The Fed'S Interest Rate Increase In March Has Not Been Much Suspense.

Domestic investors do not seem to care much about the US interest rate hike in March.

Even if there are concerns, the path of analysis is thinking in the opposite direction.

For example, some people think that if China's RMB exchange rate flexibility increases, this will change the trend of RMB's one-way depreciation and turn it into a one-way appreciation of RMB.

For example, there has been evidence that China's foreign exchange reserves have returned to US $3 trillion recently.

They believe that if this happens, the renminbi will rise to 6.6 against the US dollar by the end of the year.

Of course, some people think that this year's government work report has different requirements for the RMB exchange rate reform. This year, the RMB exchange rate will not be pegged to the US dollar basically, but will be linked to a basket of currencies.

Thus, even if the US dollar rises after the US dollar raises interest rate, as long as the depreciation rate of RMB is smaller than that of non US dollar, this may indicate that the renminbi is appreciated rather than depreciated.

Therefore, in the current mood of Chinese market, Chinese investors are not too concerned about the US interest rate hike in March.

In fact, this is not the case in the market.

First, the Federal Reserve's interest rate hike in March has not been much suspense.

This is not only because the officials of the Federal Reserve are releasing the interest rate hike in March, but the figures released in March 8th show that the US interest rate increase in March will further increase.

According to the data released by ADP, the number of private sector jobs increased by 298 thousand in February, the highest level since 2014.

The news further reflects the improvement in the US job market, giving investors a better guess over the growth of non farm jobs in the United States on Friday, which is expected to be announced on Friday.

This will naturally increase the possibility of US interest rate hike in March.

Affected by these data, the ICE US dollar exchange rate index rose 0.3% to 102.14, a slight difference from the 2002 high.

The WSJ dollar exchange rate index rose 0.3%.

The Chicago futures exchange data show that traders are expected to raise interest rates by 91% in March, a further rise than the previous week.

And more importantly, for the fed to raise interest rates ahead of schedule in March, the rate hike ahead of market expectations is as early as June this year, which will change. Market analysts believe that the rate and frequency of the Fed's rate hike in 2017 will probably change.

ColinCieszynsk, chief market strategist at CMCMarkets, said that the Fed expects to raise interest rates 4 times this year instead of the original 3 because of the Fed's interest rate hike in March.

If this happens, the impact on the market will be enormous.

Of course, the more important US withdrawal from quantitative easing monetary policy is not only the economic situation itself, but also the problem of quantitative easing monetary policy launched by countries since 2008.

We can see that since the outbreak of the US financial crisis in 2008, the Central Bank of the world has injected a large amount of liquidity into the market with the policy of zero interest or even negative interest rate in line with the quantitative easing monetary policy, so as to stimulate economic activities and business investment.

But in the past 8 years, only the real estate market and stock market have really benefited, and the asset prices of all countries have been pushed up.

In the first 40 years of 2007, UK business investment grew at an average annual rate of 3%. However, in the 8 years after the US financial crisis in 2008, the investment growth of British enterprises was only 1.5%.

In other words, the market has the most liquidity and the lowest cost of capital. These factors do not motivate enterprises to increase their investment. Instead, enterprises are more cautious in increasing investment.

So why is there no incentive for UK businesses to increase investment when financing costs are so low and market liquidity is rampant? The analysis suggests that this may be related to the lack of confidence in the future economic prospects of enterprises.

If enterprises do not have confidence in future economic growth, they will not increase their financing.

And this has nothing to do with the cost of financing.

The Bank of England survey found that "risk-free rate" is close to zero. However, the minimum return on capital (hurdle rate) adopted by British companies in deciding whether to implement investment remains at 12% level, just as it was before the outbreak of the US financial crisis in 2008.

Only when the minimum return rate is met, will corporate investors be willing to increase investment.

This finding also shows that under the current 8 years of quantitative easing monetary policy, the whole financial market environment has undergone tremendous changes.

The capital of the financial market has been reduced to a very low level, and the market liquidity is in flood. However, there is no corresponding minimum standard for the return on investment of the enterprises.

This means two important aspects, one is that the government strongly reduces the cost of financing to a rare low level, but this does not necessarily stimulate businesses and enterprises to increase investment. Low cost capital will not flow into the real economy, but it will certainly push up the prices of various assets under the condition of extremely low capital cost and liquidity.

And asset prices are most likely to benefit only a few people.

For example, in 2016, the billionaire's wealth grew by 16%, while China's fastest growing billionaire country, Beijing became the world's most billionaire city (94 people).

This is the case in the world, and the situation in China is even more significant.

Two, why businessmen or enterprises refuse high and low return on investment is not equal to the pursuit of profiteering by enterprises or businessmen, but what they see is that if interest rates are kept at an ultra-low level for a long time, it means that the future economic outlook will be very limited. The bubble of asset market is bigger and bigger, and the risk that the market will face may be higher and higher.

In this case, when making a major investment decision, the enterprise allows the margin of error ratio.

The normal period is smaller, so enterprises are unwilling to increase investment arbitrarily.

It can be said that this is the case in Britain, and so is the situation in China.

At present, all kinds of enterprises in China are doing everything possible to increase financing, but these financing have not entered the real economy, otherwise they are more or more hype in the real estate market, or in the circulation of the financial system.

There is another problem, the Fed withdrew from quantitative easing.

It will become faster and faster.

If so, its impact and impact on the global market and the Chinese market may be bigger and bigger.

This is not only about the change of capital flow, but also the change of central bank's monetary policy concept and operation behavior.

If such a situation arises, not only will there be a major adjustment in global monetary policy, but also because the liquidity turn will directly change the price of various assets, can we see clearly the domestic investment? Otherwise, it will be too late for Chinese investors to wake up.

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