Korea Bond Market Daily Report: 10/31/2024
Korea Bond Market Daily Report
Treasury yields
| Treasury yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 3Y KTB | 2.94% | ▲ 0.1 | ▼ 30.3 | ▼ 115.2 |
| 10Y KTB | 3.10% | ▼ 1.3 | ▼ 20.1 | ▼ 120.7 |
| Term Spread(bp) | 16.8 | ▼ 1.4 | ▲ 10.2 | ▼ 5.5 |
| Corp. AA- 3Y | 3.50% | ▼ 0.2 | ▼ 47.8 | ▼ 140.3 |
| Credit spread(bp) | 56.5 | ▼ 0.3 | ▼ 17.5 | ▼ 25.1 |
US Treasury Yields
| US Treasury Yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 2Y US Treasury | 4.10% | ▼ 1.2 | ▼ 23.2 | ▼ 93.2 |
| 10Y US Treasury | 4.26% | ▼ 2.4 | ▲ 30.6 | ▼ 62.4 |
| Term Spread(bp) | 15.8 | ▼ 1.2 | ▲ 53.8 | ▲ 30.8 |
[Market Trends].
The Brazilian real is experiencing increased exchange rate volatility, but confidence in U.S. fiscal policy has limited further weakening of the real. Brazil's low share of exports to the U.S. has made it relatively stable in the face of EM currency weakness.
U.S. third-quarter GDP came in below expectations, but rising personal consumption expenditures are driving economic growth. This is raising expectations for future interest rate cuts, which will impact Treasury yields if rates fall.
[Top economic news and events].
Top U.S. News
The preliminary US Q3 GDP report was lower than expected at an annualized rate of 2.8%, but there were some positives, with personal consumption up 3.7%, which is expected to be linked to future employment data and indicative of an overall recovery in the economy.
ADP private payrolls beat expectations, which pushed U.S. Treasury rates higher and could be interpreted as a signal for lower interest rates. These employment data will have a direct impact on future economic policy.
Featured News
Korean government bond rates ended mixed, but opened stronger, influenced by movements in US Treasuries, reflecting net foreign buying and corporate financing needs.
South Korea's labor market is also improving, which is likely to have a positive impact on the economic outlook going forward, so interest rates will be closely watched.
Other News and Events
The US presidential election and policy uncertainty is impacting markets, and the possibility of a Trump victory could have major ramifications for international currencies and interest rates.
There could be aftershocks in Asian financial markets as the Chinese government considers injecting RMB 10 trillion to address local government debt risks.
[Response Strategy].
As interest rates rise, you may want to consider access to shorter-dated instruments and look for suitable investment opportunities in emerging markets such as Brazil. You should continue to monitor economic data and interest rate outlooks in the U.S. and keep your portfolio diversified.
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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