Korea Bond Market Daily Report(Gemini): 10/11/2024
Korea Bond Market Daily Report
Treasury yields
| Treasury yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 3Y KTB | 2.96% | ▲ 3.0 | ▼ 27.8 | ▼ 103.5 |
| 10Y KTB | 3.09% | ▲ 1.1 | ▼ 21.8 | ▼ 113.1 |
| Term Spread(bp) | 12.6 | ▼ 1.9 | ▲ 6.0 | ▼ 9.6 |
| Corp. AA- 3Y | 3.54% | ▲ 2.5 | ▼ 43.8 | ▼ 123.5 |
| Credit spread(bp) | 58 | ▼ 0.5 | ▼ 16.0 | ▼ 20.0 |
US Treasury Yields
| US Treasury Yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 2Y US Treasury | 3.95% | ▼ 3.7 | ▼ 37.7 | ▼ 103.7 |
| 10Y US Treasury | 4.06% | ▲ 0.3 | ▲ 11.3 | ▼ 51.7 |
| Term Spread(bp) | 11 | ▲ 4.0 | ▲ 49.0 | ▲ 52.0 |
[Market Trends].
September CPI came in at 2.4% year-over-year, beating expectations (2.3%) and core CPI came in at 3.3% year-over-year, beating expectations (3.2%). Initial jobless claims rose sharply to 25.8 million, beating expectations (23.0 million).
Despite better-than-expected CPI, weekly jobless claims rose, slightly reducing the likelihood of a November hike, pushing US Treasury rates lower. Domestic rates rose on net foreign selling of Treasury futures and October monetary policy caution.
[Top economic news and events].
Top U.S. News
September CPI rose 2.4% year-over-year, beating expectations (2.3%). Supercore CPI rose 0.4%, marking the third consecutive month of growth.
Weekly Initial Jobless Claims jumped from 225k to 258k, the largest weekly gain since July 2021, though this was likely due to Hurricane Hurlene.
Featured News
September CPI came in above consensus, pushing the 10-year US Treasury yield above 4.11%, but a rise in weekly jobless claims sent it back down to 4.06%, adding to volatility.
FTSE Russell has announced the inclusion of South Korea in the WGBI, which will actually be reflected in the index one year later in November 2025. The weight of South Korea is expected to be 2.22%.
Other News and Events
According to a MOLIT press release, South Korea's share of WGBI inclusion is 2.22% as of November 2024, and the actual inclusion will be phased in starting one year later in November 2025.
Atlanta Fed President Bostic noted that recent inflation data has been unstable, leaving open the possibility that the Fed may need to pause rate cuts in November. New York Fed President Williams said it was appropriate to continue cutting rates.
[Response Strategy].
Shallow investor sentiment, coupled with a rate-cutting cycle, suggests that financial market volatility is likely to increase, and strategies should consider shifting from an overweight equity/credit (HY) position to an underweight position from an arbitrage perspective.
Disclaimer The information contained in this report has been obtained from sources believed to be reliable, but we do not guarantee its accuracy or completeness. This report is for informational purposes only and is not a solicitation or offer to buy or sell any security or financial instrument. Opinions expressed in this report are subject to change without notice. Investment decisions are the sole responsibility of the investor and you should seek professional advice as needed
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