China’s one-year interest-rate swaps completed a fourth weekly drop, the longest run of declines since February, on bets monetary policy will be eased after a report showed lending slumped last month.
Aggregate financing, the broadest measure of credit, tumbled to 273.1 billion yuan ($44 billion) last month from 1.97 trillion yuan in June, while new yuan loans, M2 money supply and industrial output missed estimates. The People’s Bank of China added a net 14 billion yuan to the financial system this week. The State Council said yesterday that growth in money supply and credit will be kept “reasonable and appropriate.”
The cost of one-year swaps, the fixed payment needed to receive the floating seven-day repurchase rate, fell seven basis points, or 0.07 percentage point, this week to 3.65 percent as of 4:30 p.m. in Shanghai, data compiled by Bloomberg show. It rose three basis points today.
“Policies will continue to be aimed at bolstering growth,” Xu Hanfei, an analyst at Guotai Junan Securities Co. in Shanghai, wrote in a research note today. “The economy is facing downward pressure in the third quarter, and both fiscal and monetary policies still have room for further loosening.”
The seven-day repo rate, a gauge of interbank funding availability, dropped eight basis points this week to 3.39 percent, according to a weighted average from the National Interbank Funding Center. The rate gains three basis points today.
The yield on the 4 percent government notes due June 2024 dropped seven basis points this week and two basis points today to 4.22 percent, according to figures from the National Interbank Funding Center.
More than 170 billion yuan of bonds, including negotiable certificate of deposits and asset-backed securities, were issued today, according to data compiled by Bloomberg News. That amounts to at least 3.2 percent of the total issuance in the first half.