There are four things that I think are strange and worth talking about:
1. Treasury bonds are bullish, and the longer the maturity of treasury bonds, the more bullish they are;
2. After a lapse of October, the central bank restarted PSL;
3. Big banks began to tighten their lending to small banks;
4. The new company law is about to be implemented, requiring 5 years to make up the paid-in capital.
On the whole, these things are somewhat "not strong enough, slightly tightened".
Let's start with the national debt. Because it is a financial market, it is the most real and most reflective of our economy and future economic policy changes.
However, since the banks cut their deposit rates, something strange has happened in the treasury bond market.
There are two things that are weird:
First, the bullish treasury bonds hit a record high;
Second, the longer the treasury bonds, the more bullish they are.
Many people don't understand that it's weird, let's say it one by one.
First of all, we must know that the change in the yield of Treasury bonds reflects the earning power of our entire economy. Treasury yields** (normal fluctuations) mean that the economy is not bad, and it is not as profitable as you do it yourself than to lend money to the country to invest, and on the contrary, everyone is very conservative.
In 2023, our Treasury yields have been **, getting closer and closer to the April 2020 lows.
This suggests that conservative sentiment is still dominant, and the market believes that monetary policy will continue to be accommodative.
The longer the treasury bonds, the more bullish they are, indicating that the market believes that lending money to the state for 30 years is far more cost-effective than three to five yearsLong-term "lock-in high yields".
Just like in the past two years, deposit interest rates have continued to **, and many banks have launched long-term large-amount certificates of deposit to attract residents to save money!
Behind this is the general belief that interest rates will be lower and lower in the future, and investment returns will be lower and lower.
So why is it weird to say that the longer the national debt, the more bullish it is?
Because it happened against the backdrop of a reduction in the deposit rate.
Logically, the interest rate cut will make the market think that the economy will improve next, investment and consumption will rise, and it is the most profitable and cost-effective to invest by yourself.
However, the financial market still does not think so, which shows that the financial market feels that this degree of monetary easing is not enough to lift the economy, the problem of low inflation is not enough to solve, and interest rates must continue to fall and continue to ease!
Therefore, the abnormal volatility of Treasury bonds in the past two weeks implies a corollary:
The current policy is not enough, and we must still exert force!!
However, since the end of the two major meetings at the end of last year, there has been very little news on monetary and fiscal policy, far less intensive than in August and October last year.
It was only when the central bank released data on January 2 that the market knew that the third round of PSL had restarted, and the use of the funds had not yet been specified.
Many people have focused on whether PSL's funds are intended to be used for the "three major projects", but I think that it is not important whether PSL funds are used to pave roads or build bridges, the key is the signal behind it.
What signal?
Insufficient financial investmentThe central bank relays the role of "quasi-fiscal"!
This is the background to the first two central bank use of the PSL tool:
For the first time, from 2015 to 2018, the shantytown was used to create demand to promote real estate destocking, increase land revenue, and stabilize the economy;
The second time, after the budget was completed in the second half of 2022, it was afraid that the infrastructure investment in the fourth quarter would be insufficient and the economy would be empty, so the central bank will invest to support the economy.
Therefore, in December 2023, 350 billion PSL was carried out to support the economy, which is essentially no different from the previous two times. But behind the scenes, I think there are at least two messages:
First, in terms of attitude, fiscal policy is likely to remain conservative.
Because in the context of the market believing that fiscal policy should exert more force to reverse the current situation, the fiscal does not want to spend too much money, or wants to guide investment to support the economy through the central bank's "inducement".
Second, the central bank's quasi-fiscal policy support (including PSL) will be crucial to GDP in 2024.
Because in 2024 there are nearly 46 trillion debts to be repaid, 13% more than last year, fiscal expenditure is estimated to be vacant, I am afraid that the central bank needs to support through quasi-fiscal means.
What does this mean for us?
Conservative will still be the main tone in 2024, and when investing, you should pay more attention to the actions of the central bank than last year!!
After talking about macro, let's comprehensively talk about the remaining two micro weird things.
The first thing is the news exclusively reported by Reuters two days ago, saying that large banks have asked for more loans (interbank business) to small banks, reduced the amount, and shortened the term.
This reminds me of the earlier incident when the overnight interest rate spiked to 50%.
What's the blame on this?
Unexpectedly, the liquidity problems of real estate and local government bonds would affect the credit of small and medium-sized banks so quickly.
According to a statement released by the Shanghai Commercial Paper Exchange** on November 30, 10 small and medium-sized banks defaulted on commercial paper at least three times in the six months last year.
Next, the central bank is likely to consider providing liquidity to small and medium-sized banks.
The second thing is the new company law that will be implemented on July 1, 2024, which requires the registered capital of the company to be paid in full within 5 years (of course, Article 266 indicates that there is a transition for enterprises), which suddenly changed from the "subscription system" to the "paid-in system" surprised many people.
Some people think that the company that does the 1 million project will soon come up with real gold to prove that you have the strength to do the work of 1 million, and the threshold for registering a company has become higher, which will make the "advance capital bridge" industry usher in a wave of small climax.
It has been argued that this is conducive to the protection of creditors.
The author prefers the first option, believing that this article is not friendly.
Because when you lend money to a business, no one looks at how much money it actually subscribes, and the company's ledger has shown its "strength".
In summary, these two microscopic events react:In addition to the market spontaneously de-risking, the policy also deliberately "guides" enterprises to de-risk.