Korea Bond Market Daily Report(Gemini): 1/8/2025
Korea Bond Market Daily Report
Treasury yields
| Treasury yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 3Y KTB | 2.51% | ▼ 1.6 | ▲ 0.1 | ▼ 77.5 |
| 10Y KTB | 2.79% | ▼ 2.3 | ▲ 4.5 | ▼ 55.0 |
| Term Spread(bp) | 28.6 | ▼ 0.7 | ▲ 4.4 | ▲ 22.5 |
| Corp. AA- 3Y | 3.19% | ▼ 1.5 | ▼ 1.0 | ▼ 84.5 |
| Credit spread(bp) | 67.9 | ▲ 0.1 | ▼ 1.1 | ▼ 7.0 |
US Treasury Yields
| US Treasury Yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 2Y US Treasury | 4.29% | ▲ 1.1 | ▲ 4.1 | ▼ 10.9 |
| 10Y US Treasury | 4.69% | ▲ 6.5 | ▲ 11.5 | ▲ 63.5 |
| Term Spread(bp) | 39.4 | ▲ 5.4 | ▲ 7.4 | ▲ 74.4 |
[Market Trends].
U.S. December ISM Services Index (54.1%) and November JOLTS job openings beat expectations, U.S. Treasury rates rise. Domestic bond rates fell on the back of a weaker won/dollar exchange rate and net purchases of Treasury futures by foreigners.
Increased uncertainty in domestic markets due to strong US economic data and potential for higher interest rates. Expect more interest rate and currency volatility depending on the outcome of the December employment report.
[Top economic news and events].
Top U.S. News
U.S. December ISM Services Index came in at 54.1%, above expectations (53.5%), indicating continued economic strength. Notably, the prices paid index reached its highest level since February 2023.
U.S. November JOLTS job openings beat expectations (7.73 million) to 809.8 million, the highest in six months. Strong labor market confirmed, but hiring rate continues to decline to 3.3 percent
Featured News
Increased uncertainty in the domestic bond market ahead of the January monetary policy meeting as the US and Korea interest rate decoupling intensified, and market uncertainty ahead of the release of US economic data (job openings, ISM services, and employment reports)
Recent changes in the triggers for the RBA's decision-making: shifting policy priorities based on market conditions in October (financial stability and household debt), November (growth and exchange rate), and January (exchange rate)
Other News and Events
ECB's rate cut remains likely despite accelerating German inflation (December headline CPI 2.6%). Difficult to balance eurozone economic conditions with price stability.
Expectations of a year-end effect, but credit spreads still likely to widen due to high US long-term interest rates, continued dollar strength and domestic political instability. Breadth and pace of year-one effects expected to be limited
[Response Strategy].
Closely monitor U.S. economic indicators and interest rate trends, strengthen management of exchange rate volatility, and develop flexible response strategies to changes in domestic and international political and economic conditions. Take a cautious approach to portfolio management given the potential for credit spreads to widen.
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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