SocGen’s Chong Sees China’s Swap Curve Steepening After Rate Cut

Wee-Khoon Chong, a Hong Kong-based fixed-income strategist at Societe Generale SA, comments on China’s first interest-rate cut since 2008.

“The lowering of benchmark rates will no doubt push the front-end of the curve lower with a possible widening of spreads relative to the deposit rate.

‘‘The surprise PBOC move today, adding to the deterioating global growth outlook, is likely to see the market chasing for a series of cuts instead of treating today’s move as one-off.

‘‘Expect yuan’s two-year non-deliverable interest-rate swaps to continue to track at a minimum of 100 basis points below the one-year benchmark deposit rate on easing pressure.’’

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