China Swaps Complete First Weekly Gain in Four on Improving Data

China’s one-year interest-rate swaps completed their first weekly gain in four on speculation signs of an improving economy will delay any monetary easing.

New local-currency loans climbed to 871 billion yuan ($140 billion) in May, beating 42 of 43 economists’ estimates in a Bloomberg News survey, while money supply also rose, the central bank reported yesterday. Data over the last week also showed export growth and consumer-price gains accelerated.

“The recovery in money supply and loans will help the economy to stabilize,” Jiang Chao, a Shanghai-based analyst at Haitong Securities Co., wrote in a research note today. “At the same time, it may lead to a delay of further easing.”

The cost of one-year swaps, the fixed payment needed to receive the floating seven-day repurchase rate, climbed three basis points, or 0.03 percentage point, this week to 3.5 percent as of 4:21 p.m. in Shanghai, according to data compiled by Bloomberg. It fell two basis points today.

The People’s Bank of China added a net 104 billion yuan to the financial system in a fifth consecutive weekly injection, data compiled by Bloomberg show.

The seven-day repo rate, a gauge of interbank funding availability, fell 11 basis points this week and 12 basis points today to 3.05 percent, according to a weighted average compiled by the National Interbank Funding Center.

M2, the broadest gauge of money supply, rose 13.4 percent in May from a year earlier, more than the median estimate of 13.1 percent in a Bloomberg survey. Industrial output climbed 8.8 percent last month, compared with growth of 8.7 percent in April, data from the statistics bureau showed today.

The yield on the 4.42 percent government bonds due March 2024 fell two basis points this week and today to 4.08 percent, National Interbank Funding Center prices show.

To contact Bloomberg News staff for this story: Helen Sun in Shanghai at hsun30@bloomberg.net

To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Simon Harvey, Andrew Janes

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