MARKET TALK: China IRS Up On Tight Liquidity, PBOC Remarks

China onshore IRS are up with the curve flattening as liquidity is much tighter Thursday, and also on the PBOC's stance that it can't let its guard down against inflation risks. The one-year IRS are up 4 bps at 3.33%-3.43%, and the five-year IRS are steady at 3.39%-3.49%. The benchmark seven-day repo rate is 45 bps up at 4.36%. "The swaps' future directions will be decided by repo rates, so we need to watch if liquidity will be tighter as the PBOC appears set to maintain tight liquidity this year," says a Shanghai-based local bank trader.