The other side of the fund is tight: the lever is heating up
From the carnival after the RRR cut to the desperation of not borrowing money, the funds have experienced two days of sorrow and joy in just one week.
"There is a clear drop, but the market is tight." Some of the friends who rushed to the car have hesitated, saying good bull market?" Some people in the industry joked.
Market participants pointed out that the funding was tight, mainly due to the impact of tax payments in the middle of the month. Under the circumstance of “difficult to solve the thirstâ€, the capital shortage also spread to the bond market. However, it cannot be ignored that the increase in financing demand caused by the increase in leverage of institutions has also exacerbated the imbalance between supply and demand in short-term funds. Looking back, with the retreat and financial support, the funds are expected to pass the end of the month smoothly, but the positive effects of liquidity on the bond market may weaken in the future.
Tax disturbance is the main cause
From over-expected easing to exceeding expectations, this reversal took place in just a few days. On April 24, the interest rate of funds rose across the board, and the overnight interest rate rose to 18%. The funds within 15% were robbed and the repurchase transactions were concentrated.
As of April 25, the funding situation was slightly improved. After the central bank announced the RRR cut, the funds had been continuously strained for five working days. No wonder the industry insiders said, "With the RRR cut, there is more money than the March season. Many partners encourage each other: Come on, don't fall before the dawn of the RRR cut."
Why is it that the funds will continue to be nervous for many days after the central bank announces the RRR cut? Market participants generally believe that monthly tax payment is the most important disturbance factor.
"The direct incentive for the recent tightness of funds comes from the tax factor. The recent foreign exchange account has been at a very low level. In addition, there is no special cash withdrawal pressure in April. The fluctuation of funds is theoretically mainly affected by tax payment." Tianfeng Securities Chief Financial Officer Sun Binbin said.
April is a traditional tax big month. In the past few years, the net increase in fiscal deposits in April was more than 500 billion yuan. Some market participants estimate that the amount of tax withdrawals in the middle of this month may reach the trillion level, and the impact on the short-term supply and demand pattern should not be underestimated.
The macro group of Lianxun Securities Research Institute pointed out that the maximum time for tax payment to be plagued by funds is generally the first two days and the last two days of the tax deadline. For example, in April this year, 18 is the final deadline for tax payment, considering The time required for the bank's backup and later withdrawal process, the period of the tax period that has the greatest impact on the funds side should be 16-20 days.
However, Sun Binbin also pointed out that although the tax factor is not exceeding expectations, the state of the capital interest rate is still beyond expectations. In terms of direct factors, under the influence of economic growth and supply-side factors, the growth rate of tax revenue has rebounded significantly in 2016. The current growth rate is still at a high level, which determines that the current tax payment period still has a long-term impact. The possibility of exceeding expectations, at least in a state where the impact is not weak.
After five consecutive days of tension, on the 24th, the interest rate of funds has stabilized and has shown signs of decline. The representative 7-day repo rate (DR007) of the bank has dropped from 3% to 2.95%, also to a certain extent. It shows that the effect of tax disturbances is weakened.
Increase leverage to increase tightness
There are also views that the taxation factor has a limited degree of explanation for such a large tightening of funds. From another perspective, since the beginning of the year, the funds have continued to be loose, the bond market has been bullish, and the leveraged behavior of financial institutions has led to an increase in financing demand, which may lead to further escalation of funding tensions.
Li Qilin, chief macro researcher of Lianxun Securities, believes that the funding has been tightened for many days. The problem is mainly caused by the demand side, the financing needs driven by financial institutions and leverage. Li Qilin judged that after experiencing a quarterly easing period, most investors set the monetary policy observation window to the April tax payment period. After the central bank announced the RRR cut on the 17th, many investors will inevitably enter the market quickly. Divide this big trading opportunity. On the one hand, in order to obtain more capital gains, the general fund may choose to add leverage when the funds are tight. On the other hand, during the period of early capital easing, the arbitrage space was significant, and more institutions increased the level of leverage. After the funds expired on the same day, the leveraged investors considered that the impact time of the tax payment period was limited, and the funds brought by the future RRR cut were loose. It is possible to choose to continue leverage, rather than selling assets to unlock leverage.
Since the beginning of the year, the stability of funds has been strengthened, and the institutions have increased their leverage and enthusiasm. The central bank’s downward trend has further contributed to this. The bond custody data also confirmed that the leverage level of the financial market has risen. Using the “bond custody volume/(bond custody amount – bond balance to be purchased)†indicator, the overall leverage ratio of the inter-bank bond market reached 111.51% at the end of March. , an increase of 1.43 percentage points from the end of February.
"In April, we have added a position in this wave of market. It is true that some leverage has rebounded." A brokerage trader bluntly said that many institutions in this market have added interest rate bonds and AAA credit bonds. There should be many people who pledge these. Bond financing and leverage, the degree of tolerance to capital fluctuations after the rebound of leverage has declined.
Insiders pointed out that before the funds continued to be loose, optimism warmed up, some institutions relaxed liquidity management, and the phenomenon of “rolling overnight†reappeared. Only when the funds were tightened, the organization began to struggle with flat positions.
"In the context of financial deleveraging, if the institutions continue to increase leverage, it is not ruled out that the volatility of the funds will be further increased." Huachuang Securities pointed out that from the market performance after the RRR cut last week, the market is undoubtedly one-sidedly believe that monetary policy is Relaxed, the direct result is to promote the agency's leverage. If the central bank also observes the recent tightening of the institution, and there is no fundamental change in the direction of large leverage, then the central bank may once again tighten liquidity to correct market-plus leverage.
Liquidity is weakened
In general, under the influence of factors such as the large amount of tax paid in April, the increase in leverage in the bond market, and the loosening of liquidity management, the recent capital situation has exceeded expectations, but market participants believe that with the RRR Landing, the fiscal expenditure at the end of the month increased, and the capital fabrics were “rainy and sunnyâ€. However, for the bond market, the tightening of funds may also be a “warningâ€. In the absence of confirmation that monetary policy is really loose, the positive effect of liquidity on the bond market is likely to weaken in the future.
The recent tightening of liquidity has also contributed to the adjustment of the bond market. From April 19 to 23, the 10-year Treasury bond of China Bonds re-raised from 3.50% to 3.60%. In just 3 trading days, it was adjusted back to 10BP, and the 10-year national debt was up 9BP to 4.40%. At the same time, The 10-year bond futures main contract T1806 suffered a three-day losing streak.
According to industry insiders, many institutions that have been vacant in the past have reported that the tight capital push to push the interest rate correction is a good opportunity to get on the train. The current high cost and leverage is only a short-term "pain."
The long-term Guoxin Securities in the seller's organization is also relatively optimistic. Guo De Securities Dong Dezhi said in the latest research report that the focus of the current market grasp of the rhythm is not fundamental, but the change in funding. The tightness of funds caused by tax payment factors is not unexpected. It is expected that at the end of this month and early next month, the overall interbank market liquidity will return to the pattern before April: stable and loose, which will drive the current bond market interest rate to return to the downside. pattern.
There are also some institutions that are cautious about the outlook. Guotai Junan (Hong Kong stocks 06611) fixed revenue chief Han Han believes that, on the one hand, the reason for the short-term rush in late March is that the institutional leverage is generally not high at the time, and the current market is different because many institutions become optimistic and The desire to get on the bus is stronger, and the position and leverage level rise. If the passive reason for the relatively abundant liquidity is that the short-term capital demand is weak, then this positive may not be sustainable in the future market. On the other hand, with the support of RRR cut, the funding pressure may be relatively controllable before the expiration of MLF in May, but on May 12 and June 6, there are 395.2 billion yuan and 498 billion yuan MLF expired, nearly 9000. The pressure for the return of funds of 100 million yuan should not be underestimated.
From the perspective of comprehensive long and short positions, the current market judgments on monetary policy and liquidity still differ. Perhaps as Sun Binbin said, the possibility that the short-term capital interest rate will fall further significantly is temporarily small, but the short-term should also be difficult to appear similar to last year's wide fluctuations. Relative to the state of the capital interest rate, from the perspective of the existing market operation strategy, the stage of rapid interest rate decline may come to an end, and the market needs to absorb and digest the operational behavior and liquidity status of the central bank in the new stage.
(China Securities Journal - China Securities Network)
Flannel Fabric,Flannel Cloth,Flannel Material,Cotton Flannel
Suzhou Zhiqin Textile CO.LTD , https://www.zhiqintextile.com