Will the central bank throw MLF "fixed heart pill" in June, will interest rates be lowered?
The central bank expressed a one-time sequel to the expired MLF in the middle of the month, and treasury bond futures closed up across the board; the loosening of monetary policy slowed down, and the expectation of RRR cuts attracted attention
On June 8, when the mid-term loan facility (MLF) of 500 billion yuan expired, the central bank did not directly renew it, but said that it will renew the MLF due this month at a time, about the specific operation amount. It will be determined according to market demand and other circumstances.
The central bank's move is regarded as a signal of care for liquidity. On June 8, the national debt futures closed up across the board. On the same day, the central bank launched a 120-billion-reverse seven-day repurchase, and the winning bid rate remained unchanged at 2.2%. On the same day, the net return of funds was 380 billion yuan.
The Beijing News reporter noted that although the pace of easing operations has slowed recently, the monetary policy easing has remained unchanged. A few days ago, when talking about the "generalized money supply (M2) and social financing scale growth rate proposed in the government work report was significantly higher than last year", a person close to supervision told the Beijing News reporter that the amount of monetary policy is well grasped It will ensure that the growth rate of M2 and social financing is higher than last year. The growth rate of both indicators in April has been above 11%, and maintaining this speed will meet the requirements.
Funds are "tight", the central bank has continuously invested 340 billion
According to the announcement of the Central Bank, in order to maintain reasonable and sufficient liquidity in the banking system, a 120-billion-reverse reverse repurchase operation was launched on June 8. This is the third consecutive trading day of 7-day reverse repurchase operations, and a total of 340 billion yuan has been released with a winning interest rate of 2.2%.
However, liquidity pressure in June tends to be greater. From the perspective of this year, Huachuang's solid income team said that the payment and the large-scale expiration of MLF require more medium- and long-term liquidity. The short-term reverse repurchase will expire at the beginning of the month, and the disturbance of government bond issuance and payment will continue. At the half-yearly point, there are many demand factors for liquidity, and supply factors are mainly concentrated in fiscal expenditures, or they are issued at the end of the month. The specific scale of refinancing for liquidity supplement is unknown.
According to Wind statistics, there were a total of 720 billion reverse repurchase and MLF maturity this week. In addition to the 500 billion yuan MLF expiring on Monday, there will be 70 billion yuan reverse repurchase due on Thursday and 150 billion yuan on Friday. The repurchase is due. Looking at the whole month, there will be 240 billion yuan MLF due on June 19.
The Shanghai Interbank Offered Rate (Shibor), which reflects the adequacy of liquidity in the market, showed mixed interest rates for different maturities on June 8. Among them, 7-day and 14-day Shibor went down by 4.5 bp and 1.5 bp to 1.942% and 1.69% respectively, continuing the downward trend of last week. However, overnight Shibor rose 30.8 bps to 1.89%, and the January period Shibor, which will cross the mid-year point, rose 6.5 bps to 1.647%.
In addition, another weather vane, DR001, jumped in early trading and then fell back to 1.88%, while DR007 fell back to 2.04% from a policy rate approaching 2.2%. As of 16:00 on June 8, the latest interest rate of DR001 reported 1.7212%, DR007 reported 1.87%.
The bond market ended in a row and the loosening of monetary policy slowed down
Although the current liquidity pressure is still there, the central bank's sequel to the middle of the month has made the market change its funding expectations and is seen as a signal for the central bank to take care of liquidity. On June 8, treasury bond futures closed up across the board, with 10-year, 5-year, and 2-year main contracts up 0.32%, 0.22%, and 0.19%, respectively.
Prior to this, the bond market experienced a "strong headwind." Since May, the price of government bond futures has been adjusted in depth. As of the beginning of June, the prices of the three varieties of government bond futures have fallen back to the level around the Spring Festival, giving up room for yield from the loose monetary policy that affected the epidemic from February to April. Market interest rates are also rising. Among them, the overnight Shibor, which fell to 0.661% of "floor price" on April 29, rebounded to 2% in late May; DR001, which was once as low as 0.6625%, also returned to more than 1%.
In fact, the regulator’s stance on monetary policy has remained unchanged. In the early stage of the outbreak (early February), the central bank successively offered tools such as trillions of reverse repurchase and RRR cuts, and reduced the reverse repurchase and MLF interest rates to ease some regions. And the financing cost of enterprises, another round of "interest rate cuts" was carried out in April. Up to now, the hedging policy implemented by the central bank has exceeded 5.9 trillion yuan. However, as the domestic epidemic situation stabilized and the pace of easing operations slowed, among them, the wait-and-see interest rate cut in May failed, and the reverse repurchase tools that provided short-term liquidity also stopped 37 consecutively from the end of March to the end of May. Trading day.
Last week, the central bank launched an innovative monetary policy tool, but instead of directly easing the currency, it kept credit ahead. According to the analysis of the deputy director of the CITIC Securities Research Institute, under the "credit first" approach to regulation and control, loose money is not a prerequisite for liquidity transmission, to a certain extent, it also leads to poor expectations of the market for currency loose.
Many industry insiders also mentioned that preventing "fishing in troubled waters" also reversed the market's loose expectation of monetary policy. This year’s government work report clearly stated that “strengthen supervision and prevent arbitrage of funds from being stolen”. The Huachuang Solid Revenue Team stated that the recent policy layer may have increased attention to bond market arbitrage and physical financing slack, and the marginal upward price of funds has triggered Market expectations have tightened significantly.
Interest rate adjustments focus on heating, experts: the probability of lowering the standard is small
The central bank only revealed that MLF will be launched in the middle of the month, but it is not clear whether it will adjust the interest rate. The market's concern about whether the RRR will be lowered and the interest rate cut in June will increase.
Zheshang Securities believes that the “reduced standard and interest rate” in June is a high probability. From the perspective of previous years, every June is a period of high occurrence of “money shortage” in the market. There are two main reasons for this. First, banks face mid-year assessments. , The mid-year settlement of the enterprise resulted in the return of funds; the second is that the financial products expired in June at the end of the quarter and half a year. In the face of relatively tight funds, the central bank is expected to further implement measures to cut the RRR and interest rate in June.
There are also disagreements on whether market standards will be lowered. Founder Securities believes that considering the peak issuance of interest rate bonds and the issuance of anti-epidemic special treasury bonds, the probability of a RRR cut is higher in June. Combined with the global "faucet" is still open, there will be no inflection point before the economy returns to normal levels. Guohai Research Jin Yi team said that in the face of higher expiration pressure and external disturbances, this week the central bank is expected to increase liquidity investment, and the possibility of lowering the standard replacement MLF cannot be ruled out.
However, the chief economist of Founder Securities believes that the government work report's M2 and social financing growth rate is significantly higher than last year's goal is an unprecedented new requirement, DR007 is lower than the reverse repo rate is acceptable, but if it is too low, If 70bp, 80bp or more, it will cause the central bank to intervene, by suspending reverse repurchase, stopping the reduction of MLF interest rates and window guidance. "DR007 should be a desirable level between 1.5% and 2%. In June, the central bank will conduct MLF operations, but interest rates may not be adjusted to push market interest rates closer to the desired central level." Color analysis said.
In terms of color, the continued reduction in the standard has led to an increase in the currency multiplier, and the financial system's demand for base currency is not too great. Moreover, the RRR cut just last month requires digestion and absorption, so the probability of a RRR cut in June is expected to be small. If liquidity is tight, medium- and long-term liquidity can be replenished through refinancing, and short-term liquidity can be replenished through reverse repurchase.
In this regard, Wen Bin, chief researcher of China Minsheng Bank, said that considering the six-month seasonal liquidity pressure, the central bank may restart the 28-day reverse repurchase and adopt the "reverse repurchase + MLF" combination to maintain liquidity and market interest rate stability.
Beijing News reporter Cheng Weimiao