21-07-2025
China's Swap Curve Normalizes as Deflation Fears Begin to Ease
A distortion in China's money market has vanished after persisting throughout this year, a nascent sign that investors expect the latest stimulus efforts to reflate the economy.
The country's five-year interest-rate swaps, a popular hedging tool, climbed above their one-year counterpart on Friday and have since widened the gap to three basis points, according to data compiled by Bloomberg. That helped end a discount that was as steep as 15 basis points in February — when deflation fears were deeply entrenched.
