Source: Nuoan Financial Lion
The political Bureau of the CPC Central Committee held a meeting on April 30, saying that the third plenary session of the 20th Central Committee would be held in July, while stressing the need to rely on forward efforts to effectively implement the macro policies already established. On the whole, the tone of the Politburo meeting on counter-cyclical regulation policy is still positive, saying that the policy should "take advantage of the situation and avoid tightening before and after loosening", and the relevant "details" are obviously more specific than the December meeting. Among them, after pointing out the lack of effective demand and the greater pressure on the operation of enterprises, in finance, money, real estate, the expansion of consumption, social security, the construction of capital market and so on. The expression of "overall research on policies and measures to digest stock real estate and optimize incremental housing" has aroused great concern, and if effectively implemented, it will be of great benefit to improve expectations. In addition, finance is related to "issuing and making good use of ultra-long-term special treasury bonds as soon as possible, and speeding up the issuance and use of special bonds". The currency makes it clear that specific statements such as "flexible use of policy tools such as interest rates and deposit reserve ratio", consumption "large-scale upgrading of equipment and trade-in of consumer goods", and "actively developing venture capital and strengthening patient capital" in the capital market are not available at the previous meeting of the Politburo in December, and are also the main concerns of the market's policy on stabilizing growth. In terms of solving the problem of stock, in addition to real estate, there are also at the level of debt reduction.OctagonpokertableThere are more specific requirements. During the two sessions, it was required to "properly resolve the risk of existing debt and strictly prevent the risk of new debt", while this meeting of the Politburo mentioned the need to "ensure that high-risk provinces, cities and counties can not only truly reduce debt, but also develop steadily." In view of the fact that the issuance of special bonds lags behind this year in the context of chemical debt, we need to pay attention to whether there is further policy support for local financing vehicles, local government cash flow, and small and medium-sized banks while promoting the resolution of stock debts. Help them properly resolve stock debts while continuing to support the healthy development of the local economy. Looking back, if the pace of policy implementation is ahead and the measures to resolve the real estate stock are strong, the positive growth momentum in the first quarter is expected to continue.
In May, the Federal Reserve FOMC decided to keep the benchmark interest rate at 5.OctagonpokertableIn terms of shrinking tables, the Fed began to slow the maximum monthly shrinking table from $95 billion to $60 billion in June. At a news conference, Powell said that even if inflation does not fall, the Fed will keep interest rates at current levels and the possibility of raising rates again is low. Overall, the Fed's May decision was basically in line with market expectations, but Powell's position at the press conference was dovish. For the market, the most important effect of this FOMC is to "narrow" the path speculation of the Fed's possible policy, from the previous more "divergent" path assumption, including raising interest rates, to "divergence only at the point when interest rates are cut". Powell said that the repetition of the inflation data in the first quarter should not be over-interpreted, while stressing that wage inflation is trending down and rent inflation will continue to decline, inflation is still expected to fall this year. Looking back, monetary policy can be summed up as the threshold for delaying interest rate cuts is not high, while the threshold for raising interest rates is high. The former is in line with market expectations; the latter alleviates some of the market concerns. The outlook for a Fed rate cut depends on the job market and inflation data. For the market, the most important effect of this press conference is to "narrow" the market's speculation about the Fed's path since then, basically ruling out the possibility of raising interest rates. The meeting reduced the diversity of market expectations and reduced the risk premium at the margin.
Non-farm payrolls in the United States increased by 175000 in April, below market expectations of 240000, and for the first time since November 2023, the initial figure was lower than expected. at the same time, a total of 22000 new non-farm payrolls were revised down from February to March. The unemployment rate rebounded to 3.9 per cent in April, higher than market expectations and previous values, while hourly wages fell to 0.2 per cent month-on-month. The labor force participation rate was unchanged at 62.7%, and the average weekly working hours fell to 34.3 hours. The non-farm payrolls data show that US growth, while resilient, may no longer accelerate marginally, while inflation, especially labour inflation, which the Fed cares about, is still on track. Weak non-farm data in April suggest that labour market rebalancing continues. Looking back, the May non-farm data is particularly important for whether it is possible to cut interest rates in July, which is still possible if the trend of non-farm weakness continues or inflation goes down again, and given the Fed's strong willingness to cut interest rates.
Focus on: 1) AI, 2) semiconductors, 2) domestic substitutes and pro-cyclical plates
Follow-up: 1) real estate, infrastructure, consumption data, price index data, 2) overseas economic data and financial risks, 3) changes in Sino-US scientific and technological friction, 4) the risk of further expansion of the Israeli-Palestinian problem.
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