In the post-financial crisis era, both recovery and inflation coexist. In 2011, global inflation will show a hierarchical and multi-track system. A good recovery process has attracted the influx of US dollars and contributed to inflation in emerging economies; capital flows back to developed economies will also push up inflation. In the final analysis, inflation is a monetary phenomenon. Asset prices trigger rises in price levels through expectations, costs, and other channels. The world will gradually enter the global inflation cycle after experiencing an increase in asset prices. Under the illusion of excess liquidity and inflation, where will global monetary policy go? What kind of risk will this bring to the steel market?
1. Overview of the monetary policies of major countries in the world and the performance of the steel market
Emerging economies headed by resource countries such as Australia and India started the withdrawal cycle of stimulus policies from the third quarter of 2009, and monetary policy gradually shifted. Including the adjustment of the benchmark interest rate, the adjustment of the statutory reserve ratio, the recovery of open market operations, and the appreciation of the local currency.
While emerging countries have shifted their monetary policy and exited stimulus policies, advanced economies have continued to maintain loose monetary policies. Even in the second half of 2010, the United States, Japan, and other countries have introduced a new round of quantitative easing policies. So far, the United States, the euro area, and Japan have maintained historically low interest rates, liquidity has continued to spread, and the emerging economies have staged a “cold fire and heavy fireâ€. The time window for policy withdrawal has become a major concern for countries around the world. one.
Policy withdrawal and steel market performance. Comparing the trends of the two, we can see that in the early phase of policy withdrawal, the steel market has a short-term adjustment, and the upward trend remains unchanged in the medium term. This is in line with our view of “rising interest rates without changing the steel market†proposed in October 2010. However, there is a great possibility that this trend will change in the later period.
2. The intrinsic logic of monetary policy change
Only in-depth analysis of the internal logic of monetary policy can we lay a good foundation for grasping the direction of the post-money policy. The reasons for the different performance of global monetary policy can be summarized as the following main aspects.
First, the weakness of the dollar and high commodity prices to increase inflationary pressures are one of the main reasons for the shift in monetary policy. Under the pressure of inflation, there is a need to change the loose monetary policy in the previous period.
Second, the strong growth and sustainability of the emerging economies have provided a good guarantee for the shift of their monetary policy.
3. The late trend of monetary policy and its impact on the steel market
Steady growth in emerging economies and high levels of inflation provide a prerequisite for the shift in monetary policy. What about the growth and inflation of advanced economies? The OECD leading index of leading real economy for six months or so and the leading indicator PMI index also indicate that the recovery of developed economies is in good shape and economic growth will return to a higher level and be sustainable. The prerequisite for the gradual withdrawal of monetary policies in advanced economies - the steady and rapid economic development has been established.
Look at the level of inflation and the job market. Driven by the sustained recovery of the global economy, since the fourth quarter of 2010, the level of inflation in developed economies continued to rise, inflationary pressures gradually appeared, and the unemployment rate continued to decline.
The direction of global monetary policy. Through the above analysis and summary, whether it is from economic growth, or from the perspective of inflationary pressure and unemployment rate, the author believes that the prerequisites for the withdrawal of loose monetary policies in advanced economies have been met. According to the actual situation in the United Kingdom, it may become The first interest rate-raising advanced economies, the euro area and the United States will gradually tighten monetary policy afterwards. The specific time window may be at the end of the second quarter and the beginning of the third quarter. As inflation continues to be high in emerging economies, monetary policy tightening will continue. From the second half of 2011, the possibility of a gradual fall in inflation is very high, and the intensity of monetary policy control will be weakened.
Tight monetary policy, especially the impact of high interest rates. From an economic point of view, higher interest rates will affect household consumption, investment in fixed assets, causing exchange rate appreciation and weakening the export competitiveness of products. Foreign capital inflows will push up asset prices, and exits after profitability will also have an important impact on the fictitious economy and the real economy. The issue of government debt will also increase with the increase in interest rates. The background of the local ** platform in China plus the continuous regulation of real estate will become even more prominent. For enterprises, tightening monetary policy not only raises their cost of capital, but also limits the amount and methods of their monetary policy. In short, while seeing the rapid growth of the economy, we must also see the adverse effects brought about by the policy or may be brought about.
The impact of monetary policy on the steel market. Looking at the historical situation first, from 2007 to 2008, when the monetary policy such as the continuous rate hike contracted to a certain degree, the capital market was seriously lacking in funds. The currency-driven price increase was difficult to sustain. The Shanghai Index fell from 6124 to 1664 points, a decrease of 72.8%. . The continuous tightening policy has also caused the increase in the cost of corporate ** capital in the real economy, the increasing difficulty of **, and the formation of financial constraints. The severe external financial crisis has made the export of products difficult. As China's export-driven economy, domestic demand is also subject to control. Constrained by weak internal and external demand and industrial policy control, the market for real estate, shipbuilding, electromechanical, and automotive downstream of steel products sluggish and was transmitted to the steel industry. The steel price was weak, and the price of charge materials in the upstream industry began to decline, which in turn affected steel. The price formed a vicious circle and finally contributed to the sharp drop in steel prices in 2008. We should take history as a mirror. At this stage, we have more similarities with 2008: GDP has been growing steadily, real estate has continued to be regulated, monetary policy has continued to tighten, *** appreciation, concerns about the false recovery of European and American economies, etc. . If, after the second quarter of 2011, advanced economies began to raise interest rates, funds continued to flow out of emerging markets and flowed into developed markets (now there have been clues), there will be a dramatic drop in the prices of asset prices and capital goods in emerging markets. risks of. On the other hand, if international speculative capital enters the market and the short-selling market and capital market in the emerging economies are to be sold out, if this logic evolves later, the new, larger financial crisis will no longer be an alarmist saga. But it is a real, cruel reality. Moreover, the target of heavy damage is no longer a virtual economy, and the real economy will face even greater risk.