Sino-Singapore Jingwei, May 5th (Zhang Shunan and Wang Yongle) In the early morning of the 5th Beijing time, the Federal Reserve announced a substantial 50 basis point hike in interest rates.
Continuous release of hawk signals
Although the Fed's "boots" of raising interest rates by 50 basis points in May have landed, Fed Chairman Powell's remarks at the post-meeting press conference still attracted the market's attention.
Will there be a 75bps rate hike in June?
How to judge the current inflation and economic situation in the United States?
The market urgently needs to find clues from Powell's remarks.
While overall economic activity fell slightly in the first quarter, household spending and business fixed investment remained strong, the Federal Open Market Committee (FOMC) statement showed.
With the stance of monetary policy tightening appropriately, inflation is expected to return to the 2% target and the labor market to remain strong.
The Fed announced that it will gradually shrink its balance sheet starting on June 1.
Specifically, the initial scale of the Fed’s reduction of treasury bonds and MBS bonds is $30 billion and $17.5 billion, respectively, and will gradually increase to $60 billion and $35 billion in three months.
Powell said U.S. inflation is too high and must be lowered to keep the labor market strong.
The FOMC is moving swiftly to keep inflation down, and is taking the risk of inflation to the Fed's dual mandate at a high priority.
Powell said the FOMC sees a 50-basis-point rate hike as a possibility at the next several meetings and isn't actively considering the possibility of a single 75-basis-point hike.
In the early stage of the interest rate meeting, a number of officials intensively "released eagles" to set the tone.
San Francisco Fed President Daly said the Fed is likely to raise interest rates by 50 basis points at each of its subsequent meetings.
Chicago Fed President Evans, who has always been "dovish", said that the Fed may raise the federal funds rate to between 2.25% and 2.5% by the end of the year, and then assess the state of the economy. If inflation remains high by then, further increases may be required. interest.
On March 17 this year, the Federal Reserve raised interest rates again after a lapse of 3 years and 3 months, raising the benchmark interest rate by 25 basis points to 0.25% to 0.50%.
On April 21, local time, Powell said that the Federal Reserve is expected to raise interest rates by 0.5 percentage points in May to curb inflation, and he said that similar rate hikes may be required thereafter.
On April 20, the "Beige Book" released by the Federal Reserve showed that in terms of prices, inflationary pressures in various jurisdictions are still huge, and the costs of raw materials, transportation and labor have risen sharply. soaring.
Businesses in most jurisdictions expect the U.S. economy to continue to face inflationary pressures in the coming months.
Will it affect post-holiday A shares?
The Fed's continued interest rate hikes and expectations of "shrinking the balance sheet" have also added a layer of variables to the market trend.
Will the trend of A-shares be affected after the holiday?
In addition, for the RMB exchange rate back to 6.6, what is the next trend?
On May 3, Hong Kong stocks opened the market first. On the same day, the Hang Seng Index opened lower and rebounded and traded in shocks, up 0.06% to 21101.89 points.
The full-day market turnover was 106.705 billion Hong Kong dollars, compared with 165.116 billion Hong Kong dollars in the previous trading day.
On May 4, Hong Kong stocks opened lower and moved lower. The Hang Seng Index fell 1.1% to 20,869.52 points, and the market turnover was 72.4 billion yuan.
Western Securities believes that overseas, from the perspective of high-frequency data, U.S. consumption, real estate and labor are all showing pressure to fall, and the risk of an accelerated downturn in the U.S. economy in the second half of the year is rising significantly. In the future, the Federal Reserve will face greater pressure for further interest rate hikes. Overseas liquidity The environment is expected to usher in phased repairs.
Domestically, as the resumption of production and work in Shanghai is expected to proceed in an orderly manner after May 1, the domestic economy is expected to gradually return to normal in the second quarter, which will also boost fundamental expectations.
At the market level, the valuation of A-shares has fallen sharply, and the overall value has gradually entered the value range.
Western Securities analyzed that with the gradual convergence of the Fed’s interest rate hike expectations and the gradual implementation of the policy of easing the epidemic and stabilizing growth to promote consumption, the window for the rebound of the A-share market has opened.
Wang Hao, a macroeconomic researcher, told the media that both A shares and Hong Kong stocks may fluctuate due to the tightening of the Fed's monetary policy at present and for a period of time in the future, but the impact on A shares is likely to be smaller than that of Hong Kong stocks.
The listed companies of A-shares are all mainland enterprises, which are supported by a huge physical industry structure behind them, and their ability to resist shocks is also stronger.
Will the more-than-expected Fed rate hike and balance sheet reduction affect the trend of China's foreign exchange receipts and payments?
Wang Chunying, deputy director of the State Administration of Foreign Exchange and spokesperson, said that China's foreign exchange market has been increasingly resilient in recent years, and it has the foundation and conditions to adapt to the current round of Fed policy adjustments.
"From historical experience, the Fed's monetary policy adjustments, especially interest rate hikes, usually have spillover effects on cross-border capital flows across countries. However, some economies with weak fundamentals and weak fundamentals are mainly affected." Wang Chunying said.
Since April 19, the RMB exchange rate has depreciated rapidly, falling below several levels in a row.
Entering May, Wind data shows that on May 4, the offshore RMB exchange rate against the US dollar opened at 6.6480, the lowest depreciation in the day was 6.6591, and the highest appreciation was 6.6318.
As of 16:5, the offshore RMB exchange rate against the US dollar was at 6.6504.
The Northeast Macro Research Report predicts that the room for RMB depreciation may be limited.
First, the U.S. dollar index is expected to weaken gradually after the Fed’s intensive interest rate hikes and balance sheet reduction. Second, the domestic epidemic is gradually coming to an end. With policy support added, it is expected that the economy will gradually improve, and the economic growth rate is expected to pick up slightly in the second half of the year.
Yang Delong, chief economist of Qianhai Open Source Fund, analyzed that the Fed's interest rate hike will indeed have a certain impact on the capital market, but considering that the market has fully expected the interest rate hike before, the impact on the market has been digested to a certain extent, so The impact on the A-share market will not be too great.
After the holiday, the A-share market may continue to oscillate and rebound.
(Sino-Singapore Jingwei APP)
(The opinions in this article are for reference only and do not constitute investment advice. Investment is risky, and you need to be cautious when entering the market.)
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