China One-Year Swap Set for Biggest Weekly Increase in 5 Months
February 11, 2012, 7:19 AM ESTBy Bloomberg News
Feb. 10 (Bloomberg) -- China’s interest-rate swaps were headed for the biggest weekly increase in five months on speculation the central bank will slow the pace of policy easing after inflation unexpectedly accelerated in January.
The consumer-price index rose 4.5 percent from a year earlier, the National Bureau of Statistics said on its website yesterday. That was more than all 33 forecasts in a Bloomberg News survey of economists and a median of 4 percent. The central bank drained a net 44 billion yuan ($7 billion) of capital from the financial market, a second week of withdrawals.
“The market has lowered policy-easing expectations following the CPI figure,” said Guo Caomin, a bond analyst at Industrial Bank Co. in Shanghai. “The higher-than-expected CPI will prompt the central bank to wait and watch before announcing any new easing measure.”
The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, rose 20 basis points this week to 3.31 percent as of 9:59 a.m. in Shanghai, the biggest increase since the five days through Sept. 2, according to data compiled by Bloomberg. It declined three basis points today.
The seven-day repurchase rate, which measures interbank funding availability, gained 30 basis points this week to 3.65 percent in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center. It fell two basis points today.
The yield on the 3.99 percent government bond due June 2021 climbed 14 basis points in the week to 3.59 percent, according to quotes provided by the Interbank Funding Center. It gained one basis point today. A basis point is 0.01 percentage point.
--Judy Chen. Editors: Sandy Hendry, Andrew Janes
To contact Bloomberg News staff for this story: Judy Chen in Shanghai at xchen45@bloomberg.net.
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To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.
