First-rate and “rate cuts”: What signal does the reverse 北京桑拿洗浴保健 repo rate cut send?
I came to Sina University of Finance and listened to Yang Delong’s “20 Macro Data You Must Understand in Stock Trading”. Understanding the actual value of macro data is unexpected again.
On the 18th, 180 billion 7-day reverse repurchase operations were restarted in advance, and the operating interest rate was reduced by 5 basis points to 2.
5% is the first time in more than four years that the open market reverse repo operation rate has been lowered.
On the previous working day (15th), Beyond Unexpectedly expanded the one-year MLF operation by US $ 200 billion, and lowered the operation interest rate by 5 basis points.
In the morning, the A-share market opened lower and rose, with the Shanghai Composite Index returning to 2,900 points and closing at 2,908 for noon.
The bond market rose sharply. The 10-year Treasury futures opened slightly higher after a small opening, and once rose by almost zero.
5%, the inter-bank bond yield fell by 3-5bp, and the 10-year T-bond active bond yield fell below 3.
Data source: Wind policy interest rates have been successively reduced. Following the “spicy powder” at the beginning of the month, the gradual reverse repurchase has also reduced prices, and the open market market operation interest rate has been fully reduced!
Source: On the morning of the 18th, the official website of the People’s Bank of China announced that it had carried out a 180 billion reverse repurchase operation by way of interest rate bidding.
The announcement shows that the duration of the reverse repurchase operation is 7 days, the scale is 180 billion yuan, and the bid interest rate is 2.
Air Force, the revolutionary reverse repo operation has been suspended for 15 working days.
Faced with the peak of the tax period, the transition to restart the reverse repurchase operation was basically expected at the end of the period in advance.
Source: China Securities News WeChat public account is surprisingly interest rate-the winning bid rate2.
5%, the previous operation was 2.
Public data show that this is the first time since August 2015 that the 7-day reverse repo operation rate was lowered.
On the 5th of this month, the MLF has been renewed for a long time, and the operating interest rate has changed from the previous 3.
3% down to 3.
25%, a 5 basis point reduction, the beginning of this round of policy rate cuts.
After the price of spicy powder is reduced, there are too many opinions on whether the participation will reduce the interest rate of the reverse repo operation.
There are even quite a few views that the reverse repo rate will not be reduced!
The 7-day reverse repurchase rate cut is considered unexpected and unexpected.
Reverse repurchase and spicy powder are the two main tools for gradually expanding open market operations and placing base currency. The term is short and long, and the short-term and medium- and long-term policy interest rate benchmarks are set to a certain length.
Since November, from the spicy powder to the reverse repurchase, the interest rate of the open market operation has been gradually reduced, and the policy interest rate has become loose.
Why to reduce financing costs was announced in advance of the third quarter of 2019 monetary policy implementation report.
The report announced the issue of interest rates in open market operations.
It is recommended to lower the MLF operation rate at the beginning of the month.
It is gradually pointed out that the decline in the interest rate for the tender of medium-term borrowing facilities is a reflection of the decrease in the average marginal capital cost of financial institutions, which will help to reduce the actual loan interest rate of enterprises and reduce the cost of social financing.
He also pointed out that the move promoted increased market risk and boosted confidence.
Source: China’s Monetary Policy Implementation Report in the third quarter of 2019. The voice has not fallen, and the change will cause the reverse repurchase operation to reduce the operating interest rate.
First of all, it is not appropriate to gradually lift up to simply understand the loosening of monetary policy.
In the third quarter of this year’s monetary policy implementation report, the previous “timely and moderately counter-cyclical adjustments” was adjusted to “strengthening counter-cyclical adjustments”. Today, the reverse repurchase yield has been reduced for the first time since March 22, 2018.Constantly strengthen the concrete manifestation of counter-cyclical regulation.
Basically, it helps to eliminate the market’s correction of tightening budgetary monetary policy.
In fact, previous monetary policy reports proposed that a comprehensive view of CPI and PPI trends has become a structural feature of the current trend, and pointed out that strengthening counter-cyclical adjustments and reducing the words such as “liquid master gate” indicate that soundness has been placed moreImportant location.Policy rates have been lowered, and market views that falsify monetary policy will tighten.
Finally, reduce the burden on financial institutions and highlight the main line of reducing financing costs.
The fundamental purpose of “cutting interest rates” in open market operations is the same as that of officials LPRs “cutting interest rates” in order to reduce the overall social financing costs.
To reform the LPR and reduce the interest rate spread between the LPR and MLF, the reform method is used to clear the monetary policy exchange rate; the MLF is lowered, and the repurchase rate is gradually reversed, using a market-based method.
It should be said that the LPR effect is appearing, but it is also facing some of the forefront. The most prominent is that the current resistance costs of financial institutions are slowing down, and the quotation banks continue to reduce the LPR quotation.
On October 20, LPR’s failure to continue to reflect this problem.
The preliminary monetary policy report even showed that in September, the average interest rate for general loans increased by 5.
96%, but increased by 0 compared with June.
Since the key issue is on the liability side, in order to continue to push LPR downwards, to guide the credit market interest rate down, and gradually reduce the open market operation interest rate, it is reasonable and reasonable to “burden” financial institutions.
MLF and reverse repo are the main tools of the Federal Open Market operation, and are also the main tools of the current base currency investment. The reduction of its operating interest rate has a significant guiding effect on short-term market interest rates.
Near the budget, the downward pressure on the economy has increased, and objectively, monetary policy is also required to strengthen counter-cyclical adjustments.
On average, the widening of the RMB’s internal and external interest rates and the gradual stabilization of the exchange rate have also created conditions for the continuous and modest reduction of policy interest rates.
The open market operation interest rate may be broken down MLF, gradually reversed the repurchase interest rate declining successively and successively lowered. The agency predicts that it will be converted into the upward momentum of money market interest rates in the past seven months.
Wen Bin, chief analyst at China Minsheng Bank, predicts that this month’s 1-year LPR will be cut by 5 BP to 4.
Wang Qing, chief macro analyst of Dongfang Jincheng, believes that the 7-day reverse repurchase rate has been reduced, gradually distorting the overall margin of the four-month money market. The average margin of DR007 in August and October has been higher than the same period of the previous year.The situation means that the “wide currency” momentum is expected to resume from November.
Wang Qing believes that this aspect will reduce the average marginal capital cost of financial institutions, promote the one-year LPR on Wednesday to resume its downward trend, and reduce the actual loan interest rate of enterprises.
In addition, this is also under the background of the current macroeconomic downward pressure penetrating, and the regulators have issued clear signals to increase the strength of countercyclical policy adjustments, which will help stabilize market confidence and macroeconomic operations in the fourth quarter.
Since it is so leading, it is resolute not to engage in “flooding floods” to prevent unexpected divergence.
Analysts expect to be cautious in terms of the amount of liquidity transition over time.
The main tone of liquidity polarity is still reasonably abundant, from tight to moderate, similar to the end of June and early July, the situation of extremely abundant liquidity is difficult to reproduce.
So, does this mean that a new round of interest rate cuts has begun?
Some institutions believe that in order to reduce financing costs and operate interest rates in the open market in the future, LPR may still be broken down, but the possibility of a significant interest rate reduction is still small.
The chief analyst of CITIC Securities clearly pointed out that future structural monetary policy operations can still be expected. The possible combinations include: continue to “cut interest rates” slightly; continue to target RRR cuts; continue to use MLF, reloan, rediscount, PSL and other monetary policy tools;Create more structural monetary policy tools; improve MPA assessment, etc.
Wen Bin believes that the MLF interest rate reduction indicates that the rate cut cycle has begun.
Edit: Ren Xiao Wang Zhu Ying