Korea Bond Market Daily Report(Gemini): 11/8/2024
Korea Bond Market Daily Report
Treasury yields
| Treasury yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 3Y KTB | 2.92% | ▼ 3.8 | ▼ 31.8 | ▼ 96.5 |
| 10Y KTB | 3.10% | ▼ 3.6 | ▼ 20.8 | ▼ 95.7 |
| Term Spread(bp) | 17.6 | ▲ 0.2 | ▲ 11.0 | ▲ 0.8 |
| Corp. AA- 3Y | 3.49% | ▼ 3.7 | ▼ 48.8 | ▼ 123.9 |
| Credit spread(bp) | 57 | ▲ 0.1 | ▼ 17.0 | ▼ 27.4 |
US Treasury Yields
| US Treasury Yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 2Y US Treasury | 4.20% | ▼ 7.3 | ▼ 13.3 | ▼ 71.3 |
| 10Y US Treasury | 4.33% | ▼ 9.4 | ▲ 37.6 | ▼ 25.4 |
| Term Spread(bp) | 12.9 | ▼ 2.1 | ▲ 50.9 | ▲ 45.9 |
[Market Trends].
Trump wins the 2024 US presidential election. He wins the Electoral College by an unexpectedly large margin.
The Senate is in Republican hands as expected. The House of Representatives is also very likely to be controlled by the GOP, making the Red Sweep scenario a reality.
[Top economic news and events].
Top U.S. News
At the November FOMC, the Fed decided to cut rates by 25 basis points, and Chairman Powell dismissed the possibility of his resignation.
US Treasury yields fell sharply on easing monetary policy uncertainty and Chairman Powell's hint of a rate cut.
Featured News
Trump trade unfolds immediately after the US election results. US markets rallied on pro-Trump themes amid expectations of tax cuts. Interest rates rise sharply on fiscal deficit concerns.
Tax cuts at center of Trump deal. Control of the House and Senate allows tax cuts to be passed through the Budget Reconciliation process. Likely to pass at the end of 25 years when the Tax Cuts and Jobs Act of 2017 (TCJA) expires
Other News and Events
U.S. prioritization, tariffs, and deregulation expected to benefit defense, oil infrastructure
One thing to keep in mind is the small margin in the House of Representatives. While they have a majority, it's only by three or four seats, meaning that even a small number of defections could make it difficult to pass legislation.
[Response Strategy].
Equities: Rather than pivoting to a purely cyclical strategy, consider existing AI and key growth sectors as Trump policy beneficiaries. Robotics (BOTZ ETF) and oil infrastructure (OIH ETF) are of interest. Fixed income: Longer-term interest rate rises are unlikely to continue given rate cuts and slowing Korean exports to the US. We recommend an overweight in Korean government bonds and a split-buy strategy in mid-4% long-dated U.S. Treasuries
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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