Korea Bond Market Daily Report(Gemini): 9/28/2024
Korea Bond Market Daily Report
Treasury yields
| Treasury yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 3Y KTB | 2.81% | ▼ 0.5 | ▼ 43.3 | ▼ 108.4 |
| 10Y KTB | 3.00% | ▲ 0.4 | ▼ 30.5 | ▼ 105.3 |
| Term Spread(bp) | 19.4 | ▲ 0.9 | ▲ 12.8 | ▲ 3.1 |
| Corp. AA- 3Y | 3.40% | ▼ 0.6 | ▼ 58.5 | ▼ 125.9 |
| Credit spread(bp) | 58.8 | ▼ 0.1 | ▼ 15.2 | ▼ 17.5 |
US Treasury Yields
| US Treasury Yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 2Y US Treasury | 3.53% | ▲ 4.0 | ▼ 80.0 | ▼ 156.0 |
| 10Y US Treasury | 3.79% | ▲ 5.0 | ▼ 16.0 | ▼ 76.0 |
| Term Spread(bp) | 26 | ▲ 1.0 | ▲ 64.0 | ▲ 80.0 |
[Market Trends].
US weekly initial jobless claims fell to 218k, suggesting a robust labor market. This, coupled with Yellen's softening outlook, pushed US Treasury yields higher.
Comments from the Bank of Korea's deputy governor on its rate-setting policy led to a decline in domestic short-term rates and curve steepening. The 3-year Treasury bill fell to 2.81% and the 10-year rose to 3.00%.
[Top economic news and events].
Top U.S. News
The final estimate of U.S. second-quarter GDP was unchanged from the preliminary estimate, growing at a 3.0% annualized rate, reflecting robust domestic demand, including private consumption and inventory investment.
US weekly initial jobless claims fell below consensus to 218K, the lowest level in four months and reaffirming the robustness of the labor market.
Featured News
On September 27, the Bank of Korea's deputy governor said that the central bank would consider not only financial stability but also inflation and growth when deciding on interest rates, raising expectations of a rate cut. This led to a decline in domestic short-term rates and a steepening of the curve.
Nice Credit Rating has warned of increasing downward pressure on the creditworthiness of not only small and medium-sized securities firms, but also large securities firms such as BNK, iM, Hanwha, and Hyundai Motor Securities.
Other News and Events
The Swiss National Bank (SNB) cut its benchmark interest rate from 1.25% to 1.00%. The SNB maintained its GDP growth forecast for 2025, but significantly lowered its inflation forecast from 1.1% to 0.6%.
The 10-year yield on French government bonds has surpassed the 10-year yield on Spanish government bonds, a country with a credit rating five notches lower, for the first time since 2007, with France's fiscal deficit being the main culprit.
[Response Strategy].
With expectations of rate cuts expanding, the domestic bond market is likely to remain curve-steep in the near term. With limited rate cuts expected in the long term, investors should keep a close eye on the range of market interest rates and develop an appropriate investment strategy.
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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