China’s Swap Markets Signal Near-Term Easing Bets Are Fading

(Bloomberg) — China’s bond traders are growing less optimistic about the prospects for more monetary easing, if the derivatives markets are anything to go by.

The nation’s one-year interest rate swaps, which show investor expectations of funding costs in the future, climbed for the seventh straight day Friday in their longest rising streak since August 2019. That’s because China’s persistent attempts to cap the yuan’s weakness are spurring bets it may hold off large monetary easing steps in the near term, even as the economy sputters under the weight of Covid lockdowns and a housing market collapse.