Main points of report
On Monday, the central bank OMO cut interest rates beyond market expectations, and in the last two trading days, stocks and bonds rose together. In this regard, we believe that under the background of increasing downward pressure on the economy and the opening of the central bank's monetary policy window, the downside of interest rates is relatively clear, while the upside of the stock market in the short term remains to be verified. We are more optimistic about the logic of debt first and then stocks next year.
After the central banks MLF and OMO cut interest rates continuously, stock bonds rose for two consecutive days. 9.10 There were many bad days in February, and the bears in the bond market prevailed. The yield of 10-year treasury bonds began to rise in September, and the highest point once exceeded 3.3%. The turning point appeared at the end of 10, and the economic and financial data was weak. The central bank was caught off guard by cutting interest rates twice, especially the OMO cut interest rates on Monday, which boosted both stocks and bonds in the first two trading days of this week. The stock market rose unilaterally, the bond market performed more strongly, the treasury bond futures closed up across the board, and both the treasury bond and CDB bond strengthened. The signal of interest rate cut will stimulate the stock and debt in the short term. Does it mean a staged stock and debt market?
Every time the interest rate cut cycle, there will be an obvious bull market in the bond market. The impact of interest rate cuts on the bond market is more direct and clear, which will bring down interest rates and make the bond market bullish. There are two phenomena worthy of attention. First, whether the central bank takes measures such as reducing RRR before cutting interest rates, and second, it needs to pay attention to the rhythm of the central bank's interest rate cuts. In the process of the central bank's interest rate cut, the downward trend of interest rates in the short term is relatively certain, and the impact of interest rate cut on the downward range and timing of interest rates still depends on the rhythm and intensity of interest rate cut.
In contrast, the impact of interest rate cuts on the stock market is uncertain, which needs to be combined with the economic fundamentals and the judgment of future corporate profits. The impact of the central bank's interest rate cut on the stock market is not direct, but after considering other factors, it may have a greater indirect impact on the stock market productivity. First, interest rate cuts will reduce the financing costs of enterprises, stimulate production and investment activities in the real economy, and drive aggregate demand and corporate profits to rebound. The second is to reduce the discount rate of enterprise's future cash flow and improve the present value of enterprise's expected income. Sometimes, interest rate cuts are accompanied by RRR cuts, which release a lot of liquidity to the stock market and push the stock market to go bullish. Although interest rate cuts are almost beneficial to the stock market, the time when the central bank chooses to cut interest rates is often a period of great downward pressure on the economy, poor profitability of enterprises and difficult production and operation of enterprises. Considering the above two aspects, although the interest rate cut is beneficial to the stock market (causality), it does not necessarily correspond to the stock market rise (correlation).
Debt before shares may be the trading logic in the fourth quarter of this year and next year. In the fourth quarter and early next year, the downward pressure on the economy was greater, and the counter-cyclical monetary policy window opened, which was good for the bond market. The downward pressure on the economy itself restricts the upside of the stock market, and the countercyclical policy is gradual, focusing on "steady growth", seeking stability rather than seeking speed. It is difficult to see a rapid rebound in economic and corporate profits in the short term. Although the stock market may be boosted by interest rate cuts, there will be a short-term market, but we are more inclined to think that the greater opportunity for the stock market will begin in the second quarter of next year.
Bond market strategy: The economic data of 10 also proves our long-standing view. The signal of cutting interest rate by 5BP means that the balance of monetary policy tilts towards the latter between "pig inflation" and "steady growth". Based on this, we judge that at the end of the year or early next year, when the downward pressure on the economy is greater, there will still be the introduction of quantity or price tools. Combined with the analysis of this paper, we believe that there is still room for interest rate reduction at present. When the market has bad expectations on the rhythm and intensity of the central bank's monetary policy, which leads to interest rate fluctuation adjustment, the strategy of entering the market on rallies is always dominant, and 2.8%-3.2% is the reasonable range of 10-year national debt yield to maturity.
main body
The central banks MLF and OMO cut interest rates continuously, and stocks and bonds rose for two consecutive days.
9.10 There were many bad days in February, and the bears in the bond market prevailed. First, the expectation of interest rate cuts fell through. Although since the middle of this year, the market has already expected the downward pressure on the economy in the second half of this year, the expectation that the domestic central bank will follow the Fed's interest rate cut is not small. However, with the failure of the domestic central bank's interest rate cut expectations at several important points, the confidence of the bond market bulls has been suppressed. Second, the margin of trade friction has eased, and the margin of risk preference has rebounded. Third, structural inflation exceeded expectations, and the market is generally worried that the upward pressure of CPI will restrict monetary easing. Under the influence of the above main factors, the bond market gradually weakened, and the yield of 10-year government bonds began to rise in September, with the highest point exceeding 3.3%.
The inflection point appeared at the end of 10, the economic and financial data was weak, and the two interest rate cuts were caught off guard, and both stocks and bonds were boosted. The PMI released at the end of 10 fell to a new low of 49.3 in the year, indicating that the manufacturing industry is still operating in a weak range, which is lower than the market expectation. The market's reaction to this tends to be cautious, and interest rates have not dropped significantly. 1 65438+1October 5th, the central bank "suddenly" lowered1year MLF interest rate by 5BP, which greatly exceeded market expectations. The interest rate of national debt fell by about 5bp +0 1 1 1. 1the financial data released on October 5 is very poor to read, and the market already has it. The rapid downward trend of interest rates occurred again in 165438+ 10/8 and 165438+ 10/9. Last weekend, the expression of "gate" was deleted from the monetary policy implementation report, revealing that signs of marginal easing may have been expected, but the new job of the central bank on Monday morning was180 billion yuan. With the release of the unexpected easing signal, treasury bonds futures strengthened sharply, and the interest rate of 10-year spot bonds fell by about 6-7BP in two days. The expectation of loose liquidity also gave a great boost to the stock market, and there was a situation in which shares and debts rose together within two days.
These two days (165438+ 10/8, 19), the stock market rose unilaterally. The positive trade friction in the early stage and the central bank's measures to reduce the MLF interest rate did not greatly boost the stock market sentiment. The Shanghai Composite Index failed to stay above 3000 points. With the sharp drop on June 65, 438+065, 438+1October 65, 438+065, 438+0, the Shanghai Composite Index fell back to around 2900, and the support level around this point repeatedly bottomed out. Although the monetary policy implementation report came out, the central bank lowered the OMO operating interest rate in early Monday, which obviously exceeded market expectations. The Shanghai Composite Index rose 0.62% on Monday, 0.85% yesterday and 1.47% in two days to close at 2,933.99 points. The Shenzhen Component Index rose by 0.70% on Monday, and rose again by 1.80% yesterday, with a cumulative increase of 2.50% in two days to close at 9889.75 points. Growth enterprise market index rose 0.46% on Monday, 2.77% yesterday and 3.23% in two days to close at 1729.08.
The bond market performed more strongly, with treasury bonds futures closing up across the board, and both treasury bonds and CDB bonds strengthened. After the central bank cut interest rates on Monday, the main 10-year treasury bond futures T 19 12 rose 0.3%, up 0.4 1% that day, up 0. 12% yesterday and up 0.53% in two days to close at 98.5000. TF 19 12, the main futures of 5-year treasury bonds, rose by 0.20% on Monday, rose by 0. 10% yesterday, and rose by 0.30% in two days to close at 99.975 yuan. The main futures of 2-year treasury bonds, TS 19 12, rose 0.09% on Monday, rose 0.06% again yesterday, and rose 0. 15% on two days to close at 100.435 yuan. In terms of cash bonds, the yield of 10-year CDB active bonds 1902 10 fell by 4.75bp on Monday, and fell by 2.37bp again yesterday, and fell by about 7. 12bp in two days to close at 3.6350%. 10-year treasury bonds 190006 yield dropped by 4.00bp the day before yesterday, and fell by 2.50bp again yesterday, and fell by 6.50bp in two days to close at 3. 1675bp. The signal of interest rate cut will stimulate the stock and debt in the short term. Does it mean a staged stock and debt market?
Can the interest rate cut cycle bring Shuang Sheng?
By combing the three domestic interest rate reduction cycles since 2008, we find that the impact of interest rate reduction cycles on the bond market is clear, and there will be a more obvious bull market in the bond market every time. From September 2008 to June 5438+February, the central bank lowered the benchmark interest rate for deposits four times in a row and the benchmark interest rate for loans five times. From June 2065438 to July 2002, the central bank lowered the benchmark interest rate of deposits and loans twice; Since October 20 1 14 10, the central bank has lowered the benchmark deposit and loan interest rate six times, and the open market operating interest rate 10 times in 20 15 years. Without exception, these interest rate cuts have lowered long-term interest rates.
Influence of interest rate cut on domestic bond market
After 2008, the first round of interest rate cuts took place in September 2008-65438+February. This interest rate cut is characterized by a large rate cut and a short duration. In response to the severe impact of the global economic crisis on the domestic economy, the central bank lowered the benchmark interest rate for deposits four times in a row and the benchmark interest rate for loans five times, of which the benchmark interest rate for 1 year loans dropped from a high of 7.47% at the end of 2007 to 5.3 1%. In the same period, the yield to maturity of 10-year national debt also dropped rapidly from a relatively high level of about 4.5% to about 2.6%.
The second interest rate cut cycle occurred in 2065438+June-July 2002. This rate cut is characterized by a relatively small rate cut and a relatively short duration. The central bank lowered the deposit interest rate and loan interest rate twice, and the loan interest rate dropped from 6.56% to 6%. As early as 20 1 1, 1 1, the central bank began to gradually reduce the deposit reserve ratio, and the long-term interest rate was partially relaxed before the interest rate cut. Although there was a short-term "small bull market" in the bond market during the interest rate cut, the interest rate cut was not sustainable, so the benefits to the bond market were limited.
The third round of interest rate cuts was from 20 1 1 in 2005 to 1 in 2005. This interest rate cut is characterized by strong interest rate cuts, long interest rate cuts and strong "sustainability". At that time, there was great downward pressure on the domestic economy. The central bank lowered the benchmark deposit and loan interest rate six times, and lowered the open market operating interest rate 10 times in 20 15 years. Among them, the loan interest rate dropped from 6% to 4.35%, and the 7-day reverse repo rate also dropped from 4. 10% to 2.25%. The process of interest rate reduction only lasted about 1 year, during which the yield of ten-year treasury bonds dropped sharply, from about 4.25% to about 2.8%, and then reached the lowest point of 2.65%, which was the biggest bull market in the bond market in recent ten years.
To sum up, the impact of interest rate cuts on the bond market is more direct and clear, which will bring down interest rates and the bond market, but it also depends on the pace and intensity of interest rate cuts. There are two phenomena worthy of attention. First of all, whether the central bank takes measures such as reducing RRR before cutting interest rates. If the central bank takes some measures to relax liquidity, the interest rate may have already included a certain expectation of interest rate cut before the interest rate cut, and the superficial impact of interest rate cut may not be so strong. Second, we need to pay attention to the rhythm of the central bank's interest rate cut, including the extent and length of time. If it is a small and unsustainable rate cut, it is difficult to bring about a sharp drop in interest rates. In the process of the central bank's interest rate cut, the downward trend of interest rates in the short term is relatively certain, and the impact of interest rate cut on the downward range and timing of interest rates still depends on the rhythm and intensity of interest rate cut.
Influence of interest rate cut on A shares
In contrast, the impact of interest rate cuts on the stock market is uncertain, which needs to be combined with the economic fundamentals and the judgment of future corporate profits. The impact of the central bank's interest rate cut on the stock market is not direct, but after considering other factors, it may have a greater indirect impact on the stock market productivity. First, interest rate cuts will reduce the financing costs of enterprises, stimulate production and investment activities in the real economy, and drive aggregate demand and corporate profits to rebound. The second is to reduce the discount rate of enterprise's future cash flow and improve the present value of enterprise's expected income. Sometimes, interest rate cuts are accompanied by RRR cuts, releasing a lot of liquidity. These cheap funds may flow to the stock market in a large amount under the condition of loose supervision, which will promote the stock market to go bullish. Although interest rate cuts are almost beneficial to the stock market, the time when the central bank chooses to cut interest rates is often a period of great downward pressure on the economy, poor profitability of enterprises and difficult production and operation of enterprises. Considering the above two aspects, although the interest rate cut is beneficial to the stock market (causality), it does not necessarily correspond to the stock market rise (correlation).
It is difficult to offset the economic crisis in the short term by cutting interest rates. In the cycle of interest rate reduction in 2008, the bullish impact of interest rate reduction on the stock market did not appear. After the central bank announced the interest rate cut, the stock market fell instead of rising. After three rounds of interest rate cuts, the Shanghai Composite Index even fell to a low of 1706. During this period, the stock market was mainly affected by the downward pressure of the global crisis and the sharp decline in risk appetite. It is difficult to reverse the situation in the short term by lowering interest rates. However, in the long run, with the gradual development of monetary policy and fiscal policy, Big bounce appeared after the economy bottomed out in the first quarter of 2009, and the stock market also moved with it, resulting in a bull market after the crisis. The Shanghai Composite Index once rose to more than 3,000 points, and reached 3,400 points in early August 2009.
The impact of 20 12 interest rate cut on A shares is counterintuitive. During the interest rate cut cycle from June to July in 20 12, the impact on the stock market was even more uncertain because of its short duration. During the RRR cut before the interest rate cut, the Shanghai Composite Index rebounded slightly, but during the short-term interest rate cut, the Shanghai Composite Index almost unilaterally declined.
The easing of 20 15 has brought about large fluctuations in the stock market. During the interest rate reduction cycle from 20 14 to 20 15, the stock market experienced a bull-bear switch, and the Shanghai Composite Index reached a high of 5 178 in June of 20 15, and then fell rapidly, resulting in a stock market crash. Judging from the interest rate cut, the central bank greatly reduced the cost of capital and released a lot of liquidity. However, due to the policies of strengthening the regulation of the real estate market and standardizing the issuance of local bonds at that time, a large amount of liquidity accumulated in the financial system and relatively little flowed to the real economy. In addition, with the differentiation and relaxation of supervision, a large number of cheap funds flowed to the stock market, which made the stock market bubble blow bigger and bigger from the end of 20 14, and the stock market appeared "bubble bull". But in the middle of 20 15 years, due to the sudden strengthening of supervision, the bubble was finally punctured and the stock market fell into a big bear market.
The logic of debt first and stock later
The stock market may be boosted by interest rate cuts, but we are more inclined to think that the greater opportunities for the stock market will begin in the second quarter of next year. The downward pressure on the economy itself restricts the upside of the stock market, and the countercyclical policy is gradual, focusing on "steady growth", seeking stability rather than seeking speed. It is difficult to see a rapid rebound in economic and corporate profits in the short term. Therefore, even if the stock market is affected by phased interest rate cuts, we are more inclined to think that a series of fundamental favorable factors such as trade easing, real estate completion recovery, special debt power and American political cycle will push the stock market to start to pick up in the second quarter of next year.
In the fourth quarter and early next year, the downward pressure on the economy was greater, and the counter-cyclical monetary policy window opened, which was good for the bond market. We have discussed the economic rhythm of next year in "Fixed Income Investment Strategy in 2020-Bright Future", and the economic data of 10 month also well proves our long-standing view. The signal of 5BP means that the balance of monetary policy has tilted towards the latter between "pig inflation" and "steady growth". Based on this, we judge that there will still be quantity or price tools introduced at the end of the year or the beginning of the year when the downward pressure on the economy is great. Combined with the analysis of this paper, we believe that there is still room for interest rate reduction at present. When the expected difference in the pace and intensity of the central bank's monetary policy leads to interest rate fluctuations, rallies are always the dominant strategy, and 2.8%-3.2% is still the reasonable range of 10 national debt yield to maturity.
(Article source: Qing Bi Tan)
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