MONEY MARKETS-Aussie swap rates jump on upbeat c.bank comments

Reuters - Wednesday, November 25

HONG KONG, Nov 25 - Australian swaps jumped on Wednesday after upbeat comments from a top central bank official boosted speculation the central bank would raise rates next week.

* One year overnight indexed swaps <AUD1YOIS=> rose 3 basis points to 4.38 percent and the one year interest rate swap <AUDQM3AB1Y=> was up 4 basis points at 4.58 percent.

* Paying was quite persistent in the belly and the long end of the curve, the 5-year IRS <AUDQM3AB5Y=> was up 15 basis points and the 10 year swap <AUDQM3AB10Y=> 9 basis points higher.

* Reserve Bank of Australia Deputy Governor Ric Battellino said the economy can look forward to years of brisk growth built on booming resource investment, rapid population growth and rising household incomes. [ID:nSYD514867]

* That has revived expectations the central bank will raise raise interest rates by another 25 basis points to 3.75 percent next week. Investors are tipping a 78 percent chance <CSRBA=CSAU> of a rate rise, up from last week's 62 percent.

* "He's essentially hinting at a new golden era of growth ahead for Australia," said Su-Lin Ong, a senior economist at RBC Capital Markets. "It suggests that there is no strong argument for a pause at next Tuesday's RBA board meeting."

* In Thailand swap rates continued falling on views rates will be on hold for some time yet and after further political worries clouded the investment horizon.

* "There is no hurry and pressure on the BoT if the economy takes a slow recovery and inflation is not yet a concern," said Nalin Chutchotitham, analyst with Kasikorn Bank. "All these point to the same conclusion - there's no hurry to pay fixed rates ."

* The one year swap <THBSB6TH1Y=> fell 6 basis points to 1.33 percent, the lowest since April 2004. Swaps have fallen 30 basis points since the start of the month.

* The fall was across the curve with the 7-year swaps <THBSB6TH7Y=> and 10-year <THBSB6TH7Y=> swaps down by 5-6 bps each.

* "Receiving the front-end of the THB curve has been our favorite trade for the past month and we believe there is still a lot of room for the trade to perform given risk-premium and rate hike expectation priced in this part of the curve remains excessive," said Royal Bank of Scotland in a report.

* In Singapore, 3-month dollars <SIUSDD=ABSG> are quoted at an average 0.26757 percent, a fresh low, tracking three-month dollar Libor rates <USD3MFSR=> overnight which fell to a record low of 0.26063 percent.

* At the current level the bnchmark LIBOR rates are only 1 basis point away from the top end of the Federal Reserve's current range on its policy rate. ((umesh.desai@thomsonreuters.com; +852 2843 6935; Reuters Messaging: umesh.desai.reuters.com@reuters.net; )) (If you have a query or comment on this story, send an email to newsfeedback.asia@thomsonreuters.com)