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北美作业代写:Impact of fed rate hike on China

2018-09-19 来源: 51due教员组 类别: Essay范文

下面为大家整理一篇优秀的essay代写范文- Impact of fed rate hike on China,供大家参考学习,这篇论文讨论了美联储加息对中国的影响。美联储加息对中国股市有着潜在的影响。美联储加息之后,美元指数持续下跌,从而影响人民币在岸价格上涨,另外还会刺激大宗商品的价格变动。美联储加息仅在短线会对美元指数有作用,进而影响人民币汇率。但中期来看,美元指数依旧会维持小幅震荡,而人民币汇率也不存在大幅波动空间。

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The fed has raised interest rates seven times since December 2015 and embarked on a programme of balance-sheet reduction in the wake of the financial crisis to gradually unwind ultra-loose monetary policy. Data collected by the federal reserve since its may monetary policy meeting showed continued strength in the U.S. labor market and steady growth in economic activity, according to a U.S. statement. Employment has soared in the past few months and unemployment has been falling. American household consumption is growing faster, and business fixed asset investment is growing rapidly. Inflation, a key measure of the fed's activity, is close to the fed's target of 2 percent for overall U.S. inflation and for items other than food and energy, according to data from last year. This time, the fed adjusted the timing and size of the federal funds rate through a comprehensive assessment of economic growth, full employment and inflation. The fed is expected to raise interest rates four times this year, based on data on employment and inflation. The median forecast from the fed shows the fed funds rate is expected to be 2.375 percent at the end of 2018 and 2.125 percent in March. The federal funds rate is expected to be 3.125 percent at the end of 2019 and 2.875 percent in March. The federal funds rate at the end of 2020 and longer term was 3.375% and 2.875%, respectively, both unchanged from march expectations.

The fed's interest rate hike is mainly considered from the following two aspects: "basic rate hike conditions" "and" "future rate hike demand" ". Among them, the "basic rate hike condition", also known as the precondition for a rate hike, refers to the two basic indicators of the fed's rate hike: employment status and inflation level. Data showed that the number of U.S. non-farm payrolls rose by more than 300, 000 in early may, and the full nonfarm payrolls report was a testament to the relative prosperity of the U.S. labor market, even though the wage growth was slightly weaker than expected in the same period. Second, last week's core CPI rate was 1.8 per cent, below the fed's 2 per cent target but at least within the acceptable range. In addition, the university of Michigan's consumer confidence index released recently was higher than expected, indicating that the overall consumption level also met the fed's requirements for raising interest rates. "Demand for future interest rate hikes" refers to the need for the fed to consider not only the two major indicators, but also the stimulus measures of tax reform to boost the economy. If there is potential risk that the economy will overheat, it needs to raise the interest rate to control the economic growth.

When a country appear rising prices, leading to inflation, will need to be raised benchmark interest rates, the fed to raise interest rates in order to prevent prices rising too fast, the fed's inflation target is 2%, the sign is beneficial to promoting economic growth, so when the rate of inflation rising accompanied with constantly raising interest rates, so that you can prevent prices rising too fast. Interest rate hikes are aimed at reducing the money supply, curbing consumption, curbing inflation, encouraging savings and slowing market speculation. Higher interest rates can also be used as an indirect means of boosting the value of domestic or regional currencies against other currencies. So there are several reasons for this fed rate hike:

Us GDP in first quarter of 2018 was its best in three years, with the federal reserve raising its growth forecast. Spurred on by trump's tax reform policies, U.S. real GDP grew by 2.2 percent month-on-month in the first quarter of 2018, beating market expectations of 2 percent and the best first quarter performance since 2015. At the June meeting, the fed further raised its forecast for U.S. economic growth in the next two years. This means that the recent solid performance of us economic growth provides an essential basis for the fed to raise interest rates in the future, helping to support the dollar index's recent strength.

As the U.S. labor market continues to improve and the unemployment rate continues to decline, since unemployment is the central focus of the fed's decision, the U.S. employment performance at this time meets the conditions for further rate hikes. In terms of employment data, the us added 313,000 non-farm payrolls in February 2018, far more than the expected 205,000, the highest since July 2016, when the previous figure was revised from 200,000 to 239,000 and the unemployment rate remained at a low of 4.1%. Nonfarm payrolls data for February far exceeded expectations, reflecting a booming U.S. job market. With U.S. real economic activity surging in the second quarter, employers added 223,000 jobs in May and the unemployment rate was just 3.8 percent, a low for the past 50 years that has surpassed expectations of the federal reserve SEP in March, and wages have been rising steadily, up 2.6 percent year-on-year.

The main reason for the fed to raise interest rates is to control inflation in the United States. As we all know, inflation can reflect the development level of a country's economy. If inflation increases gradually, it indicates that the country's economy is growing steadily. However, if the inflation level is too high, it is likely to cause an inflation crisis. Interest rate increase is the most effective way to curb inflation, so the fed will implement the policy of interest rate increase when inflation reaches the level of 2%.

Personal consumption expenditure price index rose 1.97 percent year-on-year in April 2018, close to the fed's 2 percent target, and core PCE price index rose 1.80 percent year-on-year in April, according to the Commerce Department's inflation index data. The fed's June meeting raised 2018 PCE and core pceby 0.2 and 0.1 percentage points to 2.1 percent and 2 percent, respectively, in line with market expectations. The us economy is already operating above its potential growth rate, with full employment and a positive output gap inevitably accompanied by inflation.

On June 14, 2018, affected by the fed's interest rate hike and other factors, a-shares fell again on that day, and the three major a-share indexes rushed back down. By the end of the trading day, the Shanghai composite index fell 0.18% to 3,044.16 points. The shenzhen component index fell 0.76% to 1,0084.18. The chinext index fell 0.75 percent to 1673.32. The potential impact of the fed rate hike on Chinese stocks is twofold: the dollar index continues to fall after the fed rate hike, which affects the rise in the onshore price of the renminbi. Stimulating commodity price movements. Yuan appreciation will affect the a-share market on the exchange rate sensitive paper and aviation sector. In addition, due to the decline of the dollar index, international commodity prices such as gold and silver rebound, so will be affected by the a-share market precious metals and non-ferrous metal prices. Note, however, that the fed's rate hike will affect the dollar index only in the short term, which in turn affects the yuan's exchange rate. But in the medium term, the dollar index will remain slightly volatile, and there is no room for big swings in the yuan.

The trend of U.S. stocks is one of the reference factors for the federal reserve to make monetary policy. Recently, U.S. stocks are still at a high level despite the pullback. In the past, the bull market of us stocks mainly originated from the previous loose monetary policy. When monetary policy was turned to the intensive rate of interest rate hike, the accumulated risk of us stocks was easy to erupt. Although the Chinese stock market will be affected by the trend of the us stock market, its volatility is more violent than that of the us stock market, but because this interest rate hike has been expected, already digested in advance, so A shares will not necessarily fall. In theory, the us dollar strengthened after the fed raised interest rates and the RMB faced depreciation pressure, which led to the constant outflow of domestic currency and the domestic liquidity contraction, which was not conducive to the stock market and the housing market. However, in fact, the depreciation pressure of RMB exchange rate has weakened this year and the outflow of RMB has slowed down, so the impact on China's stock market is not great, but more depends on the domestic economic operation and market liquidity. The federal reserve to raise interest rates negative impact on China's stock market basically has the following several aspects: the federal reserve to raise interest rates is likely to make domestic interest rates also follow up, once the renminbi exchange rate mechanism towards the "marketization", it will gradually establish overseas interest parity relationship, caused by rising rates of higher interest rates in the United States, China's domestic interest rates will also have to to increase the risk of this will greatly since the revaluation the domestic prices of assets such as stocks, bonds; In the case of the fed's interest rate hike, once the RMB is devalued, it will lead to capital outflow from China, and then liquidity contraction, leading to the weakening of the a-share market. In addition, the devaluation of RMB is not conducive to the assessment of China's asset prices, not conducive to the financial, real estate and other relevant weight sectors to strengthen, dragging down the overall market.

As soon as the fed raises interest rates, it means that monetary policy in the United States is in a state of normalcy. More precisely, it means that the fed enters a cycle of interest rate hikes, with the possibility of multiple interest rate hikes in the future. Taking this into account, China faces a devaluation of the renminbi, with capital outflows making it difficult for stocks to rise. Although the stock market has the possibility of falling, the range will not be too large, because a-shares are different from us stocks. First of all, a-shares are not at the historical high, but at the relatively safe position near 3000. Second, the price-to-earnings ratio of heavily weighted blue chips is low, leaving little room for a slump. Moreover, the current lack of A short mechanism, the extent of decline is limited.

The fed's interest rate hike will lead to the appreciation of the dollar, and the United States will slow down the export of money and goods to the United States. As a result, China's foreign exchange reserves will fall and the RMB will depreciate, which means the Chinese people need to spend more money to buy American goods. In theory, China's property market is one of the forces that will hit asset prices when the fed raises interest rates and the yuan faces depreciation pressure.

At around 10am on June 14, seven hours after the fed announced a rate hike, the central bank conducted 307 days of reverse repurchases, 20 billion days of reverse repurchases, and 288 billion 1-year MLF operations, with interest rates of 2.5 percent, 2.8 percent, and 3.25 percent, respectively, five basis points higher than last time. When a country's economy grows too fast and faces the risk of overheating, in order to balance the risk of overheating, it will choose to raise interest rates, that is, to raise the benchmark interest rate and leave some money in the bank, in order to reduce the money supply in the market. Raising rates would not only balance the risk of overheating, but would also boost the exchange rate of the domestic currency, but it would also affect exports. If the central bank explicitly raises interest rates, for those who have bought houses, the interest they need to repay is determined according to the benchmark interest rate at the beginning of the year. In other words, if household income does not change, the amount of mortgage payments will increase, and the pressure to repay will increase, which will lead to a great decline in people's quality of life. For new buyers, once China's benchmark interest rate is raised, that is, the mortgage interest rate is raised, it will bring the same pressure to repay the loan to new buyers. Mortgage rates were 5.42 percent in March, up 0.16 percent from December, according to central bank data. Although interest rates are rising, they are rising slowly, and not far from the 2014 peak of 6.9%. For the real estate companies, the pressure on small housing enterprises increased, accelerating the time to exit the market. The impact of interest rate hike on small housing enterprises is most obvious. These enterprises, due to their weak assets, hope to sell their houses and withdraw funds as soon as possible. For investors, who typically own many properties, the monthly increase in loan payments could be several times higher once interest rates are raised.

The fed's decision to continue raising interest rates means that the dollar has risen, while money has flowed out of other markets and into dollar assets, causing gold and silver to fall. Conversely, if the fed cuts rates, it means the dollar will fall, while the money will flow out of the U.S. capital markets and into other higher-yielding markets, such as gold and silver, causing gold and silver to rise. To sum up, the impact of the fed's interest rate or interest rate cut on gold is not simply proportional or inverse relation, but also needs to be combined with the macroeconomic background, economic cycle and other short-term factors at that time.

Gold is valuable, the dollar is just paper money, itself has no value, but gold is linked to the dollar, the unit of account of the dollar is gold, that is to say, after the dollar rises, the corresponding gold will depreciate more cheaply. But as things stand now, a fed rate hike would also mean a rise in the dollar, but gold has risen instead of falling, essentially because it has already priced in its weakness. Gold prices have been falling recently as the federal reserve continues to raise interest rates and the dollar has risen, but as no country is willing to face deflationary pressures, the price of gold as an inflation-fighting currency has risen in the long run. On the one hand, the fed's interest rate hike has boosted the exchange rate of the us dollar, which means that the us dollar has risen, so gold as a dollar-denominated investment product has been directly suppressed. On the other hand, a fed rate hike means the U.S. economy is doing well and the dollar is trending higher, which would attract money to the dollar. Gold, like the dollar, is a haven asset, and a fed rate hike is bound to reduce money in the gold market, putting pressure on prices. Further, the fed rate hike also helps to curb risks in financial markets, and gold as a haven investment will be similarly depressed in the short term as risk aversion cools.

All in all, in the short term, the fed's policy of increasing interest rates will add to downward pressure on gold prices. But in the long run, gold prices need not always be depressed when the fed raises interest rates. Specifically, fed rate hikes are expected to heat up, and by the time the policy is implemented, it will gradually boost the dollar and eventually bring its rally to a climax. That is to say, after the fed's policy of raising interest rates, the dollar will have an inflection point, at the same time gold price also has an inflection point, beginning to show a downward trend.

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