Only 1 month after RRR cut interest rates in an all-round way, the central bank cut interest rates and landed. The central bank announced in the morning of June 5438+07 that in order to keep liquidity in the banking system reasonably abundant, on June 5438+ 10/7, it launched the MLF operation of 700 billion yuan 1 year and the reverse repurchase operation of1000 billion yuan in the open market for 7 days, with the winning interest rates of 2.85% and 2.85% respectively. Among them, the MLF operating rate has been lowered for the first time since April 2020, and the 7-day reverse repo rate in the open market has been lowered for the first time in nearly 22 months.

The insiders believe that the growth of domestic insurance, the "scramble for time" of foreign interest and the Fed's interest rate hike in March have jointly contributed to the adjustment of MLF interest rate of 1. With the reduction of MLF interest rate in June 5438+ 10, the LPR quotation will be lowered, which will significantly reduce the financing cost of the real economy and release the signal that monetary policy is ahead of schedule. This will effectively hedge the triple pressure of "demand contraction, supply shock and expected weakening" faced by the current economic development and stabilize the macroeconomic market. So, what impact does MLF's interest rate cut have on the bond market?

The rate cut slightly exceeded market expectations.

In the past week, how to continue the first medium-term loan facility (MLF) in 2022 has attracted much attention, and institutions have obvious differences on whether the MLF interest rate will be lowered. According to Reuters's previous survey, most institutions expect the operating interest rate of MLF to remain stable. Only 30% of the respondents believe that in view of the sustained economic weakness, the intensified spread of the COVID-19 epidemic in China and the continuous exposure of the risks of housing enterprises, the need for policy easing has further increased, and the expectation of policy interest rate reduction has therefore increased, leading to the reduction of MLF interest rate in June 5438+ 10.

Citibank wrote in the report that China's PPI growth rate declined and CPI was moderate, which enabled the central bank to make more efforts to curb weak aggregate demand. 1 month is the key time node of the central bank, and further reduction of policy interest rates such as MLF and LPR (loan market quotation) can take effect before the Spring Festival.

In view of the fact that the the State Council executive meeting held a few days ago made it clear that steady growth should be placed in a more prominent position, and we should persist in not engaging in "flood irrigation" and expand final consumption and effective investment in a targeted manner. Therefore, more institutions still believe that the operating interest rate of MLF will remain stable. The mainstream view is that the focus of monetary policy is still to maintain strength. For example, the chief analyst of CITIC's fixed income clearly stated that the liquidity gap in June 5438+ 10 may reach 2.6 trillion (excluding MLF and reverse repurchase expiration), which is at a high level. The operation of the central bank is the most critical variable, and the fluctuation is likely to be smoothed by OMOMMLF, but it is difficult to relax greatly. The probability that the central bank will cut interest rates in June 5438+ 10 is not high.

What led to the downward trend of MLF interest rate?

The MLF interest rate cut is the first cut in the past nine months. On April 5, 2020, the central bank announced that it would cut the MLF interest rate for 1 year by 20 basis points, from 3. 15% to 2.95%, and the interest rate has remained stable since then. So, what triggered the MLF interest rate cut button to start again? From the mainstream point of view, the downward pressure on the economy continues to intensify, and moderate inflation creates space for further easing of monetary policy.

The economic and financial data released last week showed that the demand of the real economy remained weak. According to social financing data, after the RRR cut in July 20265438 and February 2065438, the growth rate of credit balance continued to decline in June 20265438 and February 2065438, which was the lowest since June 2002.

According to the financial statistics of 20021and the statistical report on the increase of social financing scale released by the central bank on June 5438+02, the increase of social financing scale in China in June 20021year was 2.37 trillion yuan, 720.6 billion yuan more than that in the same period of last year and 65438 more than that in the same period of 20 19. RMB loans in China increased by 1. 1.03 trillion yuan in February, a year-on-year decrease of1.23 billion yuan, an expected increase of 1.24 trillion yuan, and an increase of 1.27 trillion yuan in the previous period; M2 increased by 9% year-on-year, with an expected 8.7% and a previous value of 8.5%. According to preliminary statistics, the stock of social financing scale at the end of 200214.13 trillion yuan, up by 10.3% year-on-year.

According to the data of June 5438+02 released by the National Bureau of Statistics, the PPI rose by 10.3% year-on-year in June 2002/2, down by 2.6 percentage points from the previous month, and dropped by two months from the high point of 10/3.5% in June, and an inflection point has appeared. CPI rose 1.5% year-on-year, down 0.8 percentage point from last month, and fell below 2% again. Excluding food and energy prices, the core CPI rose by 1.2% year-on-year, unchanged from last month. Previously, the market generally expected that the year-on-year growth rate of PPI and CPI would decline, but the actual decline rate exceeded market expectations.

The economic and financial data of the closing month of 202 1 highlights the pressure of steady growth after the beginning of the year. According to Wang Qing, the chief macro analyst of Orient Finance, the overall growth rate of credit, social financing and M2 will enter a relatively fast upward stage, and the process of wide credit will be significantly accelerated. At the same time, consider fiscal policy and industrial policy, and actively promote policies and measures conducive to steady growth. It is estimated that the GDP in the first and second quarters of 2022 is expected to remain above 5.0% year-on-year, thus ensuring that the macroeconomic growth rate remains within the potential economic growth range (5.0%-6.0%).

In addition to the pressure of domestic fundamentals, Wang Qing believes that from the perspective of external factors, the Fed may start raising interest rates as early as March. In order to avoid the "collision" between domestic interest rate cuts and the Fed's interest rate hikes, and bring greater downward pressure on the RMB exchange rate, the central bank cut interest rates in June 5438+ 10. This also reflects the forward-looking operation of monetary policy to a certain extent.

"Good cash doesn't mean that good money will run out. In the current downward pressure on the economy, especially in the real estate market, it is hard to say that this round of monetary easing will stop at this rate cut, and the trend of subsequent monetary policy still needs to be closely observed. Economic fundamentals and marginal changes in the real estate market. " Wang Qing said.

As the MLF decreased by 10 basis point in June 5438+ 10, it is expected that the 1 year and 5-year LPR announced on the 20th of this month will be lowered simultaneously. According to the previously published data, the LPR of 202 1 65438+February1has been lowered by 5bp to 3.80% for the first time since April 2020, ending the "standing still" of the previous 19 months. However, the interest rate of varieties over five years has remained flat at 4.65% for 20 months.

Interest rate cuts and RRR cuts, the bond market was briefly excited at the beginning of the session.

As the anchor of bond market pricing, after MLF cut interest rates, the yield of inter-bank spot bonds plummeted at the beginning of the session, and the yield of 10-year active bonds 2 100 17 decreased by 2.50bp to 2.7675% in a short time. The main force of 10-year bonds opened higher, and the market buying was strong, and the increase quickly expanded to 0.24%, the highest level since June 2020 15.

However, after the bullish sentiment vented, the bond futures fluctuated and fell back, and the increase narrowed. As of midday on 17, 10 main debt T2203 reported 100.750, up by 0.07%, with a turnover of 53,600 lots; TF2203, the main force of 5-year bonds, was quoted at 10 1.780, up by 0. 12%, with 25,300 transactions; The main 2-year bond TS2203 was submitted to101.10, up by 0.06%, with a turnover of1.130,000 lots.

The yield of interest rate bonds between major banks dropped significantly and then rebounded. By midday, the yield of 10-year CDB active bond 2 102 15 was down by 0.65bp to 3.0765%, nearly 2 BP lower than that at the beginning of the session. The yield of 10 active debt 2 100 17 dropped by nearly 1bp to 2.7830%.

Last Monday, the yield of 10-year treasury bonds fell to the 2.80% mark, and interest rates fell moderately in the following days. Looking forward to the market outlook, under the favorable policy interest rate, how much downside is there for the interest rate of 10-year government bonds? In this regard, market views are still divided. Analysts told Xinhua Finance that social financing is expected to achieve a "good start" in 2022 after MLF and subsequent LPR interest rate cuts. In addition, fiscal policy may exert its strength, social financing will go up, banks' desirable allocation of assets will increase, and the attractiveness of bonds may decrease slightly. Therefore, it is more likely that the interest rate of 10-year treasury bonds will fluctuate within a narrow range.

Ming Ming, chief analyst of fixed income of CITIC Securities, reminded that considering that the leverage level of the bond market is still high, the impact of liquidity changes is expected to be amplified, and it is necessary to be alert to the risk of interest rate rising after the market's overly optimistic expectations fail.

At the same time, investors are advised to be alert to the upward pressure on interest rates caused by the net financing of national debt exceeding expectations in the first quarter. He said that increasing the supply of national debt is expected to become an important starting point for "steady growth", and the raised funds can be used for countercyclical projects such as infrastructure investment, which also provides space for tax reduction and fee reduction from the side and improves the profit expectation of enterprises. For the bond market, the increase in the net financing amount of national debt may squeeze out the allocation scale of financial institutions to securities such as political and financial bonds. When the supply increases but the demand remains unchanged, the overall interest rate tends to fluctuate. In addition, when the supply pressure is extremely prominent, the funds in the interbank market will be further withdrawn for reasons such as payment.

However, optimism is not lacking. Luo, a fixed-income analyst at Industrial Securities, believes that for the bond market, cutting interest rates does not mean that all profits are exhausted, but we should also see the potential downward pressure behind cutting interest rates. In the absence of grasping hands, steady growth takes time to take effect, and1-February is still in the long window period of the bond market.

Hongze FICC Zhang Zuohao also believes that for the market, the most direct beneficiary is the national debt. In the context of the opening of the interest rate cut cycle, the downward cycle of government bond yields will continue.