The Fed'S Rate Hike Is Expected To Continue To Be A Strong Currency.

The New York fed issued a statement that it would sell public debt of not more than US $250 million in May 24th. In May 25th and June 1st, two small institutional mortgage-backed securities (MBS) were sold and the total amount would not exceed $150 million.

In this regard, Guotai Junan Ren Zeping believes that after the release of the April hawk conference minutes, the Fed's interest rate hike in June rose from 19% to 34% before the meeting minutes were released.

Data on US retail, manufacturing output, new housing starts and CPI in April

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The New York Fed's shrinking table is just a preview, but it is resonating with the recent economic data, and the probability of raising interest rates in June will be enhanced.

The comments are as follows:

1) core view: after the release of the April hawk conference minutes,

The rate of interest increase in June rose from 19% to 34% before the minutes of the meeting; the US dollar index rose 0.5%; the offshore renminbi depreciated 200BP; oil fell 1.9%; gold fell 0.8%; the US 10 year treasury bond rose 12.3BP to 1.882%; the Dow fell 0.6%, then rebounded.

In April, US retail, manufacturing output, new housing starts and CPI data exceeded market expectations.

The New York fed shrill table is just a preview, but with the recent

Resonating comprehensively and improving the probability of raising interest rates in June.

2) the main contents of the April meeting minutes: first, the first quarter data of the United States were disappointing, but it is only temporary. The two quarter economic growth will exceed the market expectations, because of high share prices and low interest rates. Second, the price is relatively low in the short term, influenced by the price of oil and the strong dollar, but it will reach the 2% target of the Federal Reserve in the medium term.

Third, reduce the risk assessment of global economic and financial markets.

Fourth, if the US economy improves further, the Fed may raise interest rates in June.

3) the consumer spending and the real estate market improved, and the manufacturing industry returned to expansion, but it was still weak.

The new housing starts in April were 1 million 172 thousand, higher than the expected 4.7 million, higher than the previous value of 73 thousand, and the new housing starts in April were 6.6%, higher than the expected 3.3 percentage points, higher than the previous 16 percentage points, and the retail sales in April were 1.3%, the largest increase since March 2015, higher than the expected 0.5 percentage points, higher than the previous value 1.6 percentage points; March consumer credit changes 29 billion 674 million U. S. dollars, the fastest growth rate since 2001 2001, higher than the expected 13 billion 700 million dollars, higher than the previous value of the dollar; University of Michigan, the US consumer confidence index initial value was high, higher than expected, a percentage point higher than expected, a percentage point higher than the previous value.

In April, the output of manufacturing industry was 0.3%, the first increase in three months, consistent with expectations, 0.6 percentage points higher than the previous value, and 75.4% of equipment utilization in April, higher than the expected 0.4 percentage points, higher than the previous value 0.5 percentage points.

Although the manufacturing industry has returned to expansion in recent years, it is weaker than the expansion rate after the crisis.

It may be related to structural problems caused by the decline in the US age workforce.

4) CPI has continued to rise in recent years.

The United States in April CPI 1.1%, higher than the previous value of 0.2 percentage points; in April, CPI was 0.4%, the largest increase since February 2013, higher than the expected 0.1 percentage points, higher than the previous value 0.3 percentage points, the average hourly wage in April was 2.5%, higher than the expected 0.1 percentage points, higher than the previous value 0.2 percentage points; the United States April PPI 0%, less than expected 0.2 percentage points, higher than the previous value 0.1 percentage points.

5) shrinking the table is just a preview, but resonating with recent economic data, the Fed's rate hike is expected to heat up.

Unlike the "raising interest rate", the Fed's "shrink watch" will be achieved through the direct selling of bonds (Treasury bonds and MBS) or the refunding of maturity bonds by refinancing the short end interest rate through the open market operation. The direct recovery of long-term liquidity will be achieved and the long end interest rate will be raised.

Relative to the size of the $4 trillion purchased by QE, the scale of the US $400 million is smaller and has little impact, but it is resonating with the recent economic data.

6) the short-term Fed's interest rate increase is expected to rise, the US dollar is strong, and the RMB and commodities are under pressure.

Under the global economic and policy spillover effect, central banks may coordinate with each other to avoid unilateral fluctuations in exchange rates.

In the short term, the Fed's interest rate increase is expected to rise, the US dollar is strong, and the RMB and commodities are under pressure.

Under the global economic and policy spillover effect, central banks may coordinate with each other to avoid unilateral fluctuations in exchange rates.