Bloomberg News

China’s Rate Swaps Slide for a Second Day as Inflation Slows

November 09, 2011

Nov. 9 (Bloomberg) -- China’s interest-rate swaps dropped for a second day on speculation the government will loosen monetary policy after inflation in Asia’s biggest economy slowed.

Consumer prices rose 5.5 percent in October from a year earlier, the least since May, statistics bureau data showed today. Producer prices in the nation increased 5 percent in October from a year earlier, the least in a year, separate data showed.

“The market will continue to look for easing and therefore exert downside pressure on swaps,” said Wee-Khoon Chong, a fixed-income strategist at Societe Generale SA in Hong Kong.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, declined two basis points to 3.16 percent as of 9:44 a.m. in Shanghai, according to data compiled by Bloomberg. It touched 3.15 percent yesterday, the lowest level since March.

The seven-day repurchase rate, which measures interbank funding availability, dropped four basis points to 3.53 percent, according to a weighted average rate compiled by the National Interbank Funding Center.

The yield on the 3.99 percent government bonds due June 2021 fell one basis point, or 0.01 percentage point, to 3.70 percent, a second day of decline, according to the Interbank Funding Center.

--Judy Chen. Editors: Ven Ram, Sandy Hendry

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at xchen45@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.


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