The macroeconomy is gradually stabilizing and it is expected that PPI will continue to rise
(Jiangxi New Materials Co., Ltd.)
1. Futures institutions continue to be bullish on PPI.
The survey results of this newspaper show that among the futures institutions surveyed, 65% believe that the domestic PPI (factory price of industrial products) will rise steadily in the fourth quarter. Although this proportion is still high, it still dropped sharply by 29% from the previous quarter; another 24% of institutions believe that PPI will show a steady downward trend in the fourth quarter.
It is worth noting that the futures institutions surveyed have weaker expectations for PPI changes in the fourth quarter than in the third quarter. The very important reason is that based on the sharp correction in the late second quarter, commodity prices experienced a rapid restorative rise in the third quarter. Among them, the cumulative increase of the main contracts of coking coal and coke in the second quarter was 12% and 20% respectively, and in the third quarter, the cumulative increase was 40% and 36% respectively.
Among the many factors that futures agencies judge will affect the steady rise in PPI in the fourth quarter, the impact of monetary easing and rising investment accounted for 19% each, and the impact of other factors accounted for 10%. In addition, the impact of benefiting from the active international economy and rising exports accounted for 3% and 9% respectively, indicating that institutions do not have high expectations for the positive impact of overseas economic recovery.
Considering that manufacturing accounts for more than 40% of China’s GDP, the continued and steady recovery of PPI will be conducive to the stabilization of the domestic macro economy. The results of this survey show that 53% of futures institutions believe that my country’s economic situation will be flat in the fourth quarter, and 18% of institutions believe that it will be good. The two together account for 71%. However, 29% of institutions believe that China’s economy will likely weaken in the fourth quarter.
Xu Xiangchun, information director of “My Steel” website, believes that according to data released by the National Bureau of Statistics, PPI increased by 0.1% year-on-year and 0.5% month-on-month in September. The year-on-year PPI growth turned from negative to positive for the first time since March 2012. One or two months ahead of market expectations, the main reason is the larger month-on-month increase in bulk commodities in September. In addition, after five consecutive years of decline, the base of commodity prices in the same period in 2015 was already very low. It is expected that the month-on-month PPI data in October, November and December will rebound, but the increase will be slower than that in September.
In addition, the fourth quarter of each year is the traditional peak consumption season when overseas prepare for Christmas and China prepares for the Spring Festival. However, the market is extremely lack of confidence in the market sentiment of commodities in the fourth quarter of 2015. The reason is that commodities have been significantly reduced for five consecutive years. As a result, many industries such as coal, steel, and chemicals fell into industry-wide losses in the fourth quarter of 2015. The results of this newspaper’s commodity survey conducted in the fourth quarter of last year showed that 60% of futures institutions believe that PPI will fall steadily in the fourth quarter of 2015; 47% of institutions believe that my country’s economy will continue to weaken in the fourth quarter. Regarding the market performance of the commodity market in the fourth quarter of 2016, Xu Xiangchun said that the market performance of commodities this year is particularly eye-catching and market confidence is no longer fragile. It is expected that if there are no major problems in real estate, the market performance of commodities in the fourth quarter will remain relatively strong.
2. Macroeconomic policies are expected to remain stable.
Based on the expectation that the domestic economy will be stable and positive in the fourth quarter of 2016, 59% of the futures institutions surveyed by this newspaper believe that macroeconomic policies will remain loose, and 12% believe that macroeconomic policies will be more relaxed. Positive, accounting for 71% of the total; in addition, 29% of institutions believe that macro policies will tend to be tightened. The survey results of the last quarter showed that all surveyed institutions believed that macroeconomic policies would not be too tight. Among them, 71% of institutions believe that macroeconomic policies will remain loose, and 29% of institutions believe that macroeconomic policies will be more positive. The two together account for 100%. However, the results of this survey show that futures institutions’ expectations for tightening macroeconomic control in the fourth quarter have increased.
Most institutions surveyed by this newspaper believe that monetary policy will remain loose in the fourth quarter. Among them, regarding the issue of RRR cut, 88% of institutions believe that the central bank will not lower RRR within the year; 12% of institutions believe that there will be one RRR cut. Regarding the issue of interest rate cuts, 88% of institutions believe that the central bank will not cut interest rates within the year; 12% of institutions believe that there will be an interest rate cut process. This survey result is basically close to the survey results in the third quarter.
Regarding the trend of money market interest rates (3-month shibor) in the fourth quarter, 53% of institutions believe that it will remain basically unchanged, and 18% of institutions believe that it will fall steadily, accounting for 71% of the total. In addition, regarding the government bond yield curve in the fourth quarter, 53% of institutions believe that it will remain basically unchanged, and another 24% believe that it will fall steadily.
It is worth noting that compared with the third quarter, when institutions were unanimously bullish on commodity prices and expected macroeconomic policies to remain stable and slightly positive, in the fourth quarter, there was an increase in the number of institutions that were bearish on commodity price trends and expected macroeconomic policies to be tightened. .
3. 90% of institutions believe that the U.S. dollar will likely raise interest rates in December.
Compared with the results of the previous quarter’s survey, the results of this survey show that nearly 90% of institutions believe that the U.S. dollar will raise interest rates in December. Among them, 88% of institutions predict that the U.S. dollar will raise interest rates once in 2016, while only 12% believe that the U.S. dollar will not raise interest rates during the year. In the last quarter’s survey, the proportion of institutions that expected one or no interest rate hike in 2016 was respectively .�The global zinc production capacity led by Inner Mongolia will not be released until 2018, and the zinc industry market is not over yet.
3. Nearly half of the institutions believe that gold prices will fall.
Gold is the leading commodity this year. After fluctuating within a narrow range in the third quarter, how will the price trend of gold be interpreted in the fourth quarter? Corresponding to the high probability that the Federal Reserve will raise interest rates in the fourth quarter, 12% of institutions believe that gold prices will fall significantly in the fourth quarter, 35% of institutions believe that it will fall steadily, and 24% of institutions believe that it will remain basically unchanged.
From the analysis of many factors that affect the trend of gold prices, 30% of institutions believe that it is expected that the Federal Reserve will raise interest rates, 18% of institutions believe that it is the U.S. presidential election, 18% of institutions believe that it is the Italian constitutional reform referendum, and 16% of institutions believe that it is the credit risk of the euro area banking industry, 11% of institutions believe that it is a downward risk of the global economy, and another 7% of institutions believe that it is a reduction in investment demand.
CITIC Futures Liu Bin believes that the sharp drop in gold prices during the National Day is a market preview of the U.S. dollar interest rate hike. However, this does not mean that gold has weakened. This is because the UK will start the Brexit negotiation process in March next year, the Italian constitutional reform referendum, Deutsche Bank’s unresolved fine of US$14 billion, etc., as well as US dollar interest rate hikes, inflation expectations and the risk of European economic downturn, etc., these factors will bring Risk aversion gives gold still a chance.
4. There are large differences in judgments on the future trend of oil prices.
What will be the trend of international oil prices in the fourth quarter? The organizations surveyed by this newspaper have quite different attitudes towards this. Among them, 35% of institutions believe that oil prices will fall steadily; 35% of institutions believe that they will rise steadily; and 29% of institutions believe that they will remain basically unchanged.
From the analysis of factors affecting the trend of international oil prices in the fourth quarter, 41% of institutions believe that OPEC production will remain high, 22% of institutions believe that it is geopolitical factors, and 19% of institutions believe that inventory is high. Another 15% of institutions believe it is the return of U.S. production.
5. Institutions are optimistic about the pig industry chain.
The price of live pigs is one of the core indicators that affects the current CPI. Since last year, pig prices have been rising, driving up the CPI. As the number of live pigs increases, will pig prices form a downward trend in the fourth quarter? The results of this survey show that 82% of institutions think it is less likely, only 12% think it is more likely, and 6% think it will definitely happen.
With the slow recovery of pig breeding, the demand for soybean meal will be boosted. Among the bullish sectors in the fourth quarter, the number of institutions that are bearish and bullish on soybean meal is evenly matched. As for the price trend of soybean meal in the fourth quarter, 47% of institutions believe that it will rise steadily, 24% of institutions believe that it will remain basically unchanged, and 29% of institutions believe that it will fall steadily.
Futures companies participating in the survey:
Green Dahua Futures, Shenyin & Wanguo Futures, Nanhua Futures, CITIC Futures,
Galaxy Futures, Beite Futures, Jinrui Futures, Capital Futures, GF Futures,
Baocheng Futures, Xinhu Futures, SDIC Anxin Futures, Guodu Futures,
Founder Medium-Term Futures, Huatai Futures, Chaos Tiancheng Futures, CIC Tianqi Futures
