The Central Bank Of China Will Maintain Its Benchmark Interest Rate In The Next Three Months.

China's Fixed Income Market Outlook Survey shows that the vast majority of participating institutions expect the Central Bank of China to maintain the benchmark interest rate unchanged in the next three months.

Expectations are still low, and the proportion of institutions that are not expected to fall within the next three months is clearly improving, indicating that the market is expected to weaken.

Participating agencies expect China's 6 month 10 - year treasury bond yield to be 2.97%, down 2 basis points from the end of last month.

According to the survey, 99% of the participating agencies believe that the Central Bank of China will maintain the one-year deposit benchmark interest rate unchanged at 1.5% in June. The number of institutions that expect to cut interest rates in June is only one, and the number of institutions expected to cut interest rates in the next three months is only four in 76 participating institutions.

In addition, the current 89% of the institutions expect that the Central Bank of China will maintain the statutory reserve requirement ratio of large deposit institutions in June, while the 63% institutions expect the Central Bank of China to drop the benchmark in the next three months, which is significantly higher than the previous period, indicating that the market is expected to weaken.

The results also show that the average weighted average interest rate and the seven day interest rate of overnight pledge repo in interbank deposit institutions in the month of June, and the forecast average of Shibor in March are 2.0429%, 2.3960% and 2.9611%, respectively, which are 6 basis points (base points), 8 base points and 4 base points than the actual monthly average in May.

The participating agencies estimated the maturity rate of return of treasury bills, treasury bonds, financial bonds, and AAA and AA short and medium term bills. At the end of 6, the predicted value was between -5 and 7 basis points over the end of May. In May, the trend of better financial and credit bonds was under adjustment pressure. The yield of 10 year treasury bonds was expected to be downwards, and the adjustment of sentiment was moderated.

China's macroeconomic data released in May turned out to be weak. The anticipated financial strain was also spared by the normalization of PSL and the replacement of the business base. The rest of the bond market was in addition to Treasury bonds.

The downward range is relatively large; however, at the end of the half of June, the market is more cautious about the financial disturbance brought by the MPA policy and so on, and there is still support in the medium term of the bond market, but the fluctuation in June should not be neglected.

China's top ranking economic L trend, abandon the debt leverage stimulus mode, monetary policy is neutral and robust, the participating institutions at the end of the two quarter of the overall interest rate is expected to rise as a whole, financial bonds and credit bonds may face adjustment pressure.

Show differentiation.

The US has strong economic consumption and a high probability of raising interest rates in July, and the Federal Reserve has been trying to sell MBS and treasury bonds on a small scale, shrinking its balance sheet and appreciating the US dollar. The ECB will begin to buy corporate bonds in June, and the European economy will continue to improve; Japan will postpone its consumption tax plan next year.

The current growth situation of the developed economies has improved, but we still need to pay attention to the possible impact of the weaker US economic indicators, the referendum of the British referendum and the divergence of the Greek debt agreements.

The depreciation rate of the RMB against the US dollar has been larger since May, which is beneficial to the central bank's early release of the depreciation pressure brought by the US dollar interest rate increase. The appreciation effect of the US dollar may also affect the pace of US interest rate hike in the year.

Overall, however, during the Fed's rate hike window, the pressure of RMB continued to depreciate is not small. International capital flows superimpose the end of season effect. In June, interbank liquidity management in China faced challenges.

A total of 76 institutions participated in the sixth phase of the 2016 survey.

Among them, the banking institutions include: ICBC, Agricultural Bank of China, Bank of China and China Construction Bank 29; the securities participation agencies are still 19 such as CICC and CITIC Securities, and 11 of the venture capital participating institutions have life assets, including 16 participating agencies of the fund's private equity fund.

Reuters launched the China fixed income Market Outlook Survey in 2012, at a frequency of once a month.

This survey involves 25 key indicators of the eight series, including deposit benchmark interest rate, reserve ratio, repo rate, Shibor, and yields of treasury bonds, financial bonds and credit bonds, which can quantitatively show the future trend of China's fixed income market.