amount and optimize the structure.
Last year, in order to alleviate the impact of the epidemic, the central bank added a total of 1.8 trillion yuan in three batches to support loans to small and micro enterprises, lowered the interest rate for re-lending and small loans to support agriculture and small businesses, and launched two innovative monetary policy tools , which directly reach the real economy, to guide the focus of new financing to manufacturing, foreign trade and small and medium-sized enterprises. This year, two direct monetary policy tools will be extended to the end of the year, with 4 html small re-loan 5 quotas added in September, and a carbon emission reduction support tool will be launched this week, and monetary policy will accelerate toward key areas.
There is a problem of poor transmission mechanism during the implementation of the total monetary policy. Affected by factors such as heterogeneity of micro-subjects, imbalance of the financial system, insufficient marketization of interest rates, credit resources have been excessively flowed to real estate infrastructure and traditional manufacturing industries in the past, and financing difficulties of small and micro enterprises and emerging industries have made the credit structure mismatched with the economic contribution degree and the real policy intentions. Structural monetary policy provides precise support to specific financial institutions and specific entities by introducing an incentive compatibility mechanism, which can coordinate the imbalances arising from the implementation of traditional total monetary policy.
From the perspective of the implementation results of structural monetary policy, the growth rate of loan scale of small and micro enterprises has significantly exceeded the overall level since 2016, and the decline in loan interest rates far exceeds the weighted average interest rate and policy interest rate of loans, so as to effectively increase volume and increase prices. The growth rate of manufacturing loans has also increased significantly since last year. As of the end of September, the balance of inclusive small and micro loans and the balance of medium and long-term loans in manufacturing increased by 27.4% and 37.8% year-on-year respectively, with the growth rate of total loans being only 11.9%. Although significant results have been achieved in credit distribution, structural monetary policy does not have a clear ultimate policy goal and will not have a significant impact on economic operation in the short term.
The carbon emission reduction support tool launched this week adopts a direct delivery mechanism of "loan first and borrow later". The central bank provides 60% of the loan principal at an interest rate of 1.75%. Compared with the small-scale re-lending rate of 2.25% and the one-year certificate of deposit interest rate of 2.8%, the carbon emission reduction support tool saves bank capital costs more effectively; the loan interest rate is roughly the same as the LPR for the same period. The current one-year LPR interest rate is 3.85%. The average interest rate for newly issued small and micro enterprises in September is 4.89%. The weighted average interest rate for corporate loans in the first half of the year was 4.63%. In this way, it seems that the interest rate spread of to is not high. This tool is currently suitable for emerging industries that are "small but refined" and can bring significant carbon emission reduction effects. It is expected that the scale of new loans will be limited in the short term, and the impact on liquidity and fundamentals will be low. With the deepening of carbon neutrality, China's green and low-carbon investment scale will reach more than one trillion yuan in the next 30 years, and there is a broad room for development in the field of carbon emission reduction. In the long run, the carbon emission reduction support tool is expected to gradually expand.
Structural monetary policy focuses on high-quality economic development and can guide bond market interest rates to decline for a long time through local interest rate cuts.In the medium and short term, the bond market is still mainly affected by fundamental trends and market supply and demand. Some tools are loaned first and then borrowed, and precisely placed, making it difficult for liquidity to overflow into the interbank market. Relatively total monetary policy injects liquidity into the entire market, and structural policies provide less support to the bond market.
In the future, we believe that:
(1) The economy has undergone structural differentiation, and using total monetary tools cannot solve the problem more targetedly.
(2) Inflation pressure is also very high, and total monetary tools are more likely to push up inflation pressure.
Therefore, we believe that the probability of the use of total monetary policy in the future will become smaller and smaller, and there will be more and more structural policies. Although these tools are also relaxed, their positive effects on the bond market are very limited and they are more accurate in stimulating the economy. Therefore, from this perspective, the short-term impact of structural monetary instruments on bonds is neutral, and the long-term impact is negative.
2. Last Friday strategy review
Overseas inflation expectations have risen significantly: Jianghai bond market early trading strategy (2021-11-12)
Thursday S&P Nasdaq rebounded, Dow fell; European stocks rebounded; crude oil rebounded; US bond closed, except for British debt, European bond yields continued to rise. OPEC 's latest monthly report shows that global crude oil demand may drop due to soaring energy prices, OPEC cut its 2022 crude oil demand forecast for OPEC to 28.7 million barrels per day. This also means that OPEC will not increase its production. In addition, the increase in discussions on inflation in the United States means that the future Fed may passively accelerate the pace of currency contraction, and the impact on US bonds cannot be underestimated.
Domestic aspects, pay attention to the marginal changes in real estate policies and their impact on the financial market. Of course, there are many market news recently, and there are also differences between virtual and real. We just need to grasp the main line. In addition, today we will pay attention to the issuance of 30-year treasury bonds. The overall market focus is still inflation expectations and marginal relaxation of real estate, and the bond market is still facing pressure to adjust.
Marginal relaxation of real estate is not a one-time impact on debts--Jianghai Bond lunch strategy (2021-11-11)
Interest rate first rose and then fell on Thursday, real estate relaxed expectations, and the sharp rebound in US bond interest rates brought about by the sharp rise in overseas inflation are all the main reasons for the rebound in interest rates. However, the capital market is still loose, which limits the rebound space for interest rates.
The latest change in the market is the marginal relaxation of real estate. We believe that the trend and continuity of real estate policies are very strong, and once they are tightened, they may be trendy; once they are relaxed, even if they are marginal relaxation, they will not be short-term. At present, the bond market may still view the one-time impact of real estate relaxation, believing that this news has been released and the negative for bonds will end. We think that we can't see it this way. With the marginal relaxation of real estate, we will see chain reactions such as the rebound of real estate-related loans in the future, driving the rebound of social financing; rebound of inflationary pressure; improvement of macro data and other chain reactions. At the same time, it will gradually alleviate the market's pessimistic expectations about the economy.
Therefore, in the future, overseas inflation and the easing of pessimistic expectations of the domestic economy will become the main line affecting the bond market. Moreover, it is easier to change the pessimistic expectations of the economy. As long as a certain suppression area is relaxed, the effect will be immediately seen. After all, the government also knows the downward trend of the economy, as long as the downward slope is not too steep. But it is very difficult to suppress inflation because it is priced globally.
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