Monetary Policy Actions - On September 27, the People's Bank of China (PBOC) lowered the reserve requirement ratio (RRR) by 0.5 percentage points, bringing the weighted average RRR to approximately 6.6%[2] - The PBOC also reduced the 7-day reverse repo rate from 1.70% to 1.50%[2] Economic Impact - The RRR cut is expected to release around 1 trillion yuan in available funds for banks, which can be used for loans or bond purchases, thereby supporting investment and consumption[3] - The reduction in interest rates is anticipated to lower loan market rates by 0.2 to 0.25 percentage points, with new residential mortgage rates expected to decrease even more significantly[3] Future Policy Outlook - There is potential for further RRR cuts of 0.25 to 0.5 percentage points before the end of the year, indicating a proactive approach to support government bond issuance and economic growth[3] - The current RRR of 6.6% allows for a theoretical reduction down to 5.0%, providing 1.6 percentage points of room for additional cuts[4] Market Confidence and Growth Projections - The significant interest rate cuts are expected to boost consumer and investment demand, addressing the issue of insufficient effective demand and improving economic growth momentum[4] - The measures are crucial for achieving the annual economic growth target of around 5.0%[4]

Monetary Policy Adjustments - The central bank announced a reduction in the 7-day reverse repurchase rate by 20 basis points, from 1.7% to 1.5%[1] - A decrease in the reserve requirement ratio (RRR) by 50 basis points, providing approximately 1 trillion yuan in long-term liquidity to the financial market[1] - Potential further RRR cuts of 25-50 basis points later this year, depending on market liquidity conditions[2] Real Estate Support Measures - The central bank will guide commercial banks to lower existing mortgage rates to align with new mortgage rates, with an expected average reduction of around 50 basis points[3] - The minimum down payment ratio for second homes will be reduced from 25% to 15% nationwide, lowering the barrier for improvement demand in housing[4] - The central bank's support ratio for the 300 billion yuan affordable housing relending program will increase from 60% to 100%, accelerating the acquisition of existing homes for affordable housing[4] Economic Impact and Outlook - The policy adjustments aim to stimulate macroeconomic demand, addressing the current "strong supply and weak demand" situation and promoting a moderate recovery in price levels[3] - The reduction in existing mortgage rates is expected to decrease banks' annual interest income by approximately 189 billion yuan, about 8.2% of the total banking sector profit for 2023[3] - The focus will shift to further lowering new mortgage rates, which is crucial for reversing market expectations in the real estate sector[4]

Group 1: Policy Changes - The People's Bank of China announced a reduction in existing mortgage rates by approximately 0.5 percentage points, aligning them closer to new mortgage rates[1] - The minimum down payment for second homes has been lowered from 25% to 15% nationwide, aimed at stimulating demand[1] Group 2: Economic Impact - Over 23 trillion yuan of existing first-home mortgage rates were adjusted down by an average of 73 basis points to 4.27%, saving borrowers about 170 billion yuan annually in interest payments[2] - The average early repayment rate for RMBS reached 19.3% in June, significantly higher than 12.9% in the same period last year, indicating a trend of borrowers paying off loans early due to high existing rates[2] Group 3: Bank Profitability - The reduction in mortgage rates will decrease banks' annual interest income by approximately 189 billion yuan, which is about 8.2% of the total banking sector profit for 2023[3] - A 6.4 basis point reduction in deposit rates could offset the profit impact from the 50 basis point mortgage rate cut, helping to alleviate pressure on bank profits while reducing household mortgage burdens[3] Group 4: Future Outlook - There is significant room for further reductions in new mortgage rates, especially given the current low inflation and negative GDP deflator index[4] - The central bank's measures, including extending financing support policies for real estate companies until the end of 2026, are expected to improve the financing environment for the sector[4]

Group 1: MLF Rate Changes - The MLF operation rate in September is 2.0%, down 0.3 percentage points from August[1] - The central bank announced a 20 basis point (0.2 percentage points) reduction in the main policy rate on September 24, which is expected to lead to a similar decrease in MLF rates[1] - The current low yield on bank certificates of deposit is a significant factor driving the MLF rate reduction[1] Group 2: MLF Operation Scale - The MLF operation scale in August was 300 billion, with an expiring scale of 591 billion, indicating a reduction of 291 billion in September[1] - The central bank's unexpected reserve requirement ratio (RRR) cut of 0.5 percentage points will inject approximately 1 trillion into the financial market, reducing the demand for MLF operations[1] - The continuation of large-scale MLF operations is aimed at supporting government bond issuance during a peak period[1] Group 3: Economic Implications - The significant reduction in MLF rates will lower banks' funding costs, which will be transmitted to loan rates, thereby reducing financing costs for enterprises and households[2] - This is considered a crucial measure to stimulate domestic demand[2]

Group 1: Factors Influencing RMB Appreciation - Recent RMB appreciation against the USD is driven by the PBOC's interest rate cuts and increased support for the real estate sector, boosting market confidence[1] - The USD index is trending downward due to significant interest rate cuts by the Federal Reserve, contributing to the RMB's passive appreciation against the USD[1] - Since July, the RMB has been appreciating against the USD, leading to increased bank foreign exchange settlement and a decrease in foreign exchange sales, creating a positive feedback loop for RMB appreciation[1] Group 2: Future Outlook and Market Sentiment - The current market sentiment is optimistic, with pent-up foreign exchange settlement demand expected to be released, potentially allowing the RMB to break above 7[1] - The RMB is likely to maintain a reverse fluctuation pattern against the USD, with limited potential for sustained large-scale appreciation until the domestic real estate market stabilizes[2] - Future RMB stability will depend on the USD index movements, emphasizing the importance of preventing abrupt fluctuations in the RMB against the USD[2]

Investment Rating - The report indicates a continued downward pressure on second-hand housing prices, suggesting a cautious investment outlook for the real estate sector in the near term [1] Core Insights - In August, second-hand residential prices accelerated their decline, with varying degrees of month-on-month decreases across different city tiers. Notably, Beijing and Shanghai experienced significant price drops [2][3] - New residential prices also saw a month-on-month decline, although the decrease in first-tier cities was slightly less pronounced [5] - Sales performance showed a slight improvement in the month-on-month and cumulative sales area declines, but absolute levels remain low, indicating that the sales sector is still in a bottoming phase [7] - Investment performance remained weak, with no significant improvement observed in August. The decline in real estate development funding sources narrowed, but the absolute levels remained low [9][10] Summary by Sections Price and Sales Performance - In August, second-hand residential prices in 70 cities fell by 0.95% month-on-month, with only one city showing an increase. First-tier cities saw a month-on-month decline of 0.9%, marking 11 consecutive months of decline [3] - New commodity housing prices in 70 cities decreased by 0.73% month-on-month, with first-tier cities experiencing a smaller decline of 0.3% [5] - Sales area and sales revenue for August were 64.53 million square meters and 639.26 billion yuan, respectively, with year-on-year declines of 12.6% and 17.2% [7] Investment Performance - The decline in real estate development funding sources narrowed in August, with a total of 80.32 billion yuan, but the year-on-year decline was still significant at 10.57% [12] - New construction and construction data showed a month-on-month improvement, while the area of completed projects saw a larger decline [14] - The land market showed a month-on-month increase in transaction area, with third-tier cities leading the market [16][17]

Group 1: LPR Rates and Economic Context - The 1-year LPR remains unchanged at 3.35%, and the 5-year LPR is also steady at 3.85% as of September 20, 2024[1] - The recent expectation for domestic interest rate cuts has increased following a 50 basis point reduction by the Federal Reserve on September 19, 2024[1] - The current economic environment shows a steady but weak trend, influenced by insufficient effective demand and other factors, leading to a cautious approach in monetary policy adjustments[1] Group 2: Monetary Policy Considerations - The People's Bank of China (PBOC) previously lowered the 7-day reverse repurchase rate by 10 basis points in July, which has led to a wait-and-see period for policy effects[1] - The net interest margin for banks has narrowed to 1.54%, down 0.15 percentage points from the previous year, indicating constraints on further rate cuts[1] - A potential reduction in the 7-day reverse repurchase rate of 10 to 20 basis points is anticipated in the fourth quarter, which could lead to a corresponding decrease in LPR[2] Group 3: Future Outlook and Risks - The likelihood of a rate cut in the fourth quarter is supported by the need to achieve a 5.0% economic growth target and to manage risks in key sectors like real estate[2] - Recent regulatory changes and banks' initiatives to lower deposit rates may help alleviate pressure on net interest margins, encouraging LPR adjustments[2] - The PBOC aims to improve the quality of LPR quotes to better reflect actual loan market rates, which may allow for LPR adjustments independent of policy rate changes[2]

Group 1: Federal Reserve Rate Decision - The Federal Reserve announced a reduction in the federal funds rate target range from 5.25%-5.50% to 4.75%-5.00%, a decrease of 50 basis points[1] - This marks the first rate cut since the tightening cycle began in March 2022, with one FOMC member voting against the 50 basis point cut, suggesting a preference for a 25 basis point reduction[1] - The updated dot plot indicates a significant downward revision in rate expectations, with the median rate forecast for this year dropping from 5.125% to 4.375%[1] Group 2: Economic Outlook - The Fed slightly lowered its GDP growth forecast for this year by 0.1 percentage points, while maintaining projections for the following two years[1] - Unemployment rate expectations were raised by 0.4 percentage points for this year and by 0.2 percentage points for the next two years[1] - PCE inflation expectations were reduced by 0.3 percentage points for this year and 0.2 percentage points for next year, indicating a more favorable inflation outlook[1] Group 3: Rationale for Rate Cut - The 50 basis point cut is seen as a preemptive measure to prevent a rapid cooling of the labor market amid rising unemployment rates[2] - Recent labor market data shows a significant decline in job creation, with the average monthly increase in private sector jobs dropping to 96,000 from 185,000 earlier in the year[2] - The unemployment rate rose to 4.3% in July, nearing a critical threshold that could signal an economic downturn[2] Group 4: Inflation Trends - Core CPI has shown a steady decline, with the year-on-year growth rate falling from 3.9% at the beginning of the year to 3.2% in August[3] - The breadth and stickiness of inflation are decreasing, as indicated by the Cleveland Fed's trimmed mean CPI and the Atlanta Fed's sticky CPI metrics[3] - The Fed's confidence in achieving inflation targets has increased, allowing for a more aggressive rate cut without immediate inflationary concerns[3] Group 5: Future Rate Cut Expectations - The Fed is expected to implement two additional 25 basis point cuts by the end of the year, totaling a 100 basis point reduction, aligning with the dot plot guidance[4] - The pace and magnitude of future rate cuts remain uncertain, influenced by economic resilience and inflation trends[4] - The Fed's flexible approach suggests that future rate adjustments will be data-driven, with no preset path for rate changes[5]

Economic Overview - In August, the industrial added value grew by 4.5% year-on-year, down from 5.1% in July, indicating a slowdown in economic momentum[1] - Retail sales of consumer goods increased by 2.1% year-on-year in August, a decrease from 2.7% in July, reflecting weak consumer demand[1] - Fixed asset investment accumulated a year-on-year growth of 3.4% from January to August, down from 3.6% previously[1] Demand and Supply Dynamics - The macroeconomic environment shows a "strong supply, weak demand" characteristic, with both supply and demand sides experiencing a downward trend[2] - The official manufacturing PMI index fell to 49.1 in August, indicating contraction for four consecutive months[2] Policy Implications - The central bank may implement further counter-cyclical adjustments, including potential interest rate cuts and increased fiscal measures to stimulate demand[2] - Policies to support the real estate sector, such as lowering existing mortgage rates, are crucial for reversing market expectations[2] Industrial Production Insights - The industrial production growth rate is expected to remain strong compared to investment and consumption, driven by robust export demand and equipment upgrades[3] - Year-to-date, industrial added value has increased by 5.8%, with manufacturing value added growing by 6.1%[3] Consumer Behavior Trends - Consumer confidence remains low, with the consumer confidence index at 86.0, down for four consecutive months[5] - The impact of early mortgage repayments is significant, with an estimated annualized repayment amount of approximately 4.6 trillion yuan, equivalent to 9.8% of the total retail sales[6] Investment Landscape - Fixed asset investment growth has been declining since April, with infrastructure investment particularly affected by extreme weather conditions[9] - Manufacturing investment remains high, with a year-to-date growth of 9.1%, supported by policy measures and strong demand for equipment updates[10] Real Estate Sector Challenges - Real estate investment fell by 10.2% year-on-year from January to August, with a slight narrowing of the decline in August compared to July[12] - The lack of strong stimulus measures for the real estate sector suggests continued downward pressure on investment in the near term[12]

1 东方金诚宏观研究 | --- | --- | |--------------------------------------------------|------------------------| | | | | | | | | | | | | | 菜价快速上涨推高 8 月 CPI 涨幅，需求偏弱导致 | PPI 同比跌幅再度扩大 | 事件：9 月 9 日，国家统计局公布的数据显示，2024 年 8 月 CPI 同比为 0.6%，上月为 0.5%；8 月 PPI 同比为-1.8%，上月为-0.8%。 基本观点： 主要受高温多雨天气带动蔬菜价格快速上涨影响，8 月 CPI 同比上涨 0.6%，涨幅比上个月小幅扩大 0.1 个百分点，符合市场普遍预期。不过，8 月原油等国际大宗商品价格下行，国内工业消费品价格环比 由正转负，旅游出行等服务价格也有走弱，核心 CPI 同比低位下行，低通胀局面还在延续。背后的主要原 因是在各类商品和服务供应稳定的背景下，居民消费需求不振，菜价的短期冲高无法改变这一局面。这意 味着在安排 1500 亿超长期特别国债资金支持耐用消费品以旧换新之后，下一步宏观政策在促消费方面还 有 ...