Bearish Swaps Signal Divides SocGen, Deutsche Bank: China Credit

China’s swap market turned cautious on the economy last month for the first time since August and global banks are divided on prospects for growth.

The extra cost of locking in interest rates for five years rather than two shrank to 36 basis points, from 46 on Jan. 31, according to data compiled by Bloomberg. The five-year swap that exchanges fixed payments for the floating seven-day repurchase rate fell seven basis points to 3.69 percent, while the two-year rose three basis points. Societe Generale SA and Bank of America Merrill Lynch said the so-called curve flattening will persist, while Deutsche Bank AG and Standard Chartered Plc forecast renewed steepening.