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Chinese swap rates have recovered.......>

CHINA RATES
CHINA RATES: Chinese swap rates have recovered some of yesterday's losses today,
holding above the August 16 lows across the curve. The 2-year trades at 2.8650%,
up 1.5bps on the day.
- As an MNI Sources report mentioned yesterday, the room for the PBOC to further
loosen monetary policy appears limited as inflationary pressures pick up and the
yuan remains under downside pressure.
- Yesterday's renewed rise in US 2-year yields is another factor adding upside
pressure to rates. While US and Chinese swaps have traded with a strong inverse
correlation so far this year, the PBOC appears increasingly concerned with
allowing interest rates spreads with the US to widen further, and so any further
US hikes should put upside pressure on their Chinese counterparts. 

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