Hong Kong's Rates Curve Is the Most Inverted in Two Decades
- One-year interest-rate swaps surge on seasonal funding squeeze
- Currency has hit six-month high as bears unwind short bets
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Expectations that liquidity will tighten in Hong Kong in the short term have helped drive the city’s interest rate swap curve into its deepest inversion since 1999.
One-year interest rate swaps have climbed 17 basis points this week to 2.15%, compared with 1.84% for five-year contracts. The one-month interbank borrowing cost extended an advance on Thursday, jumping to the highest level since October 2008, amid seasonal demand for Hong Kong dollars. That has supported the currency.