Inflation Expectations Are Heating Up. The End Of The Year May Be The Golden Age Of Treasury Bonds.

At present, the market is keen to see that Trump will push ahead with infrastructure after coming to power, which may stimulate the global economy next year.

The US general election has just ended, and Haitong team, including Jiang Chao, has stepped onto the US territory.

Inflation is likely to end soon.

Haitong Securities's global layout in the US, Europe and Asia gives them the opportunity to communicate with the world's top investors at the fastest speed and understand the true state of the US economy and the latest views of different experts after Trump's election.

After a week's research, he made his own judgement. The current inflation is likely to end soon. The fourth quarter commodity prices will probably end in the first quarter of next year.

"Price increases lie behind supply and demand.

Let's see if global demand is expanding. When we went to the us to investigate, we found that only those commodities that were influenced by Chinese elements were rising at that time.

Looking at the current situation in China, no one is willing to cut production after the price increases. Since July, the output of industrial products has increased month by month, and the supply has reached a new high. "

Through careful analysis and field research, Jiang Chao believes that many industries have entered the replenishment stage. Replenishment is a subtle signal, which indicates that supply exceeds demand in the short term.

Therefore, although the price of commodities is still rising, whether the follow-up demand is still strong, we need to ask a question mark.

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Jiang Chao believes that real estate and auto sales will rise by 30% this year and will not be sustainable next year.

"This growth rate has only appeared in 07 or 08 years in history, and is directly related to the stimulus policy.

Next year, the general forecast for the automobile industry is single digit growth or zero growth. The real estate industry should be negative growth under regulation. "

Jiang Chao said, "the ultimate demand for this price increase is that the government has borrowed money to build infrastructure, and residents have borrowed money to buy houses, and businesses have not borrowed money.

In the future, the government will continue to borrow money, but it is very difficult for residents to borrow money to buy a house.

After making investigations, Jiang Chao made a judgement which is different from the mainstream view of the market.

"The United States does have infrastructure needs, but infrastructure construction in the United States is very slow. The general engineering cycle has to be five to ten years, and the demand release process is very slow. It can not see much change every year, especially in the short and medium term."

Jiang Chao pointed out that the logic of causal judgement between expanding infrastructure and generating inflation is untenable.

"Among all the governments, Japan has built up the most capital construction, and the Japanese government has made the whole construction of the island of Japan once again, but Japan has been deflation for a long time.

The government's stimulus policy is only one aspect of stimulating demand. "

Jiang Chao cited the example of "Ricardo equivalence" in economics, and found that it is difficult to avoid the phenomenon that the government needs to borrow money to invest and to extrude private expenditure.

"We hope to create Inflation Based on government spending. At least, Japan has proved impossible in the past few decades.

Government spending will generate short-term inflation, but not long-term inflation.

So we think inflation will be very short and deflation is very long. "

When it comes to the timetable for the end of inflation, Jiang Chao believes that the peak of this economic cycle is in October this year and has begun to decline.

"Usually economic indicators are ahead of prices one to two quarters, so inflation is likely to end in the first quarter of next year."

In December 1st, treasury bond futures fell 0.63% in 10 years, and the yield on treasury bonds in 10 years exceeded 3%.

This is the first time in ten years that the interest rate on treasury bonds has returned to 3% for the first time after six months.

Some analysts believe that the 10 year treasury bonds will return to 3.1% in 2017, which will challenge more than 3.2% in the short term.

Whether the interest rate of treasury bonds will hit a new high in 2017? This is a topic of considerable concern in the industry.

In this regard, Jiang Chao again throws out the opposite view from the mainstream of the market: "in the short term, the interest rate of the Global Treasury bond is going up. China and the United States are no exception, but we are different from many people. We believe that the yield of treasury bonds will decline next year, and will create a new low.

The end of this year may be an ideal time to invest in treasury bonds.

Jiang Chao believes that interest rates will eventually match the economy, and the US economy will be under great pressure next year.

In the short term, although the growth rate of consumption in the United States is higher, the employment rate is very low. The main driving force is export and inventory. The strong US dollar has led to a decline in exports.

In addition, U.S. interest rates will shrink next year as interest rates rise.

Therefore, Jiang Chao believes that the US economy is facing a new downward risk next year. "If the economy is not so good, I think the yield of US Treasury bonds next year should drop, and it will not be reduced to less than 2%."

When it comes to the topic of domestic interest rates, Jiang Chao believes that the domestic interest rate pressure comes mainly from two aspects, one is the rise in foreign interest rates, the other is domestic inflation.

"But if next year the US interest rate goes down and the domestic inflation goes down, next year's interest rate should also come down."

Jiang Chao believes that the short-term tightening monetary policy environment should have a further relaxation next year.

This relaxation should be related to the economic downturn caused by hedging real estate policies.

The time for relaxation may occur in the two quarter.

"Our policy should not only curb real estate, but also prevent financial risks after the fall of real estate.

At present, monetary policy should be relaxed next year, but we must stick to the current policy of real estate regulation, and keep the ratio of 70% down payment for second suites unchanged.

At this time, the policy of reform and pformation will be liberalized and the money will flow to where we should go.

For next year's ten year treasury bond interest rate low, Jiang Chao boldly predicted that it would be as low as 2.6%.

He also believes that the end of the year will be a good time to plan for next year's bond market.

Why American investors are more optimistic about China?

How

Asset allocation is the main concern of many high net worth people. Jiang Chao found that American investors generally preferred China's investment opportunities.

"They think how to look at the short term will invest in the US first, because the dollar is rising.

But if you want to find investment opportunities in the next five to ten years, there are only two choices in the world, one is China and the other is India.

Jiang Chao pointed out that American investors believe that India's fundamentals have been improving for a long time and think that there are investment opportunities in China's SOE reform, innovation and service sector.

"The future Chinese economy should be walking on three legs.

The infrastructure is a foundation, such as a road and infrastructure, which provides the most basic driving force for economic development; at the same time, we must release the reform dividend of state-owned enterprises and improve the efficiency of state-owned enterprises by mixing the ownership system; the third block is the hope, innovation and service of China's economic development.

We find that many companies and products have the world's leading innovation capabilities, such as Tencent and Alibaba's innovation in the Internet field.

When the quality of "made in China" is as good as that of the world's famous brands, and the cost is half the same, why not buy it domestically? In many areas, we are already the largest market in the world, and some have potential to dig.

When it comes to the service industry, Jiang Chao said that after the industrialization, the service industry must be the world. China's service industry has great potential.

"There are two big sectors in the service sector. One is the spin off of service industries after the pformation of industrial enterprises. For example, the design is split into a design institute separately, and the research is divided into research institutes. The logistics, sales and advertising links of some large enterprises can be divided and collectively referred to as the business service industry.

The other is a life style clothing property, such as medical clothing, educational services, such as this year's second birth is expected to bring a potential education demand, the future is very promising.

"We need to see what China's economic development goals are.

Continue to pursue GDP growth of 7% to 8% per year, that is, we need to make a lot of efforts.

The risks of housing, finance and employment will increase.

On the other hand, if GDP's goal is more flexible, then our space will be huge.

On the economic growth rate, the tolerance is higher, and the economic efficiency can be larger. "

For more information, please pay attention to the world clothing shoes and hats net report.