China’s short-term rates have stabilized but the yield curve remains inverted

By Sober Look

The sharp jump in China’s short-term rates has been nearly reversed. Repo rates are approaching their longer-term averages, with the PBoC coming to its senses and addressing the liquidity squeeze.

Repo rates

However as the short-term rates came down, so have rates at longer maturities. The full interest rate swap curve has shifted lower but remains inverted (see post). The chart below compares today’s curve with the one three weeks ago. The market continues to price in some further slowdown in China’s economic growth.

SHIBOR rate swap


Sober Look is a no-hype financial markets/macro blog that typically relies on data analysis, primary sources, and original materials. We keep it concise, to the point, with no self-promoting nonsense, and no long-winded opinions. If you are looking for Armageddon predictions or conspiracy theories, you will be thoroughly disappointed. Topics include financial markets, banking, asset management, risk management, derivatives, global economy, policy, and regulation, with the emphasis on finance education. Follow him on his blog or twitter.

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