On February 5, a new round of RRR cuts was officially implemented on the eve of the Spring Festival. According to the official website of the People's Bank of China, the People's Bank of China lowered the reserve requirement ratio by 05 percentage points, providing long-term liquidity to the market of about 1 trillion yuan. At the same time, a 14-day reverse repurchase operation of 100 billion yuan was carried out in the form of interest rate bidding.
On the first day of the RRR cut, the bond market, the foreign exchange market, and ** all reacted to a certain extent, but the impact was not large. Analysts believe that the RRR cut has effectively made up for the liquidity gap before the Spring Festival and is expected to greatly improve the liquidity market environment. Looking forward to the follow-up monetary policy, more analysts said that after the RRR cut is implemented, it is expected to effectively improve the pressure on the liability side of commercial banks, and the possibility of a separate reduction of LPR** from MLF guidance in February is not ruled out.
The bond market strengthened slightly, and the impact on the foreign exchange market was not significant.
On the whole, on the first day of the RRR cut, the bond market as a whole strengthened slightly, and the marginal rebounded after a sharp weakening, while the RMB exchange rate remained weak and fluctuated.
The RRR cut was implemented, and ultra-long bonds in the bond market continued to perform well. Wind data shows that at 10 a.m., the main contract of the 30-year treasury bond ** rose 055%, the main contract of 10-year Treasury bonds** rose 014%, the main contract of 5-year treasury bonds** rose 007%, the main contract of 2-year treasury bonds** rose 002%。As of **, the yield on the 10-year Treasury note edged down 086%, the main contract of 10-year treasury bonds** rose 012%, the main contract of 5-year treasury bonds** rose 004%。
In the foreign exchange market, on February 5, the central parity of the RMB exchange rate was quoted at 1 US dollar to 7 yuan1070 yuan, the middle price of the previous trading day was reported at 71006 yuan, a single-day reduction of 64 basis points. The opening price of the CNY on the day was 71965, more than 100 basis points lower than the previous trading day's ** price; The CNH opened at 72155, which is basically the same as the ** price of the previous trading day. As of 6 p.m., the onshore yuan was trading at 7 against the US dollar1984。
In terms of **, the first day of the RRR cut faced large fluctuations. On the morning of February 5, the three major A-share stock indexes accelerated their decline, and the three major stock indexes all fell more than 3% during the session. However, in the afternoon, the three major stock indexes staged a deep V reversal, collectively turned red, the Shanghai Composite Index lost 2,700 points, and the ChiNext Index once rose more than 3%.
The channel for the RRR cut to release funds is to directly convert part of the statutory deposit reserves of commercial banks into excess reserves, which still belong to the category of base money, which can directly improve the interbank liquidity level and inject funds into the bond market. For the bond market, CITIC chief economist Ming Ming explained.
However, in Mingming's view, the transformation to broad liquidity and then the impact of ** and other markets still need to go through credit and other transmission paths, and there will be no obvious impact in the short term. Although the RRR cut will help improve the liquidity market after the landing, the bond market is mainly expected by policy and economic fundamentals, and the benefits of the RRR cut have been fermented at the press conference held by the People's Bank of China on January 24.
In addition, in terms of exchange rate, Ming Ming believes that the current Fed's interest rate hike cycle has come to an end, and the pressure on capital outflows in the countercyclical environment of Sino-US policies has eased compared with 2023, and the impact of the RRR cut on the exchange rate is not large.
However, in the opinion of analysts, the prudent tone of monetary policy reflected by the RRR cut from the side, combined with the introduction of the policy "combination punch", will help boost the market's expectations for economic recovery and improved corporate earnings. Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, pointed out that on the one hand, market liquidity remains reasonable and abundant, the interest rate pivot is expected to move down moderately, and the interest rate of advanced economies is gradually shifting to an interest rate reduction cycle. On the other hand, the market's confidence in accelerating the recovery of the economy and the gradual improvement of the credit environment are positive for the bond market as a whole. In addition, the RRR cut helped boost financial market sentiment; The People's Bank of China (PBoC) has stepped up support for the real economy, improved the prospects for economic recovery, and the fundamentals are stable and favorable to the exchange rate.
Looking forward to the follow-up bond market and foreign exchange market trend, it is clear that the bond market will mainly focus on the expected transaction of MLF interest rate cuts after the RRR cut funds are landed, and the inertia of superimposed longs is still strong, and the short-term 10-year treasury bond interest rate may still have room to strengthen; Equity market risks may not yet be exhausted, and they may continue to operate weakly before the revision of weak economic expectations, so it is necessary to pay attention to the formulation of stable growth policies and economic growth targets in the "two sessions"; In anticipation of the Fed's interest rate cut this year, it is expected that the interest rate differential between China and the United States will gradually narrow, and the RMB exchange rate may also gradually strengthen.
Make up for the liquidity gap before the Chinese New Year.
The People's Bank of China's RRR cut is the first time this year, and it is also the fourth consecutive RRR cut since April 2022After 25 percentage points, it expanded to 05 percentage points.
In the view of many analysts, the RRR cut is conducive to supporting the good start of the economy in the first quarter and will help stabilize the market's expectations for the full-year growth target. At the same time, the RRR cut effectively made up for the liquidity gap before the Spring Festival.
Choosing to cut the RRR at this point in time will help hedge against short-term factors such as the Spring Festival, bank credit easing, bond issuance, and tax payment. Zhou Maohua said. Before the Spring Festival in previous years, there will be a large gap in the liquidity of the banking system due to the centralized withdrawal of cash by residents, the withdrawal of wages by enterprises and the long holiday. Since the fourth quarter of 2023, the People's Bank of China (PBoC) has invested a total of 1,905 billion yuan in excess MLF renewals, and added 500 billion yuan in collateral supplementary loans (PSL). Although the People's Bank of China has invested more than 2 trillion yuan in liquidity, according to market estimates, the demand for bond issuance payment, new deposit payment and pre-holiday cash withdrawal is large, and there is still a certain gap in liquidity before the Spring Festival.
Ming Ming said that in January and February, in the context of the approaching Spring Festival holiday and high cash demand, the liquidity gap may be at the high point of the year, and the landing of this RRR cut is expected to greatly improve the liquidity market environment. Looking ahead, the RRR cut is expected to effectively improve the pressure on the liability side of commercial banks, considering that there is still room for the LPR to compress the MLF interest rate increase, it is not ruled out that the LPR** will be cut separately from the MLF guidance in February.
Under normal circumstances, the supply of credit and the rapid consumption of liquidity can easily lead to a tightening of the capital side and raise the overall interest rate level of the market. At the same time, Ming Ming pointed out that the main pressure on the liquidity market at the Spring Festival is the structural liquidity gap caused by the rise in cash demand, and at the same time, factors such as the "good start" of credit demand at the beginning of the year may also form disturbances. Looking ahead, the pace of capital withdrawal after the holiday and the structural differences in credit growth between large and small banks are likely to exacerbate liquidity frictions.
In order to intensify macroeconomic policy regulation and control, the Ministry of Finance has previously issued an additional 1 trillion yuan of treasury bonds, and the People's Bank of China has also added a new 500 billion yuan PSL quota to support affordable housing, the construction of public infrastructure for both ordinary and emergency purposes, and the transformation of urban villages. Recently, the Ministry of Finance also said that it will continue to arrange a certain scale of local special bonds, appropriately increase the scale of investment in the budget, and give full play to the amplification effect of policy investment.
Now that the "doubled" RRR cut has been delivered, what tools are there for the next stage of monetary policy? Ming Ming said that in addition to the possibility of a reduction in LPR** in February, in the short term, the total policy may temporarily increase after the RRR cut, re-lending, and rediscount rate cuts are implemented, but considering the policy objectives of credit growth and stimulating domestic demand, there may still be room for the MLF interest rate to be lowered in the whole year.
Zhou Maohua put forward the outlook for future policies: first, interest rate cuts and structural tools are still in the toolbox, and second, there is sufficient room for monetary policy. At present, China's economy is facing a more complex environment, macro policies need to balance multiple goals, policies to promote the steady recovery of the economy at the same time, but also to reflect the "progress". Therefore, monetary policy should strengthen coordination with fiscal and other policies, and maintain a certain degree of flexibility to improve the precision, quality and efficiency of policies. Objectively, it is required that a prudent monetary policy should be strengthened through a combination of aggregate, structural tools and reform means, so as to balance stable growth, prevent risks, promote reforms, and take into account internal and external balances.
Beijing Business Daily reporter Yue Pinyu Dong Hanxuan.