Finance Association, November 15 (Reporter Cao Yunyi) Today, when a large MLF expires, the tax period is superimposed, and the financial side is facing a major test. However, the market believes that the effects of MLF maturity this month and the issuance of government bonds are all short-term disturbances, and capital fluctuations are manageable. Looking back, the core disturbance in terms of capital is still the supply of government bonds.

The industry believes that the underlying logic of the current policy has changed, and in particular, it has clearly opened up room for imagination for the central government to increase leverage. Specifically, on the monetary side, easing will continue in the general direction, and another downgrade may be implemented during the year.

MLF maturity this month is large, short-term capital fluctuations are manageable

Today, the central bank launched a 7-day reverse repurchase operation of 981 billion yuan on the open market, with an operating interest rate of 1.50%. According to Wind data, the 12.2 billion yuan reverse repurchase expired today, in addition to the 1,450 billion yuan MLF and 80 billion treasury cash fixed deposit due.

Yesterday, the Shanghai Interbank Offered Rate (Shibor) fell 0.9 basis points overnight to 1.456%. 7-day Shibor rose 3 basis points to 1.674%. Judging from the repurchase interest rate performance, the DR007 weighted average interest rate increased by 1.7174%, which is higher than the policy interest rate level.

Furthermore, from a financial perspective, the full week's reverse repurchase matured at 84.3 billion yuan, treasury cash deposit matured at 80 billion yuan, and MLF matured at 1,450 billion yuan. The maturity scale is large and will have to be delayed until the 25th. The market is concerned about the form of hedging that the central bank will adopt.

However, with regard to financial fluctuations, the market expects that fluctuations will be manageable in the short term. “Due to the large amount of MLF maturities this month, combined with the effects of government bond issuance, etc., there are relatively many factors that disrupt market liquidity, but these are all expected disruptions.” Zhou Maohua, a macro analyst at the Financial Markets Department of Everbright Bank, told the Financial Association reporter.

Zhou Maohua pointed out that the central bank previously stepped up countercyclical monetary and fiscal adjustments. Previously, it downgraded and fiscal expenditure accelerated. The central bank used various open market operation tools to take care of market liquidity and maintain reasonable and abundant market liquidity. In addition, the central bank created treasury bond trading, buyout reverse repurchase operations, etc., and liquidity management is more refined.” Zhou Maohua said.

The supply of government bonds is mainly due to capital disturbances, and the market is expected to be downgraded during the year

Huaxi Securities believes that in the future, the core disturbance in terms of capital will still be the supply of government bonds. “With the holding of the Standing Committee of the National People's Congress, supply pressure has basically settled during the year. If calculated according to the upper limit of 2 trillion yuan, the cumulative net issuance of government bonds in November-December may be around 3 trillion yuan, while the net supply of government bonds in November-December last year was 2 trillion yuan. The peak supply in August-September this year was 3.3 trillion yuan, and there was still one downgrade during the year.” Huaxi Securities analyst Xiao Jinchuan said that in comparison, the supply pressure in November-December may be within the acceptable range of the market.

Based on the newly released macro data, the market's expectations for a downgrade during the year are getting higher. There are opinions that a downgrade may be implemented within November, and interest rates may be cut in the first half of next year.

Xiong Yuan, chief economist at Guosheng Securities, believes that looking back, the underlying logic of the current policy has changed; in particular, the central government's room for imagination to increase leverage has clearly opened up. “On the monetary side specifically, easing will continue in the general direction. It is likely that the rate will be lowered during the year. If possible, interest rates will be cut in January next year.”

“Under the central bank's new framework, it is expected that there may be a rate reduction in November and another rate cut in the first half of next year.” Sun Binbin, chief analyst at Tianfeng Fixed Income, believes that from the perspective of policy signals, peripheral uncertainty and domestic macroeconomic pressure may have an impact, but they will not change the direction of monetary easing, including the possibility of interest rate cuts.

Zhou Maohua, on the other hand, pointed out that currently, due to the low domestic price environment and changes in overseas policies, there is plenty of room for conventional domestic policies such as interest rate cuts and downgrades. “Taking into account financial disturbances such as subsequent active fiscal implementation, increased issuance of government bonds, and seasonal factors, it is not ruled out that the central bank will introduce further tools such as downgrades to stabilize market liquidity and stabilize bank debt costs and net interest spreads.”