Wen Mingming's bond research team
After the interest rate of Chinese and American government bonds entered the era of total inversion, the interest rate of Chinese and American funds also appeared inversion. According to the current Fed bitmap and the follow-up Fed rate hike rhythm shown by the Fedwatch tool of Chicago Business Research Institute, China-US policy interest rates will also be upside down in the second half of this year. For the bond market, the spread of funds and policies is not a strong constraint, and the bond market is "I am the master". In the second half of the year, the broad credit rhythm, which is high before and low after, may be the key to decide that the yield of 1-year government bonds will go down first.
the key term interest rates of Chinese and American government bonds are mostly upside down. With the ebb of the loose monetary policy of the Federal Reserve and even the rise of interest rates, the yield of US Treasury bonds has risen rapidly. However, domestic macro-economy is facing "triple pressure", monetary policy is still loose, and China's national debt yield to maturity fluctuates within a narrow range. Since the beginning of this year, the key term interest rates of China and the United States have been upside down, starting with the narrowing of the three-year spread between China and the United States on March 25, and spreading to other key terms. By June 13th, the yield to maturity of 3-year Sino-US Treasury bonds was upside down, which means that the yield of Sino-US Treasury bonds was upside down in the critical period. As of June 22, 223, except for 3-year treasury bonds, the spread between China and the United States has returned to 1.5bps, and the interest rates of other key treasury bonds have basically remained upside down.
The spread of funds between China and the United States has been narrowing since the end of February, and it turned upside down on June 16th. Taking SOFR interest rate as the benchmark index to measure the interest rate of funds in the United States, the spreads of R1-SOFR and DR1-SOFR began to decline from the highs of 249bps and 219bps on February 28th, respectively. After the Federal Reserve raised interest rates by 75 basis points on June 16th, the spread of DR1-SOFR was upside down for the first time. On the one hand, the interest rate inversion between China and the United States is similar to that in February-March 22, when the COVID-19 epidemic led to loose liquidity, which led to a rapid decline in domestic interest rates; On the other hand, it is similar to the second half of 218. The background is that the Fed's interest rate increase and contraction led to an accelerated decline in the reserve size of American deposit institutions, and the US interest rate center moved up and fluctuated.
after the capital interest rate is inverted, it may be difficult to avoid the inversion of the policy interest rate between China and the United States. In order to cope with rising inflation, the Fed was forced to change the original route of raising interest rates. Compared with the FOMC bitmap in March, it predicts that the federal funds rate will rise to 1.75% ~ 2.% (median) by the end of this year. At the interest rate meeting in June, the Federal Reserve once again sharply raised the target range of the federal funds rate at the end of this year to 3.25% ~ 3.5%. In the expected data of future interest rate hikes displayed by Fedwatch, in the neutral scenario with the highest probability, as of the third quarter of this year, the Fed will raise interest rates five times and raise interest rates nine times throughout the year. In the future, the pace of raising interest rates in the United States is still hawkish. Under the expectation that the domestic monetary policy will remain loose as a whole, it is expected that the policy spread between China and the United States will be further narrowed or even upside down in the third quarter.
impact on monetary policy and assets. The inversion of Sino-US capital interest rate and Sino-US policy interest rate will restrict the operation of China's monetary policy, especially the price-based tools. However, it is expected that China's monetary policy will still adhere to the "I-oriented" policy, and there is still room for further credit expansion in the second half of the year. Looking back at the performance of the stock and bond trading market during the period of upside-down interest rate of funds between China and the United States in history, it is found that the stock market and the exchange rate market have similar performance, and both have experienced the process of weakening and rebounding. At present, the stock market and RMB exchange rate market are also in the rebound stage. For the bond market, the spread of funds and policies is not a strong constraint, and the bond market is "I am the master". In the second half of the year, the pace of wide credit is high and then low. Related Q&A: I heard that the interest rate of bank deposits in the United States is only .25% per year. Where do Americans keep their money?
interest rate of Bank of America
The average interest rate of Bank of America is almost this number. According to the data of Bankrate, the top three savings rates in the United States are Citibank, Goldman Sachs Marcus Bank and American Express, and the interest rate is almost 1.5%
This interest rate is barely acceptable, but the interest rates of Wells Fargo and Bank of America, the largest banks in the United States, are outrageous, one is .1% and the other is .3%.
since the deposit interest rate in the United States is so low, don't American residents save money? This is indeed a true situation. Americans are really not aware of saving money. Data show that in recent decades, the household savings rate was less than 2% in the highest year, and only about 2% in the lowest year. On the contrary, China's household savings rate has reached more than 6%.
where do Americans keep their money?
American money is mainly used in two aspects: consumption and insurance.
the United States has always been a consumer country, and the social security system is relatively perfect, so the United States does not need savings to meet the future needs of medical care, education, and old-age care like us. In the real world, as long as Americans have money, they will spend on demand and even borrow money to spend. Credit cards originated in the United States.
Another important aspect, Americans have a strong sense of insurance. They will invest a lot of insurance in any aspect and wrap themselves up with insurance. When problems occur, they will not have a significant impact on their lives. This is also one of the main reasons why the living standards of Americans have been relatively high and the quality is relatively good.
summary
in addition to the above two parts, buying houses and financial management (such as funds and stocks) is also a common behavior of Americans. For example, the proportion of securities trading accounts in the United States is about 25%, while that in China is about 8%, which is more than three times that in China. Generally speaking, Americans are reluctant to save money. Therefore, the impact of the deposit interest rate on Americans is not great.