Monday, July 9, 2012

China's domestic rate expectations trending down

China's rate expectations continue to decline. The chart below shows China's 2-year domestic rate (SHIBORswap level - the market expectation of where average short-term rates will be for the next two years.

China 2-year rate swap (SHIBOR) 

With inflation seemingly under control and the stock market near recent lows, the authorities will have little choice but to further bring down short-term rates.

Source: ISI Group
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