On April 3, CICC pointed out that the financial turmoil in the United States has eased in the past week, and the PCE, the inflation indicator that the Federal Reserve is most concerned about, has performed better than expected, which has boosted market sentiment.
Reflections on financial regulation from all walks of life have increased significantly. Members of Congress have severely criticized the Fed’s stress test, and there is a high probability that financial regulation will become stricter again in the future.
This will strengthen the trend of “tight credit” of US banks. On the one hand, banks will shrink their balance sheets spontaneously in order to reduce risk exposure. On the other hand, exogenous financial regulation will also lead to credit tightening. The superposition of the two forces may increase the economic downturn. pressure.
We maintain our previous view that the U.S. economic downturn cycle has not yet ended, and the future may be “stagflation”.