World Focus! Liquidity outlook in December: the level of RRR reduction and capital assistance returns to stable, and MLF may continue to shrink

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With the central bank's full RRR reduction coming soon (December 5), how to go about the year-end fund, how to view the loose space of monetary policy tools, and how the fund interest rate will return to the policy interest rate have become the focus of the market.

CICC pointed out that the reduction of the reserve ratio will help the capital level return to stability. Following the repo rate, the interest rate of the deposit certificate may return to a low level, and the repair of the capital level will eventually drive the interest rate down, "After the central bank increased the amount of OMO reverse repo, the margin of repo interest rate has fallen back. With the release of funds from this RRR reduction, as well as the potential financial investment and net exchange settlement support of enterprises in December, it is estimated that inter-bank liquidity will remain loose by the end of the year, and the price of repo funds may fall back to a lower level in the year."

Kaiyuan Securities pointed out that there was no obvious gap in liquidity in December. In terms of government bonds, it is estimated that the net financing scale of government bonds in December will be about 350 billion yuan, slightly down from 606.8 billion yuan in November; The net financing scale of government bonds totaled about 500 billion yuan, with supply pressure slightly higher than that in November; In terms of fiscal expenditure, it is expected that the scale of generalized fiscal net expenditure in December will exceed 2 trillion yuan, which will provide strong support for the capital in December.

There will be 500 billion medium-term lending facilities (MLF) expiring in December. On the basis of reducing the reserve requirement to release 500 billion yuan, Tianfeng Securities believes that, with reference to the central bank's operation in December last year, it is very likely to scale back and continue.

CITIC Securities believes that from the perspective of the recent monetary policy operation attitude of the central bank, it is unlikely that the central bank will quickly tighten liquidity, and the attitude of maintaining stable capital is still clear. The reduction of the reserve ratio does not mean that the monetary policy has turned to further easing. At present, there are still concerns about inflation, and the central bank's focus is still to ease credit and stabilize growth. Therefore, the monetary space for the subsequent total amount has been widened or narrowed.

As for the capital interest rate, CICC believes that, on the whole, with the support of the RRR reduction and seasonal liquidity delivery, it is expected that the overnight repo rate in December may remain at 1.1% - 1.4%, the 7-day repo rate will remain at 1.5% - 1.8%, the 1-year deposit receipt rate is expected to gradually fall back to the level of 2.0% - 2.2%, and the 10-year treasury bond yield will also fall back to 2.7% - 2.8%.

"Although the People's Bank of China emphasizes to provide a suitable liquidity environment for economic work at the end of the year, on the whole, we believe that there is a possibility that as long as the policy of stabilizing growth will be further strengthened in the future, the fund interest rate will be in a state of convergence to the policy interest rate. That is to say, in the subsequent process of stable growth, the combination of easy money and easy credit reflects on the capital, which may be different from the situation in April August this year. It is suggested that the capital interest rate in December should be estimated at 1.75%. " Tianfeng Securities believes that.

key word: In December, liquidity outlook, capital support for reserve ratio reduction returned to stability MLF or reduction continued