Introduction
"IMI Macroeconomic Monthly Analysis Report" continues to pay attention to domestic and foreign economic and financial trends and provides exclusive in-depth views. This report pointed out that the overall inflation pressure abroad remains unabated, and the hawkish attitude of the United States and Europe may be asynchronous; the growth rate of the domestic economy has declined completely due to the impact of the epidemic.
International macro aspects , U.S. employment has exceeded expectations again, inflation is still resilient, Federal Reserve Chairman Powell strengthened his determination to control inflation at the Jackson Hall Global Central Bank Annual Meeting on August 26, showing a hawkish attitude; the economic outlook in the euro zone was poor, inflation soared again, central bank turned to hawks; Japan's economic outlook is still unclear, inflation hit a new high, and the central bank insisted on easing.
Domestic macro aspects , although the epidemic is generally controlled, the impact is still continuing, and the performance of many economic indicators is lower than market expectations. Economic data is close to a comprehensive slowdown. The recovery performance of both production and demand ends is insufficient, and the pressure still exists. The growth of industrial production slowed down slightly, but the overall growth of industrial production was steadily; consumer demand was weak; investment in exports, infrastructure and manufacturing industries maintained high growth, forming a major pull for secondary restoration.
Financial institutions , , , CCIC released data on the main regulatory indicators of the banking industry in the second quarter of 2022. Affected by the impact of the epidemic and the downward trend in the real estate economy, the growth rate of commercial banks' net profit declined in the second quarter, but it still remained at a relatively high level in recent years; the central bank held a symposium on the analysis of the monetary and credit situation of some financial institutions.
capital market , the stock market went up and down throughout August, and continued to fluctuate. The structure began in mid-August, and the extremes of the previous market style gradually eased; the overall bond market showed a situation of strong first and weak first, with loose capital, central bank cut interest rates beyond expectations, medium-sized bill yields overall decline, and credit spreads expanded.
The following is an excerpt from the report:
U.S. employment has exceeded expectations again, inflation is still resilient, and the Fed hawks have returned. In terms of economy, the number of new non-agricultural employment increased further than expected. In July, the number of new non-agricultural employment was 528,000, higher than the 250,000 that were consistently expected by , Bloomberg , and the previous value was 372,000. In terms of inflation, it is expected that the US CPI will still operate in the range of more than 7% year-on-year, and the core CPI will fluctuate around 6% year-on-year. Both still have a rebound risk in August-September, and it may not be until the first quarter of next year that the significant decline in inflation readings will be seen. In terms of monetary policy, Federal Reserve Chairman Powell strengthened his determination to control inflation at the Jackson Hall Global Central Bank annual meeting on August 26, showing a hawkish attitude. The eurozone economic outlook is poor, inflation soars again, and the central bank turns to an eagle. In terms of economy, GDP increased by 3.9% year-on-year in the second quarter, 4.0% lower than the expected value and 4.0% of the previous value. In terms of inflation, HICP rose again by 0.3 percentage points to 8.9% year-on-year in July, and there is a risk of further upward trend. In terms of monetary policy, after exceeding expectations for interest rate hikes in July, several officials recently expressed support for at least 50bp interest rate hikes in September, and at the same time, it is not ruled out that interest rate hikes are 75bp. Japan's economic outlook remains unclear, inflation hits a new high, and the central bank insists on easing. In terms of economy, GDP in the second quarter had an annualized rate of 2.2%, restoring the level before the epidemic. However, under the influence of multiple factors such as the high number of confirmed cases of new crown in and the cooling of consumption willingness, the economic downturn faced by Japan is increasing. At the same time, inflation hit a new high in July, with CPI recording 2.6% year-on-year, compared with the previous value of 2.4%. In terms of monetary policy, Bank of Japan Governor Kuroda Haruhiko said it will continue to implement loose policies until wages and prices rise in stable and sustainable forms.
Table 1: Macroeconomic indicators of major developed economies
(1) U.S. employment has exceeded expectations again, inflation is still resilient, the Federal Reserve hawks returned to
Economic , employment data has exceeded expectations again, and the number of new non-agricultural employment has risen sharply. In July, the number of new non-agricultural employment was 528,000, higher than Bloomberg's unanimous expectations of 250,000, which was 372,000, which was 471,000 new employment in the private sector, and Bloomberg's unanimous expectations of 230,000, which was 381,000. The unemployment rate in July recorded 3.5%, better than Bloomberg's consensus forecast of 3.6%, and the previous value was 3.6%. The unemployment rate further improved after stabilizing at 3.6% for four consecutive months.
In terms of inflation, inflation fell more than market expectations in July, but it is expected that US inflation will be particularly resilient, and inflation readings will remain high in the second half of the year. In July, CPI fell to 8.5% year-on-year, with core inflation flat at 5.9%, and both readings were lower than overseas market expectations, and it has appeared for the first time since U.S. inflation rose at the beginning of last year. The month-on-month period changed from 1.3% last month to zero growth, the lowest growth rate since the second half of 2020. However, from the current situation, it is difficult to draw the conclusion that "US inflation peaked and fell". It is expected that the US CPI will still operate in the range of more than 7% year-on-year, and the core CPI will fluctuate around 6% year-on-year. Both still have a rebound risk in August-September, and it may not be until the first quarter of next year that the significant decline in inflation readings will be seen. First, the inflation reading in July fell, mainly due to the decline in oil and gas prices, but the price of oil and gas fluctuated greatly, which had an extremely unstable impact on inflation. Second, the slowdown in core inflation rise mainly comes from the short-term decline in travel-related goods and services prices, while the rent price, which accounts for the largest proportion, remains firm, which is the pillar of core inflation and even overall inflation resilience.在就业尤其是服务业就业强劲以及薪资上涨背景下，核心通胀涨价压力仍然较大。
货币政策方面，杰克逊霍尔年会鲍威尔再现鹰态。在8月26日的杰克逊霍尔全球央行年会上，鲍威尔展露鹰派姿态。 The main contents of his speech include: First, strengthening the Federal Reserve's determination to control inflation and saying that reducing inflation to 2% is the focus of the Federal Reserve's work. Meanwhile, Powell said it would take some time to restore price stability, and it might take some time for economic growth to continue below the trend, and the job market could also weaken, acknowledging that this is the price to control inflation. But he stressed that the failure to restore price stability will face greater pain. It implies that the Fed puts inflation target first at present and needs to reduce inflation even if it pays a certain price for economic weakness.其二，关于货币政策前景，鲍威尔表示9月再次加息75bp是有可能的，具体加息多少将取决于经济数据。 Third, regarding employment, Powell reiterated that the labor market is very strong, suggesting that the Federal Reserve's turnover is not under great pressure. Fourth, regarding inflation, Powell stressed that despite the decline in July readings, the improvement in the monthly data is far from where the committee can be assured that inflation is falling. Fifth, from the perspective of historical experience, Powell pointed out that restoring price stability may require maintaining a restrictive policy stance for a period of time, and historical experience warned the Federal Reserve not to relax its policies too early. At the same time, he emphasized that historical experience tells the Fed that it must persist (sustainment) until the work is completed (successfully controlled inflation).
Figure 1: US GDP growth rate in 2022Q2 -0.6% (Note: unit%)
Figure 2: US manufacturing PMI fell to 52.8
Figure 3: US CPI rose to 8.5% year-on-year in July (Note: unit%)
Figure 4: US unemployment rate in June remained at 3.5% (Note: unit%)
(2) The economic outlook in the euro zone is poor, inflation soars again, and the central bank turns to the eagle
economic outlook is poor. Eurozone's GDP in the second quarter increased by 3.9% year-on-year, lower than expected value of 4.0% and the previous value of 4.0%. By country, the downward risks of the European economy, Germany's "locomotive" economy are highlighted, with GDP in the second quarter only 1.5% year-on-year. Looking back, the energy crisis has caused Germany to suffer a lot, and the economy has shown signs of weakness. Germany's ZEW economic prosperity index fell to -55.3 in August, further down from -53.8 in July, and increasingly approached the historical low of -63 of in October 2008. In terms of inflation, HICP rose again by 0.3 percentage points to 8.9% year-on-year in July, and there is a risk of further upward trend. At the recent Jackson Hall Central Bank Annual Meeting, ECB official Schnabel said the risk of long-term inflation expectations exceeding central bank targets or “deaning” is rising, and current surveys show that inflation is weakening public trust in the central bank, which may further boost inflation. In terms of monetary policy, several ECB officials recently expressed an open attitude towards the 75bp rate hike in September. The minutes of the 7 meeting show that the ECB is determined to firmly control inflation. The ECB realized that even if the economy declined, medium-term inflation may continue to rise, which may prompt the ECB to adopt a more radical rate hike, which may increase the rate hike to 75bp in September.At the same time, several officials (Knot, Holzmann, Kazaks) recently expressed their support for a rate hike of at least 50bp in September, and at the same time, it is not ruled out that a rate hike of 75bp is not ruled out.
Figure 5: The growth rate of the real GDP in the euro zone in Q2 is 2.5% year-on-month (Note: unit %)
Figure 6: The manufacturing PMI in the euro zone in August fell to 49.7
Figure 7: The unemployment rate in the euro zone in June remained at 6.6% (Note: unit %)
Figure 8: The HICP in the euro zone in July rose to 8.9% year-on-year (Note: unit %)
(3) Japan's economic outlook is still unclear, inflation hits a new high, the central bank insists on easing
economic outlook is still unclear, Japan's GDP grew by 0.5% month-on-month, equivalent to an annual rate of 2.2%, restoring the level before the epidemic. However, under the influence of multiple factors such as the high number of confirmed cases of the new crown and the cooling of consumption willingness, Japan's economic downturn risks are increasing, and the outlook is still not optimistic. On August 30, Japan's new confirmed cases reached 150,000 in a single day, still at a high level. The severe epidemic situation is combined with the fact that as prices rise faster than wages rise, consumption may cool down. After the seasonal adjustment in Japan in July, the consumer confidence index recorded 30.2, which has declined for two consecutive months, approaching the previous low in January 2021. Inflation hits a new high. In July, Japan's CPI recorded 2.6% year-on-year, compared with the previous value of 2.4%.
In terms of monetary policy, the Bank of Japan insists on loose policies. At the recent Jackson Hall Bank of China annual meeting, Bank of Japan Governor Haruhiko Kuroda said it would continue to implement loose policies until wages and prices rose in stable and sustainable forms.
Figure 9: Japan's actual GDP in 2022Q1 is 2.2% month-on-month change rate (note: unit %)
The mid-term trend of the exchange rate still depends on internal fundamentals. We believe that the depreciation of the RMB exchange rate requires two conditions - exports are weak and the PMI is weak. Once PMI goes up, the backlog accelerates the settlement of foreign exchange is expected to form support for the RMB exchange rate. First of all, the RMB exchange rate currently has about US$300 billion to "protect the body" of the backlog of foreign exchange settlement, and there is "confidence" behind it. Secondly, the level of the company's willingness to settle foreign exchange is related to the number of orders, so whether to settle foreign exchange (export exchange rate-import payment rate) is more consistent with the PMI trend. Therefore, there are three scenarios assumptions:
scenario a: Export high + PMI upward → RMB appreciation;
scenario b: Export falling + PMI upward → RMB may flat;
scenario c: Export falling + PMI downward → RMB weakening
At present, due to the epidemic disturbance, the PMI in March fell below 50, and it is now scenario C, and it is normal for the exchange rate to have a weakening trend. However, due to the fact that there is a backlog of nearly US$300 billion to be settled, once the PMI goes up, even if exports fall, the backlog of enterprises to be settled and accelerated foreign exchange settlement is expected to form an effective hedging for a decline in export surplus. After experiencing C, there is a possibility of reaching scenario B. The key to the exchange rate is domestic demand.
In terms of inflation, in July, CPI rose 2.7% year-on-year, up 0.2 percentage points from the previous month and 0.5% month-on-month and 0.5 percentage points from the previous month. The sharp rise in food month-on-month caused the CPI to rebound month-on-month, and the sharp rise in food year-on-year pushed up the CPI this month's year-on-year, mainly affected by the rising prices of pork, fresh vegetables and other prices and seasonal factors. PPI rose 4.2% year-on-year, down 1.9 percentage points from the previous month, down 1.3% month-on-month and down 1.3 percentage points from the previous month. The month-on-month and year-on-year decline in means of production are the main reasons for the month-on-month and year-on-year decline in PPI.From the perspective of major industries, the decline in prices of international commodities such as crude oil and non-ferrous metals has led to a decline in prices in domestic non-ferrous metals, chemicals, fuel processing oil and gas mining and other related industries; the price of coal mining has changed from rising to falling; the decline in steel prices has expanded.
(1) The economic data is lower than expected
html Although the domestic epidemic in July was generally controlled, the impact of the epidemic is still continuing, and many economic indicators are not as expected. Economic data is close to a comprehensive slowdown, and the recovery performance of both ends of production and demand is insufficient, and the pressure still exists. Among them, industrial production is generally poor, but the industry is even worse when looking at it closely; consumer demand is weak; investment in exports, infrastructure and manufacturing industries maintains high growth, forming a major pull for secondary restoration, but real estate investment has further declined. We need to pay attention to the implementation of policies at the Politburo meeting in July in the future. Real estate will be a key variable for whether the economy can recover substantially.(2) Industrial production growth slowed down slightly
html Industrial production growth fell slightly in July, but industrial production overall grew steadily. The added value of industrial added to the scale of in my country increased by 3.80% year-on-year, down 0.10 percentage points from the previous month, driving the added value of industrial added above the designated size in January-July increased by 3.5% year-on-year, slightly up 0.1pct from January-June; a month-on-month increase of 0.38% and down 0.46 percentage points from the previous month.is divided into three categories. In July, the added value of the mining industry increased by 8.1% year-on-year, the manufacturing industry increased by 2.7%, and the production and supply of electricity, heat, gas and water increased by 9.5%. By industry, 25 of the 41 major industries have grown positively year-on-year, but the growth rate of most industries has declined to varying degrees. The industries with higher growth rates are mainly coal mining and washing industries, oil and natural gas mining industries, 4.5%, ferrous metal mining and dressing industries, 4%. Nonferrous metal mining and dressing industries, 6.8%, mining and professional and auxiliary activities, 10.9%, other mining industries, 36.3%, food manufacturing industries, 2.8%, wine, beverage and refined tea manufacturing industries, 10.8%, tobacco products industries, 8.9%, printing and recording media replication industries, 0.6%, culture, education, engineering, sports and entertainment products manufacturing industries, 2.7%, chemical raw materials and chemical products manufacturing industries, , 4.7%, chemical raw materials and chemical products manufacturing industries, 4.7%, 1. The ferrous metal smelting and rolling processing industry grew by 2.3, the special equipment manufacturing industry grew by 4%, the automobile manufacturing industry grew by 22.5%, the railway, ship, aerospace and other transportation equipment manufacturing industry grew by 7.6%, the electrical machinery and equipment manufacturing industry grew by 12.5%, the computer, communications and other electronic equipment manufacturing industry grew by 7.3%, the instrument manufacturing industry grew by 7.2%, other manufacturing industry grew by 8.8%, the comprehensive utilization of waste resources increased by 8.6%, the metal products, machinery and equipment repair industry grew by 19.6%, the production and supply industry of electricity and heat increased by 10.4%, the gas production and supply industry grew by 6.7%, and the production and supply industry of water increased by 2.6%.
(3) Real estate development investment continues to weaken, infrastructure and manufacturing investment maintains high growth
html From November to July, the total amount of national fixed asset investment (excluding farmers) increased by 5.7% year-on-year, with the previous value of 6.1%. Among them, infrastructure construction investment (excluding electricity) increased by 7.4% year-on-year, real estate development investment decreased by 6.4% year-on-year, and manufacturing investment increased by 9.9% year-on-year; from January to June, it was 7.1%, -5.4% and 10.4% respectively. In July, the growth rate of infrastructure investment continued to remain high, real estate investment continued to decline, and manufacturing investment remained resilient. The growth rate of infrastructure investment and manufacturing investment is the main reason that supports the steady growth of investment, and the continued weakening of real estate development investment has made investment growth weaker than expected. htmlInfrastructure investment growth rate continued to remain high in July. From January to July, the cumulative year-on-year investment in full-scope infrastructure increased by 9.58%, a slight increase of 0.33% from January to June. From a structural perspective, the growth rates of the three major industries have differentiated. The cumulative year-on-year growth rate of the water and environmental public industry rose to 11.8%, and the cumulative year-on-year growth rate of electric heating water was 15.1%, basically the same as in the first half of the year. The two maintained rapid growth; the cumulative year-on-year growth rate of the transportation warehouse and postal industry continued to decline, with the growth rate in July falling by 0.4% to 4.2%. This year, the importance of infrastructure investment as a countercyclical adjustment tool has increased. As of the end of July, 3.47 trillion yuan of new special bonds have been issued, with relatively abundant funds.html Real estate sales in July and land purchases in that month continued in June, and the newly started area and other areas continued to weaken. According to the data from National Bureau of Statistics , in terms of sales, the sales volume and sales area of commercial housing in July were -28.8% and -23.1% year-on-year respectively, which was slightly different from -28.9% and -22.2% in June, and there was little change. The cumulative year-on-year land purchase area for the month was -48.1%, and the previous value was -48.3%. The newly started housing area was -36.1% year-on-year in July and -34.4% in June. In the short term, both sides of real estate supply and demand will be affected by high temperatures, epidemics, etc., and coupled with weak residents' expectations, commercial housing sales may continue to decline. Moreover, the credit pressure of real estate companies is high, which affects the willingness to acquire land, start-up and construction progress, and it is difficult to quickly reverse the pessimistic expectations of the real estate market.The overall growth rate of manufacturing investment has slowed down, but it has maintained a high resilience. In July, the manufacturing PMI fell below the boom-bust line again. The growth rate of manufacturing investment fell to 7.5%, dragging the cumulative decline of 50bp to 9.9% from January to July. Insufficient demand and weak expectations are the main factors for the decline in the growth rate of manufacturing investment.
(4) Consumer demand is weak
htmlTotal retail sales of consumer goods in July was 3.59 trillion yuan, a year-on-year increase of 2.7%, down 0.4 percentage points from June; retail sales of consumer goods except automobiles increased by 1.9%. Consumption declined in July after a certain improvement in June. According to consumption type , commodity consumption recovery has slowed down, and service consumption is still in the contraction range, but the decline has narrowed. The year-on-year growth rate of commodity retail in July fell by 70bp to 3.2% compared with June, and the year-on-year growth rate of catering revenue rose by 2.5% to -1.5% compared with June. The growth rate of most optional consumption slowed down, while the recovery of cosmetics, clothing, communication equipment, and automobile consumption all slowed down significantly. The year-on-year growth rate of automobile consumption fell to 9.7%, while the previous value was 13.9%, which should be related to the decline of the impact of post-epidemic stimulus policies. The epidemic situation in various places has rebounded to varying degrees, and we should continue to pay attention to the impact of the epidemic on consumption in the future.(5) Exports continue to grow economically
According to the data of General Administration of Customs , denominated in US dollars. In July, my country's total import and export value was US$564.661 billion, an increase of 11% year-on-year. Among them, exports were US$332.964 billion, an increase of 18% year-on-year, with the previous value of 17.7%; imports were US$231.697 billion, an increase of 2.3% year-on-year, with the previous value of 1%. The trade surplus in July was US$101.267 billion, an increase of 8151 year-on-year.
From the perspective of export countries, China's exports to the United States, EU , Japan, and ASEAN year-on-year growth rates were 10.97, 23.17, 19.02, and 33.49 respectively. Compared with the previous value, the export growth rates of the other three economies except the United States have increased. In terms of major export commodities, the growth rate of exports of automobiles and automobile chassis, auto parts and general machinery and equipment has significantly accelerated; while the export volume of mobile phones, integrated circuits, lamps, lighting devices and similar products has turned from positive to negative year-on-year. From a month-on-month perspective, it only increased slightly by 0.51% from the previous month, and a significant decline from the previous two months (12.61% and 7.65% respectively). This indicates that the centralized release of orders backlogs in the previous period has basically ended, and the momentum of export growth has weakened.
html import growth rate rebounded slightly in July, mainly due to the continued increase in domestic policies to stabilize growth, and a series of policies to promote consumption and stabilize investment are gradually exerted, which is conducive to the recovery of domestic demand and thus supports the recovery of import growth. The cumulative year-on-year growth rates of iron ore sand and its concentrates, crude oil, coal and lignite , natural gas and steel were -3.4%, -4.0%, -18.2%, -9.6% and -21.5% respectively.(1) The food rebound drove CPI upward
html in July CPI rose 2.7% year-on-year, the previous value was 2.5%, and the month-on-month increase was 0.5%. The core CPI rose 0.8% year-on-year, and 1% year-on-year in June, an increase of 0.1 percentage point on the month-on-month. The increase in the core CPI shows a moderate recovery in demand and a steady growth trend of overall prices. Affected by the rise in prices of pork, fresh vegetables and other foods and seasonal factors, food rose by 6.3% year-on-year and 3% month-on-month, with the previous values being 2.9% and -1.6% respectively. The year-on-year and month-on-month increase in food drove the year-on-year and month-on-month increase of CPI this month.(2) The decline in bulk drove the PPI downward
html PPI in July rose 4.2% year-on-year, the previous value was 6.1%, and the month-on-month decrease was 1.3%, and the overall price of industrial products declined.From a general perspective, the price of means of production fell by 1.7% month-on-month, and the price of means of life rose by 0.2%, which was 10 bp less than last month. The month-on-month decline in means of production was the main reason for the month-on-month decline in PPI. From the perspective of major industries, the decline in prices of international commodities such as crude oil and non-ferrous metals has caused the prices of domestic chemicals, non-ferrous metals, oil and gas mining, fuel processing and other related industries to decline, and the decline in coal mining prices has further expanded.- . Finance: Market liquidity continues to be loose, but social financing fell more than expected html added RMB loans in July 679 billion, with the increase in social financing scale of 756.1 billion, M2 12% year-on-year and M1 6.7% year-on-year. In July, the stock of social financing was 10.7% year-on-year, down 0.1 percentage point from June.
Li Wenhong: "Decode" Beijing Finance "14th Five-Year Plan"
Zhang Ming and others: Don't worry about the sharp depreciation of the RMB against the US dollar in the short term
Liu Jun: Follow the trend of globalization and serve the new development pattern of dual circulation
Meeting briefing | IMI hosts the "2022 Digital Currency Technology and Application Forum"
Mu Changchun: Smart Contracts and Digital RMB
(1) Social financing fell beyond expectations, and credit and corporate bonds constituted a major drag on
htmlIn July, the scale of new social financing was 756.1 billion yuan, a year-on-year increase of 319.1 billion yuan; at the end of July, the stock of social financing was 334.90 trillion yuan, a year-on-year increase of 10.70%. In terms of sub-items, in July, RMB loans and foreign currency loans (equivalent to RMB) increased by 430.3 billion yuan year-on-year, and 105.9 billion yuan more respectively, and net financing for corporate bonds increased by 235.7 billion yuan year-on-year. These three sub-items increased by 771.9 billion yuan in total, which is the main drag on social financing this month. The discounted bank acceptance bills in have not been reduced by 42.8 billion yuan year-on-year, which also has a certain drag on social financing. Net financing for government bonds increased by 217.8 billion yuan year-on-year, stock financing for non-financial enterprises increased by 49.9 billion yuan year-on-year, entrusted loans increased by 24 billion yuan year-on-year, and trust loans decreased by 117.3 billion yuan year-on-year, forming certain support for social financing. In July, RMB loans increased by less than the previous year, mainly because the short-term loans issued by banks in the first half of this year were significantly higher than those in previous years, showing a significant impact effect, and the repeated epidemic in July caused adverse disturbances to long-term loans.(2) M1 and M2 scissor gap continues to narrow
html At the end of July, the balance of M1 was 66.18 trillion yuan, up 6.7% year-on-year, up 0.9 percentage points from the previous month; the balance of M2 was 257.81 trillion yuan, up 12% year-on-year, up 0.6 percentage points from June, a new high since April 2016. Judging from the growth rate of M1-M2, the year-on-year growth rate of M1-M2 at the end of July was -5.3%, and the growth rate scissors gap decreased by 0.3 percentage points compared with the previous period, indicating that the current monetary deposit is still increasing slowly and market liquidity continues to be loose.(1) The China Banking and Insurance Regulatory Commission released the data on the main regulatory indicators of the banking industry in the second quarter of 2022
In the first half of 2022, commercial banks achieved a cumulative net profit of 1.2 trillion yuan, a year-on-year increase of 7.1%. The average capital profit margin was 10.1%, down 0.81 percentage points from the end of the previous quarter. The average asset profit margin was 0.82%, down 0.08 percentage points from the end of the previous quarter. Affected by the impact of the epidemic and the downward trend in the real estate industry, the growth rate of commercial banks' net profits in the second quarter fell, but remained at a relatively high level in recent years.
Figure 14: Commercial Banks net interest margin trend
At the end of the second quarter of 2022, the total assets of domestic and foreign currency of financial institutions in my country's banking industry were 367.7 trillion yuan, an increase of 9.4% year-on-year. At the end of the period, the non-performing loan ratio of was 1.67%, down 0.02 percentage points from the end of the previous quarter; the provision coverage ratio of was 203.78%, up 3.08 percentage points from the end of the previous quarter. The asset quality of commercial banks remained stable in the second quarter. With the economic recovery and the gradual resolution of real estate risks in the second half of the year, the asset quality of banks will continue to improve.
Figure 15: Commercial Banks’ non-performing rate level
(2) The central bank held a symposium on the analysis of the monetary credit situation of some financial institutions
In order to thoroughly implement the decisions and deployments of the CPC Central Committee and the State Council, on August 22, 2022, Yi Gang, President of the People’s Bank of China and Director of the Financial Committee of the State Council, presided over a symposium on some financial institutions to analyze and study the current monetary credit situation and deploy the promotion of the current and next stage of monetary credit work. The meeting emphasized that major financial institutions, especially large state-owned banks, should strengthen macro thinking, give full play to the leading and pillar role, and maintain the stability of the total loan growth. We must increase the issuance of loans to the real economy and further improve credit support for small and micro enterprises, green development, scientific and technological innovation and other fields.We must ensure reasonable financing needs of real estate. We must increase financial support for key areas of platform economy in accordance with the law. Policy-based development banks should make good use of policy-based development financial tools, increase support for key areas such as network infrastructure construction, industrial upgrading infrastructure construction, urban infrastructure construction, urban infrastructure construction, agricultural and rural infrastructure construction, and national security infrastructure construction, so as to form physical workload as soon as possible and drive loan issuance. We must adhere to the principles of marketization and rule of law, and coordinate the relationship between stable credit growth and preventing financial risks. At present, my country's economy is still facing certain pressure. Credit and social financing showed a sharp decline in July. The central bank held a symposium on the analysis of the credit situation, which is conducive to urging bank institutions to increase support for the real economy, and on the other hand, it is also conducive to improving the economic expectations of enterprises and residents' departments.
At the end of July 2022, the balance of base currency was 32.42 trillion yuan, a decrease of 1.01 trillion yuan throughout the month. Among them, cash (currency issuance) increased by 28.4 billion yuan, bank deposit reserves decreased by 1.04 trillion yuan, and non-financial institutions increased by 3.7 billion yuan. Throughout the month, the central bank's various broad re-loans recovered a total of 717 billion yuan of base currency. Fiscal factors such as tax payment have recovered 437.5 billion yuan of base currency.
html The balance of M2 at the end of July was 257.8 trillion yuan, a year-on-year growth rate of 12.0%, an increase of 0.6 percentage points from the previous month. On the one hand, the increase in net fiscal expenditure contributed to the growth rate of M2. On the other hand, the decrease in the scale of non-standard compression dragged down the growth rate of M2. According to the old statistics that do not include money bases, M2 decreased by 329.6 billion yuan in June. Decomposed from the source, about 473.6 billion yuan of M2 was derived from the loans to entities (additional write-offs and ABS); about 192.4 billion yuan of M2 was invested in fiscal factors such as net fiscal expenditure; about 323.9 billion yuan of M2 was recovered when the bank purchased corporate bonds on its own. Banks invested in non-banks and non-standard factors, and about 670.9 billion yuan of M2 (this account is mainly a difference item, and considering other neglected derivation channels, there may be errors between the project and the actual value); foreign exchange deposits were recovered about 800 million yuan of M2.Table 2: Structure of M2 increments in July
(1) Fundamental update
Throughout August, the market went up and down first, and continued to fluctuate. The structure began in mid-August, and the extremes of the previous market style gradually eased. In the past month, both the global and domestic epidemics have improved, but domestic prevention and control have become stricter. High frequency of exports shows that exports in August may be significantly lower than in July, and commodity prices are fluctuating. Real estate sales are still weak overall, and high-frequency consumption data show that terminal consumption is still weak. In terms of inflation, the drag on CPI by food prices has begun to turn into a contribution. pig grain continues to rise slightly this week compared with , and the number of live pig stocks has decreased, indicating that pork prices will continue to expand year-on-year in the future; the impact of high temperature and drought, vegetable prices have risen month-on-month, and the year-on-year increase has expanded. At present, the transmission of PPI to CPI is accelerating, especially oil prices have led to higher transportation prices; the epidemic has recovered and travel has increased, indicating that service prices may rise. It is expected that the CPI may be above 3% in the remaining months of this year. Inflation at the production side, when supply is insufficient, commodity prices are expected to fluctuate at high levels. It is expected that the PPI may be around 3.2% in August, and the squeeze on downstream and small and medium-sized enterprises will continue. It is judged that monetary policy will not tighten, and the total volume and structure will continue. However, due to the inverted interest rate spread between China and the United States, the space for easing is limited. House prices in 100 cities turned negative month-on-month, among which first-tier cities had a lot of negative month-on-month growth, but second-tier cities continued to grow positive month-on-month; the year-on-year growth rate of housing prices in 100 cities continued to slow down: house prices rose by 0.52% in July (0.88% in June), and the increase continued to slow down. In terms of financial environment, overseas, Fed Chairman Powell's speech at the annual meeting of the global central bank was more hawkish, and the previous expectation of a reversal of interest rate hike due to concerns about recession was further corrected, and the expectation of high end interest rate levels and long duration was strengthened. Therefore, the previous expectations of the Federal Reserve hawks were insufficient and the adjustment was large.In terms of commodities, energy has strengthened again with the increase in the possibility of OPEC production cuts. Agricultural products have risen under the influence of food supply. Industrial metal prices have also rebounded. Gold has fallen slightly under the expectation of interest rate hikes and the rise in the US dollar index. Domestic, since early August, the R007 interest rate center has continued to rise. Affected by the rise in expectations of overseas interest rate hikes and the weak domestic economic expectations, the pressure on the depreciation of the RMB is relatively high, which means that the space for the periods of the interest rate gap between China and the United States is limited again. If the Fed's interest rate hike continues to exceed expectations in the future, domestic full-term treasury bond interest rates will be under great pressure to rise, so we need to pay attention to the pressure on macro liquidity due to the rise in domestic long-term and short-term interest rates. In terms of economic activities, high-temperature power limit has been alleviated to a certain extent, and the coal consumption of 25 provinces continued to exceed the same period last year, and the structural improvement of production. Real estate sales and terminal demand are still weak. High frequency of exports shows that exports in August may weaken compared with July. In August, the manufacturing PMI was still below the boom and bust line, demand rebounded slightly from a low level, production has not improved yet, and inventory is still selling overall. The marginal upward trend of PMI is mainly related to the month-on-month recovery under the low base, the stabilization of bulk prices and the continuous implementation of infrastructure projects under policy support. The resilience of external demand and the depreciation of the RMB exchange rate have also driven demand. Finished product inventory continued to decline, and raw material inventory rose slightly. In August, finished product inventory fell by 2.8 to 45.2, and the raw material index rose by 0.1 to 48.0. But it is important to pay attention to the current PMI "new orders" and "finished product inventory" are both low, and it is difficult to use demand improvement to explain the decline in finished product inventory. A more reasonable explanation is that manufacturing companies are currently actively reducing finished product inventory. Behind this rare phenomenon is the expectation of abnormally weak manufacturing enterprises.
(2) Market Review and Outlook
Since August, under the extreme tear of style, as the domestic structural easing has become the main form of policy efforts, the overseas Fed Hawk's will continue, starting from mid-August, the style has shrunk to a certain extent. The Shanghai Stock Exchange 50, Shanghai and Shenzhen 300, CSI 500, and CSI 1000 recorded returns of -1.09%, -2.19%, -2.20%, and -5.15% respectively. After two consecutive months of decline, the Shanghai Stock Exchange 50 seems to have returned to the position of the "golden pit" at the end of April compared to the CSI 1000. Although the current stock and bond markets are already very pessimistic about the macro economy: the 10-year treasury bond yield is close to the historical low in early April 2020, and the risk premium of equity has recently returned to the extreme level, such market prices do not seem to have obvious "mispricing" for the economic situation. Investors believe that China's economy is about to face a more serious test than the epidemic in April.
looks forward to the future market. Although the market is disturbed by factors such as real estate loan cuts, repeated epidemics, extreme weather, etc., the economic recovery has been twists and turns, and the low-valuation sector has now fallen near the previous bottom, and expectations for a weak economic recovery have been included in the price. With the implementation of the stable growth policies and the seasonal peak production and sales season of the "Golden September and Silver October" and the low base effect, it is expected that the probability of a further new market low will be smaller. A more comprehensive rise requires waiting for more positive policy signals and verification and support on macro and meso data. In terms of market structure, on the one hand, the popular tracks such as "New Semi-jun" have been rapidly rising for more than two months. With the positive results of CATL, the certainty and pattern of future prosperity in some key industries have diverged. In the case of congestion in trading, the sector has great pressure to take profit; on the other hand, before more positive policy signals and macro data are verified, it is difficult for the market to directly enter a comprehensive low-valuation pro-cyclical style switching market. Therefore, while the growth sector in the short-term market is facing profit-taking, internal rotation will continue to accelerate under the game of relative returns investors, while low-valuation sectors still need to wait for a clearer rebound signal, and absolute returns investors can buy call options.
(1) The capital market is loose, and the central bank cut interest rates beyond expectations
liquidity, the central bank's net reverse repurchase in August was 6 billion yuan, of which 46 billion yuan was invested and 52 billion yuan was due.The reverse repurchase and MLF interest rates both cut interest rates by 10bps in the other 7 days, and the spread of policy interest rates and capital interest rates converged. At the same time, the MLF has been reduced in volume for 400 billion yuan, with a net withdrawal of 200 billion yuan. The capital market remains loose, and the overall capital interest rate level is still at a low level. The average interest rates of DR001 and DR007 in August were 1.12% and 1.42%, respectively, down 9BP and 14BP respectively from July. In terms of
interest rate bonds, earnings in August fell to a low level and rebounded slightly. On August 15, the central bank lowered the policy interest rate beyond expectations, driving a rapid decline in yields. The yield on 10Y Treasury bonds fell to 2.58%, while the yield on 10Y Treasury bonds fell to 2.78%. After the yield declines to a low level, institutional demand for take-profit increases, driving the yield to rebound from the low level. 10Y Treasury bonds rebounded slightly to around 2.62%, and 10Y Treasury bonds rebounded slightly to around 2.80%.
(2) The yield on medium-sized notes declined overall, and the credit spread expanded
html Non-financial enterprise credit bonds including short-term bonds, medium-sized notes, corporate bonds, corporate bonds, and targeted tools, total issuance scale of 1.069.206 billion yuan, and net financing amount was 135.56 billion yuan.与去年同期相比，发行规模减少1,960.20亿元，净融资额减少1,876.49亿元。收益率方面，8月各等级、各期限中票中债收益率普遍明显下行。 The yields of AAA medium-term 1-year, 3-year and 5-year medium-term bonds fell by 23BP, 22BP, 24BP to 2.07%, 2.61%, and 2.97% respectively compared with the end of July; the yields of AA+ medium-term 1-year, 3-year and 5-year medium-term bonds fell by 22BP, 22BP, 24BP to 2.20%, 2.79%, and 3.19% respectively compared with the end of July. From the perspective of credit spreads, the credit spread widened in August. At the end of August, the credit spreads widened by 6BP, 7BP, and 1BP respectively compared with the end of July, while the credit spreads widened by 5-year AAA, AA+ and AA credit bonds, respectively.据中债估值数据，8月期限利差小幅压缩，8月末国债3Y-1Y、国债10Y-1Y期限利差相对7月底分布压缩1BP、1BP。资产荒背景下，中高等级信用债受到机构热逐，信用利差被压缩至历史低位，绝对收益率水平也偏低。
(3) Market outlook and allocation suggestions
html Since August, the central bank's interest rate cut beyond expectations has led to a sharp decline in yields. However, after the LPR interest rate cut is implemented, all the good news will be released in the short term, and the market has also entered a stage of being insensitive to positive and negative news. For further interest rates to fall, more and greater positive factors are needed to stimulate, such as the increased uncertainty of the epidemic, further rapid decline in the real estate sector or exposure of risk events, and further loosening of monetary policy operations, but the probability is relatively low in the short term. The economy is on the rise in margins, policy logic returns to steady growth, and capital continues to converge. It is expected that the bond market will be in a headwind environment as a whole, but the economic growth rate is still below the potential growth rate, and the extent of interest rate rebound may be relatively limited. There is little probability of a sharp tightening of monetary policy. It is recommended to remain cautious in the short term.Scan the QR code below to get the full text of the monthly report
Disclaimer
This document is produced by the Institute of International Monetary Research, Renmin University of China (hereinafter referred to as "IMI") and is for distribution to specific recipients only and shall not be used for business solicitation or related commercial activities. The copyright of this document is owned by IMI and no organization or individual may forward, reproduce, copy, publish, publish or quote in any form without written permission.
The information in this file is derived from public information that we believe is reliable, but IMI does not make any guarantees about the accuracy and completeness of this information. The information, opinions, etc. in this document are for reference only and should not be regarded as an offer for sale, solicitation of orders or any investment advice or services to the browser. Such information and opinions do not take into account the specific investment purpose, financial status and specific needs of anyone, and do not constitute a personal recommendation to anyone at any time. IMI and/or its affiliates shall not bear any legal liability for all consequences caused by the basis or use of this document.
Editorial Board Directory
Academic Guidance (arranged by surname):
Ben Shenglin Cao Tong Guan Qingyou Qu Qiang Tu Yonghong Wei Benhua Zhang Zhixiang Zhao Xijun Editor: Song Ke
Executive Editor: Peng Yuchao
Editorial Committee (arranged by surname):
Huang Nan Peng Yuchao Song Ke Sun Chao Wang Jian Zhang Bin Zhang Yu Zhu Shuangshuang
IMI Macroeconomic Monthly Analysis Report》 Introduction
"IMI Macro Research Monthly Report" is a series of monthly analysis reports launched by the Institute of International Monetary Research, Renmin University of China (IMI). Unlike the existing macro research reports, this report focuses more on the academic nature of macro analysis. The report includes three major sectors: macro analysis, topic analysis and data summary. Among them, the macro analysis sector includes four parts: analysis and judgment of overseas macroeconomic and financial situations, analysis of domestic macroeconomic and financial situations, business conditions of commercial banks and financial markets. Thematic analysis is the feature of this report, mainly conducting in-depth theoretical analysis on some economic and financial issues with great practical significance, improving the academic connotation of this report. This report is created by IMI researchers and guided by senior academic committee members. It is one of IMI's main academic products.
unified manuscript ｜Zhang Bin, Zhang Bijia
topic selection ｜IMI Macroeconomics Research Office
layout editing｜Tu Jiayin
Editor in charge｜Li Jinxuan, Jiang Xu
Director-General Producer｜Zhu Shuangshuang
Recent hot articles
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-