China's rate curve has seen some bear...>

CHINA RATES: China's rate curve has seen some bear flattening today with 1-year

swaps up 3bps to trade at 2.52%. This comes despite an edging lower in US rates.

- Chinese rates have traded inversely with US rates over the past few days which

is something worth watching going forwards. 

- The short end of China's rate curve is very depressed relative to the long

end, the US curve, and domestic equities, which continue to edge up from recent

lows. 

- While ongoing yuan strength gives the PBOC room to ease further, it also

suggests a resumption in risk appetite that could point towards an economic

pickup, reducing the need for further accommodation.