2024-07-01Daily Financial News Express

Domestic macro

At the 70th anniversary of the promulgation of the Five Principles of Peaceful Coexistence, the Chinese leaders said that China is willing to negotiate free trade arrangements with more countries in the Global South, continue to support the Aid for Trade initiative launched by the World Trade Organization (WTO) and continue to inject funds into the China Project, and welcome more countries in the Global South to join the Framework Framework for International Economic and Trade Cooperation on Digital Economy and Green Development. Between now and 2030, China's cumulative imports from developing countries are expected to exceed US$8 trillion.

China's official manufacturing PMI in June was 49.5, unchanged from the previous month, and the price index retreated. The non-manufacturing business activity index was 50.5 percent, down 0.6 percentage points from the previous month, higher than the critical point, and the non-manufacturing industry continued to expand. The composite PMI output index was 50.5%, down 0.5 percentage points from the previous month and higher than the critical point.

The Monetary Policy Committee of the Central Bank held its regular meeting for the second quarter of 2024. The meeting pointed out that it is necessary to intensify the implementation of the monetary policy that has been introduced. Maintain reasonable and abundant liquidity, guide the reasonable growth and balanced distribution of credit, and keep the scale of social financing and money supply in line with the expected targets of economic growth and price levels. Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level, and resolutely guard against the risk of exchange rate overshoot. Effectively implement the existing structural monetary policy tools, increase financial support for large-scale equipment renewal and consumer goods trade-in, and guide financial institutions to increase medium and long-term loans for manufacturing industries with market demand; Increase financial support for the "market + security" housing supply system, and implement financial policy measures to promote the healthy development of the platform economy.

The central bank and other seven departments jointly issued the "Work Plan on Doing a Solid Job in Science and Technology Finance", proposing to provide full-chain and full-life cycle financial services for the scientific and technological innovation activities of various innovative entities. Comprehensively strengthen the professional capacity building of financial services, establish a green channel for the issuance of bonds for science and technology enterprises, strengthen the service and scientific and technological innovation functions of stocks, the New Third Board, and regional equity markets, further promote the innovation pilot of regional equity markets, and enrich the sources of funds and exit channels for venture capital funds.

The Ministry of Finance, the General Administration of Customs and the State Administration of Taxation announced that from July 1, the duty-free quota for luggage carried by mainland residents from Hong Kong or Macao will be increased to RMB 12,000, while the policy of purchasing additional RMB 3,000 duty-free goods at duty-free shops at the port of entry will be retained, with a total quota of RMB 15,000.

Overseas macro

Core PCE inflation in the United States rose 2.6% in May, hitting a new low in more than three years, and the short-term inflation outlook of U.S. consumers fell back. The core PCE price index rose 0.1% month-on-month in May, the lowest since December 2023. However, the data was mixed, with supercore PCE prices remaining high, rising for the 49th consecutive month, and revenue and expenditure accelerating year-on-year. The one-year inflation rate in the United States is expected to be 3.0% in June, with an expectation of 3.2%, a preliminary reading of 3.3%, and a final reading of 3.3% in May.

The final value of the University of Michigan consumer sentiment index in June was 68.2, the forecast was 65.8, the preliminary value was 65.6, and the final value in May was 69.1.

Markets are pricing in the chances of Trump winning the U.S. presidential election, with Treasury yields rebounding sharply from daily lows of double digits on Friday.

Preliminary results of the first round of voting in the French National Assembly election show that the far-right National Alliance is ahead. In the first round of voting, the far-right National Alliance led with 33% of the vote. The second round of voting is scheduled for July 7.

The Fed's former "top three": The Fed will eventually cut interest rates, but later than the market expects, focusing on two key indicators. Dudley believes that the U.S. economic growth will gradually slow down, the interest rate level will remain high for a longer time, and the neutral interest rate level may rise to 3.6%, and the follow-up will mainly focus on the unemployment rate and core services inflation, two key indicators.

The final GDP of the United Kingdom in the first quarter rose by 0.3% year-on-year, with an expected increase of 0.2%, a preliminary increase of 0.2%, and a final decline of 0.2% in the fourth quarter of 2023.

The number of unemployed in Germany increased by 19,000 in June, with an expected increase of 15,000 and a previous increase of 25,000, and the total number of unemployed was 2.781 million, compared with 2.762 million in the previous month. The seasonally adjusted unemployment rate in June was 6.0%, with an expectation of 5.9% and a previous value of 5.9%.

Japan appointed Jun Mimura as chief monetary diplomat, succeeding Masato Kanda; Hideki Ito was appointed as the head of the Financial Services Agency of Japan, replacing Teruhisa Kurita.

Liquidity:

The central bank resumed net supply, and most of the interbank interest rates fell. Overnight SHIBOR was at 1.8790%, down 9.70 basis points. The 7-day SHIBOR was at 2.0280%, down 5.50 basis points. The 3-month SHIBOR was at 1.9180%, down 0.10 basis points. The central bank announced that in order to maintain stable liquidity at the end of the half year, a 7-day reverse repurchase operation of 100 billion yuan was carried out in the form of interest rate bidding on June 27, and the winning interest rate was 1.8%. On the same day, the reverse repurchase of 10 billion yuan expired, so the net investment in a single day was 40 billion yuan. Last week, the central bank carried out a reverse repurchase operation of 750 billion yuan, because 398 billion yuan of reverse repurchase expired, and the net investment of 352 billion yuan for the whole week. In addition, a 5 billion yuan central bill swap (CBS) operation will be carried out during the week, and 5 billion yuan of CBS will expire. This week, the central bank will have 750 billion yuan of reverse repurchase due in the open market, of which 50 billion yuan, 300 billion yuan, 250 billion yuan, 100 billion yuan, and 50 billion yuan will expire from Monday to Friday respectively. The overall market capital is balanced, and the interbank 7-day repo rate can fall from the high point of nearly 7 months in early trading. Half a year has passed, and the overall funding will be abundant.

Follow today

07:50 Japan's Tankan Large-scale Manufacturing and Non-manufacturing Prosperity Judgment Index in the second quarter;

08:00 South Korea import and export in June;

08:30 Japan's final manufacturing PMI for June

09:45 China's Caixin Manufacturing PMI (Jun);

15:50 France manufacturing PMI final value in June;

15:55 Germany's final manufacturing PMI (June);

16:00 Eurozone manufacturing PMI final value in June;

16:30 UK manufacturing PMI (Jun);

20:00 Germany's preliminary CPI in June;

20:15 Speech by ECB Governing Council Member and Bundesbank President Nagel;

21:45 U.S. S&P Global Manufacturing PMI Final (June);

22:00 U.S. ISM Manufacturing Index (June), Construction Spending (May);

All day: The Hong Kong stock market is closed for one day due to a holiday;

At 03:00 the next day, ECB President Christine Lagarde spoke at the ECB's Central Bank Forum;