Korea Bond Market Daily Report(Gemini): 1/17/2025
Korea Bond Market Daily Report
Treasury yields
| Treasury yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 3Y KTB | 2.63% | ▼ 4.9 | ▲ 11.9 | ▼ 60.9 |
| 10Y KTB | 2.80% | ▼ 5.8 | ▲ 5.3 | ▼ 52.0 |
| Term Spread(bp) | 17.6 | ▼ 0.9 | ▼ 6.6 | ▲ 8.9 |
| Corp. AA- 3Y | 3.28% | ▼ 3.9 | ▲ 7.9 | ▼ 70.6 |
| Credit spread(bp) | 65 | ▲ 1.0 | ▼ 4.0 | ▼ 9.7 |
US Treasury Yields
| US Treasury Yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 2Y US Treasury | 4.24% | ▼ 2.9 | ▼ 0.9 | ▲ 2.1 |
| 10Y US Treasury | 4.61% | ▼ 4.7 | ▲ 4.3 | ▲ 54.3 |
| Term Spread(bp) | 37.2 | ▼ 1.8 | ▲ 5.2 | ▲ 52.2 |
[Market Trends].
US December retail sales missed expectations and new jobless claims beat expectations, suggesting a possible slowdown in growth in the US economy.
Despite the Bank of Korea's decision to keep the key interest rate unchanged, markets are pricing in a rate cut in February. This reflects concerns about the slowing economy and expectations of government stimulus measures. Exchange rate volatility remains a major concern for the market.
[Top economic news and events].
Top U.S. News
Retail sales in the US rose just 0.4% in December, below expectations (0.6%), suggesting a possible contraction in consumer sentiment.
US Federal Reserve Board member Waller expressed optimism about slowing inflation and mentioned the possibility of three to four rate cuts this year, a comment that fueled market expectations of rate cuts.
Featured News
South Korea's Monetary Policy Committee froze the benchmark interest rate at 3.00% in January. Despite the minority view of member Shin Shin-hwan for a cut, the decision was made due to high currency volatility and political uncertainty. Markets are still keeping open the possibility of a rate cut in February.
Since the January Monetary Policy Committee results were announced, government bond rates have been on the decline. The decline in US Treasury yields and the BOK's dovish stance contributed to the decline in government bond rates. In particular, the 3-year and 10-year government bond rates fell by 4.9 and 5.8 basis points, respectively.
Other News and Events
U.S. Fed Director Waller expressed optimism that inflation is slowing and hinted at the possibility of three to four rate cuts this year. The comments spurred a decline in U.S. Treasury yields.
The US government's budget deficit has raised concerns about the limited availability of fiscal support. This is expected to affect the future direction of economic policy.
[Response Strategy].
The timing and breadth of future interest rate cuts are expected to be determined by the stability of domestic and international economic indicators and political conditions. Therefore, you should closely monitor market conditions and carefully observe the direction of government policy, including whether a supplementary budget will be organized and implemented. You need to establish a response strategy to fluctuations in domestic and foreign interest rates and exchange rates.
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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