US inflation hit a new high of 8.5%, China lowered the reserve requirement ratio without cutting interest rates, A shares how to move next
US latest inflation data once again hit a record high of 8.5% in nearly 40 years. This data means that Fed may speed up the rate of hike in in May, and the intensity of interest rate hike may also increase, which will stimulate the US dollar to shrink rapidly from the global globally, eventually leading to poor liquidity. At the same time, since US Treasury bonds are the anchor of the global financial market, interest rate hikes stimulate the rise of risk-free yield of US bonds , which will stimulate the start of outflow of equity markets such as stocks. Therefore, from this perspective, before the junior and middle stage of Fed hike rate hikes , the global market including US stock is not a good time to invest.
US prices have exploded
From the United States' own perspective, the United States is indeed able to raise interest rates. The prerequisite for the Federal Reserve's interest rate hike is that the economy achieves rapid development (the growth rate of GDP in 2021 was 5.7%, the highest since 1984), and the employment rate has increased significantly (the current unemployment rate has been controlled below 4%), so the United States has the ability to dare to raise interest rates under the current circumstances to reduce liquidity, because economic growth is affordable, but at this point, our economic situation may be exactly the opposite of the United States.
US economy is improving
First of all, although our economic growth rate in the past year was 8.1%, from the average growth rate in the two years, our GDP growth rate has just exceeded 5%. From the perspective of unemployment rate, the official unemployment rate has exceeded 5%. However, due to the incomplete statistics of our country's unemployment rate, coupled with the impact of the epidemic in some regions, many people have lost their jobs. This unemployment rate should actually be very high. So what we adopt is the loose monetary policy of , but our monetary policy of seems to be very restrained, and we did not choose to cut interest rates but just a tentative reduction in the reserve requirement ratio.
Reservoir reduction
So what is the difference between lowering the reserve requirement ratio and lowering interest rates for the real economy? Simply put, lowering the reserve requirement ratio is to reduce the deposit reserves placed by various commercial banks in central bank in order to deal with depositor withdrawals. Reducing this reserve means that various commercial banks have more funds to use for loans to support the development of the real economy. The reduction of the reserve requirement ratio is weaker than the interest rate cut, and it is not substantial monetary easing, so it is more of a phased monetary regulation effect.
interest rate cut
. Rate cut refers to the use of the way interest rates regulate money to guide the flow of money. Simply put, interest rates are down. Depositors will feel that it is inappropriate to obtain interest in banks and other financial institutions, so they are more inclined to take out the deposits in banks for consumption, investment, and purchase physical assets . This situation usually occurs when commodity trading and services in the market are extremely sluggish, mainly to stimulate the development of the economy again, but in most cases interest rate cuts will also cause inflation , rising prices, and falling exchange rate .
Commodity pricing
Secondly, after understanding the meaning of interest rate cuts and reserve requirement ratio cuts, we can understand to a certain extent why we chose to lower the reserve requirement ratio instead of directly choosing to lower the interest rate, because the reserve requirement ratio cut is a tentative test of whether the currency released by the currency can drive the economy. If it can drive the economy, there are no need to cut interest rates more vigorously, because although interest rate cuts are strong and have good results, they also have many disadvantages. In addition, almost all the pricing power of commodity raw materials is in the hands of the United States. If interest rate cuts lead to a decline in exchange rate, it will reduce the purchasing power of the RMB, which will increase the cost of buying commodities such as oil, , natural gas, , and is not conducive to the internationalization of the RMB.
money increment is weak
Finally, what impact will the high inflation in the United States and our tentative reserve requirement ratio cuts have on the prices of A-shares and other assets? I am still pessimistic personally. At least before the Fed's second and third interest rate hikes balance sheet reduction , there were no decent trend investment opportunities. The logic is very simple. The direct factor in the price rise and fall of equity assets such as stocks is the amount of funds. From this point of view, the amount of money reduced by the Fed's interest rate hike may be much greater than the amount of money brought about by the reserve requirement ratio cut. Therefore, as long as there is no interest rate cut, the overall currency volume in society is still tight. Since there is not enough funds in the market, there will be no trend trading opportunities. Therefore, all rebounds do not represent reversals. At present, the main focus is on controlling position and risks.
