"New Interest Rate Increase" Will Boost The Financing Cost Of The Real Economy.

The synchronization of monetary policy between China and the United States depends mainly on economic growth, not inflation.

Since 1997, there have been four deviant (1999200720112015) and five simultaneous (20022008201220132016) monetary policies in China and the United States.

During this period, Sino US PPI was highly correlated, with a correlation coefficient of 0.95, while the Sino US economic growth correlation was lower, and the actual GDP correlation coefficient -0.07.

Because of arbitrage capital, the spread of the 10 year treasury bonds in China and the United States ranges from 50 to 150 basis points.

The yield of 10 - year treasury bonds in China and the United States has been significantly affected by the monetary policy of China and the United States (200820132016).

Capital Account Liberalization (since 2007) and oil price (2011) have enhanced the linkage between the yield of the 10 year treasury bonds.

China's future money market interest rate is limited.

Under the segmentation of interest rate market, there are two modes of interest rate increase in China. "Old interest rate increase" means raising the benchmark interest rate of 1 years, while the "new interest rate" means raising the interest rate of money market policy, such as SLF, OMO and MLF interest rates.

Considering that China's economy is still at the bottom of the L, the "new rate increase" will be pushed up.

The cost of financing will affect economic growth. In the future, China will have limited space to raise the interest rate of money market policy.

International gold futures prices continued to rise slightly on Thursday (July 20th), and have recorded a five consecutive rise. The highest in the US market reached 1247.36 US dollars / ounce and stabilized on the 1240 line.

On Thursday, the European Central Bank announced that interest rates will remain unchanged. President Delaki said the euro area needs stimulus. The potential changes in the bank bond buying program will be discussed in the autumn. Delaki's speech has lifted the euro, and the dollar has fallen sharply and gold has been supported.

Market information, the European Central Bank announced interest rate resolution on Thursday, announced that it will maintain

At 0%, the deposit interest rate will remain unchanged at -0.400%. The marginal lending rate will remain unchanged at 0.250%, and the monthly asset purchase scale will remain unchanged at 60 billion euros. If necessary, it will continue until December 2017 or beyond.

The ECB statement said that if the economic outlook deteriorates, consider increasing the QE scale and extending the QE time.

Subsequently, the European Central Bank President Delaki held a news conference, Delaki said that the latest data confirm that the economy is strengthening, the scope of economic recovery has become more extensive, and still needs to maintain very relaxed.

The ECB will discuss and decide on the forward-looking guidelines in the autumn.

MITSUBISHI analyst Jonathan Butler said: "Delagi's speech is basically a dove, emphasizing the support for the easing policy to a large extent, and reaffirming its commitment to quantitative easing.

The European Central Bank will postpone the decision to reduce QE gradually to the autumn, and the euro has been boosted in this news. The depreciation of the US dollar helped gold recover from some previous losses.

Some market participants believe that the maintenance of the loose monetary policy in the euro area will affect the gold's short and long term, depending on whether the demand will continue to slow down the opportunity cost of holding interest free assets.

Ultra low interest rates have been a key factor in supporting gold prices in recent years since the global financial crisis ten years ago.

However, as central banks begin to end the unprecedented monetary stimulus, investors are very nervous.

In addition, according to foreign media reports, the US special prosecutor Robert Mueller will expand the investigation of Trump's "through Russia gate" to its business pactions, and will also involve the financing activities of "first son-in-law" Kushner and former campaign manager Manafort. Ross, the US Secretary of Commerce, will also investigate the loan behavior of Trump family business during the period of the Cyprus bank.

This news once again triggered the market's risk aversion, boosted gold, and the US dollar and US stocks were under pressure.

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