Taiwan’s Rate Swaps at Record Discount to Cash on Easing Bets

Taiwan’s short-term interest rate swaps are at the widest discount to the local money market benchmark, deepening an anomaly as US tariffs prompted stronger bets on monetary easing on the island.

The one-year swaps are now about 16 basis points below the three-month Taipei Interbank Offered Rate, versus a premium of 8 basis points in March and marking a record negative spread since Bloomberg began tracking the data in 2014. The last time the inversion occurred was in February 2024.

The spread turned upside down after the one-year swaps, which are typically sensitive to shifts in interest rate outlooks, dropped ...