The Bull Market Is Still Steadfast, And The Debt Correction Is A Good Opportunity.

Following the central bank's unexpected interest rate cut, the 14 day repo rate was reduced by 20bp, and the central bank's interest rate downward intention was obvious.

Although the recent impulse of treasury bond futures is insufficient, with the introduction of more loose monetary policy in the future, the adjustment space of treasury bond futures is limited. After the oscillation, the probability of continuing to go up is larger.

In November 27th, the financial data of industrial enterprises released by the National Bureau of statistics showed that from 1 to October, the total profit of Industrial Enterprises above Designated Size reached 4 trillion and 944 billion 680 million yuan, an increase of 6.7% over the same period last year, and the growth rate dropped 1.2 percentage points from 1 to September.

Among them, the total profit in October was 575 billion 470 million yuan, down 2.1% from the same period last year.

The main reason is that the slow growth of China's product sales and the lack of market demand have led to a slowdown in production and sales. Although profit margins have steadily increased, China's economic growth rate has dropped to a foregone conclusion, and the downward pressure on the new normal is still relatively large.

The pressure of deflation caused by insufficient demand showed that the consumer price index increased by 1.6% in September and October, the lowest since January 2010.

Under the weak economic background, if interest rates remain high, it will be extremely unfavorable to economic stabilization. On the one hand, it will cause great burden on the financing cost of enterprises, on the other hand, it will reduce the investment demand of enterprises. Only when enterprises predict future investment can exceed their financing costs, will enterprises have the desire to invest for a long time.

The central bank lowered its 14 day repo rate from 20bp to 3.2% in November 25th.

On the same day, the open market repo operation was 5 billion yuan, the repurchase expired 20 billion yuan, the treasury cash was fixed 60 billion yuan, and the whole day invested 75 billion yuan in net capital.

This is the fourth time that the central bank has lowered the repo rate in the year. In February 18th this year, the central bank lowered the repo rate from 4.3% to 3.8%. When the market expected that the central bank would still adopt a neutral monetary policy, the central bank had quietly changed the direction of monetary policy, and the interest rate of the money market suddenly dropped.

The second time was in July 31st, the central bank lowered the repo rate from 3.8% to 3.7%, down 10bp, not much, but the guidelines were of great significance.

Then the two reduction was made in September and November.

During the year, 110bp fell by more than 25%.

The main reason for the central bank to lower interest rates is that excessive financing costs of entities cause enterprises to bear too high interest burden and weaken their willingness to invest, which will have a negative impact on the economy.

This year, management has repeatedly stressed the need to reduce the financing costs of entities, and the central bank has also guided by multiple means.

Downwards, we have made full use of quantitative and price money instruments to solve the problem of high financing costs of entities. At present, this action will continue.

In the short term,

It has limited impact on reducing financing costs of entities, but as the Central Bank continues to introduce more and more preferential policies, low interest rates are bound to pass.

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At present, the state has great determination to reduce the financing cost of entity enterprises. It is speculated that the central bank will continue to guide market interest rates downward before the financing cost of entity enterprises falls to a reasonable level that the state thinks.

Although interest rate liberalization will increase upward pressure on interest rates, at present, through asymmetric measures such as asymmetric interest rate cuts, the central bank has enough means to guide interest rates down steadily while interest rates are being marketed.

Therefore, every time the debt depth callback is a good opportunity to raise positions, but we need to grasp the timing and rhythm of the increase, continue to hold more ideas.