Zhongtai Securities: Probability of Reduction in April Increased

Source: Li Xunlei Finance and Investment Last Friday, news about the extension of the RRR cut touched the nerves of investors in both the stock market and the bond market. Transfers of Weibo also rarely rumored late at night.

After all, do you want to lower the quota in April, and why do you lower it?

Considering that there are good 佛山桑拿网 reasons for all parties, the fixed income research team (Qi Sheng, Long Shuo, etc.) of the China-Thailand Securities Research Institute, from the perspective of data, calculates based on the gap between the base currency and reduces the necessity and magnitude of the RRR cut.The funds released by the RRR cut have already been spent, and the over-reserve ratio has replaced a relatively low level, and if it is not converted, the second quarter will still cause a 500 billion base currency gap.

  Therefore, the Sino-Thai solid income team judged that hedging the base currency gap with the method of lowering the standard may still be the best choice for the transformation.

It is possible to observe the aftereffect of 5%, or directly reduce it by 1% once and for all. The difference is only in the amount of replacement of MLF, which ultimately results in a significant difference in the scale of net capital growth.The situation chooses the strength of the April signal, but it is still a high probability event before the MLF expires on April 17.

  At the same time, the article also prejudges the trend of interest rates and the performance of the bond market based on historical experience.

  Have you spent all the funds released in January?

  The excess reserve ratio has reached the expected relatively low level. Before discussing the currency gap in April, we must first review the currency gap and gradual operation in the first quarter.

In the first quarter of each year, the funds released in January are concentrated in January, mainly including the following operations: reduction of standards, release of funds1.

5 trillion yuan; targeted reduction, 250 billion yuan of funds will be released; TMLF operation, 257.5 billion yuan of funds will be released, and the three will release about 2 trillion yuan in total.

At the same time, the MLF expired in the first quarter of the year was 12235 billion, of which 18.5 billion had been lowered before the initial replacement and the net return was about 1.

2 trillion; as of the end of March, there was no balance in the transitional reverse repo operation, which was equivalent to a net decline of 840 billion funds, the balance of payments was offset, and the operation was basically balanced.

  At the same time, there are some natural changes caused by some initial factors in the first quarter. The data from January to February can be found in the corresponding balance sheet. In March, they are temporarily calculated based on historical averages. The main subjects are as follows: Foreign exchange accounts are almost zero.Financial deposits brought in more than 600 billion net withdrawals, and cash changed the banking system by about 300 billion due to the Spring Festival effect. Since then, the more than 900 billion funds released by fiscal savings at the end of December 18 have been almost consumed.

  In addition, due to the recovery of bank credit expansion from January to February, the consumption of statutory reserves also exceeded the level of the same period last year, and is expected to be around 750 billion yuan.

In the context of further operation of the basic balance and the minimum factors causing the basic currency investment in December to have been basically consumed, the excess deposit reserve has been continuously consumed by the law, and the excess reserve ratio has been decreasing month by month since January, and has been reduced to 1 at the end of March.

2% -1.

About 3%, slightly lower than the same period last year, similar to more than 17 years.

  According to the above analysis, the funds released in January have been exhausted. As the available funds of the bank have been reduced, the funds are in a tight balance, which has also caused the liquidity to remain loose in the past month, but the volatilitySignificantly intensified, and short-term funding supply and demand imbalances occasionally occurred.

  What is the funding gap in the second quarter?

  Initial budget funding is an inevitable choice. After reviewing history, let’s look forward to the next future. How big is the currency gap in the second quarter?

First of all, let’s look at the expiration of MLF. In the second quarter, a total of 1.185 trillion yuan expired, of which 366.5 billion on April 17, 156 billion on May 14, 463 billion on June 6, and 200 billion on June 19.No small amount of money.

  In terms of changes in other subjects, foreign exchange accounts in the second quarter are expected to remain unchanged, cash will return slightly, historical experience is around 2000 billion, statutory deposit reserve pressure is passed through in April, and the May-June meeting is appropriately released.Empirical quarterly equilibrium probability contradictions.

Changes in fiscal deposits will still cause a gap in the base currency. Tax months will be allocated in April and May, and the total return of funds will be about 700 billion. The release of fiscal savings in June may bring more than 200 billion funds, but it will still cause500 billion base currency gap.

  According to the MLF termination amount in the second quarter of more than one trillion US dollars, and fiscal expenditure caused a gap in the base currency, according to the analysis above, the current level of excess reserves is not high, and gradually continue to invest in the second quarter will be an inevitable choice.

  Considering that from a rhythm perspective, April is the month with the largest gap in the base currency. Therefore, there may be two options for the allocation of funds gradually: First, without reducing the standard, increasing the amount after the termination of the MLF will continue to make up for the fiscal expenditure gap;Second, the accuracy is reduced to 0.

5% of the released funds are about 800 billion yuan, which basically covers the gap between the tax payment in April and the termination of MLF. At the same time, some or all sequels of MLF terminated in the second quarter are based on the situation of funds, similar to the same period last year;Associated with 1%, released funds at 1.

About 5 trillion yuan, basically covering the gap between the second quarter of tax payment and the termination of MLF. After the termination of MLF, the sequel will continue, and the seasonal changes in liquidity will be adjusted by reverse repurchase operations according to the situation of funds.

  What about the probability of choosing an operation?

First look at option one. The problem with this operation is that the current MLF interest rate still exceeds the capital market interest rate, and then choose to lower the MLF interest rate, or it will release a stronger “weight rate” signal than the weight, and choose to keep the MLF interest rate unchanged.Or reduce the effect of guiding the upward interest rate of funds, no matter how you choose, it will bring new problems.

At the same time, according to our research on expected behavior patterns, its counter-cyclical policy is very serious. In the bank credit expansion stage, it will be easier to use MLF + OMO to limit the gradient corridor to prevent disorderly expansion of bank credit.In the contraction phase, it will be easier to use banks and other methods to guide banks to obtain more stable long-term resistance to cost reduction, in order to stimulate bank credit.

Judging from the current situation, bank credit expansion has just improved, and the probability of restarting the MLF-limited interest rate corridor is uncertain.

  Therefore, we judge that hedging the base currency gap with the method of lowering the standard may still be the optimal choice for the transformation, and it is the first to reduce it by 0.

It is possible to observe the aftereffect of 5%, or directly reduce it by 1% once and for all. The difference is only in the amount of replacement of MLF, which ultimately leads to a significant difference in the size of the net growth of funds, which can be based on the financial data in March.The situation chooses the strength of the April signal, but it is still a high probability event before the MLF expires on April 17.
  Does the RRR cut help lower interest rates on funds?

  Maintain the judgment of the bond market’s “short-to-long-short” judgment and analyze the possibility of the RRR cut. Let’s discuss the impact of the RRR cut on the bond market.

First of all, do we have to reduce the funding rate so that the short-term logic of driving the long-term downward trend continues?

  From historical experience, no matter whether it is 12 years, 15-16 years, or 18-19 years, the standard reduction cycle has played a significant role in guiding the decline of capital interest rates in the initial period of standard reduction.

However, by reducing the increase in the number of downgrades, the interest rate of funds has started to maintain a low level and will no longer decline, and will even have a slight rebound in value.  Looking back at the trend of the fund interest rate in 18-19 is more clear. Since the second half of 18, the fund interest rate represented by GC007 has almost stabilized at 2.

The range of 5% -3% fluctuates. Once it continues to approach the lower limit, the funds will gradually tighten, and even reverse operations (such as the suspected positive repurchase in October 18, etc.) will continue, and vice versa.At the highest level, the budget will also increase investment, bringing the interest rate of funds back to the range.

Therefore, even if the benchmark is lowered again, it is difficult to continue to break through the bottom of the fund interest rate formed earlier, and the short-term drive of the long-term space is limited.

  If the interest rate of funds cannot be reduced, will the RRR cut have a positive impact on the bond market?

From the perspective of the behavior model of banks, the RRR cut will have two impacts on the bond market. First, the RRR cut will help banks to increase their risk appetite, which is not good for the bond market. Second, the RRR cut will help banks expand broad credit.Investment is good for the bond market.

To consider the overall impact of the RRR cut on the bond market, it also depends on the bank’s current behavior.