China's Wildest Rates Since 2014 Leave Bond Traders Stranded
- Shifts in monetary policy and trade war causing large swings
- Seven-day repo rate has become the most volatile since 2014
A pedestrian holding an umbrella walks past buildings illuminated at night in the Lujiazui district of Shanghai, China.
Photographer: Qilai Shen/Bloomberg
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China’s bond traders are throwing away the script this year as the central bank repeatedly tweaks policy to keep up with shifts in the economy.
The lack of visibility is sending tremors through the interbank lending market, which is typically a source of cheap leverage for government-bond buyers. The seven-day repurchase rate -- a gauge of China’s funding costs -- has turned the most volatile since 2014, 100-day historical data show. That has made it very difficult for traders to know how much it will cost them to buy bonds.