Korea Bond Market Daily Report(Gemini): 10/30/2024
Korea Bond Market Daily Report
Treasury yields
| Treasury yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 3Y KTB | 2.94% | ▲ 0.4 | ▼ 30.4 | ▼ 113.7 |
| 10Y KTB | 3.12% | ▲ 0.1 | ▼ 18.8 | ▼ 116.2 |
| Term Spread(bp) | 18.2 | ▼ 0.3 | ▲ 11.6 | ▼ 2.5 |
| Corp. AA- 3Y | 3.50% | ▲ 0.1 | ▼ 47.6 | ▼ 138.0 |
| Credit spread(bp) | 56.8 | ▼ 0.3 | ▼ 17.2 | ▼ 24.3 |
US Treasury Yields
| US Treasury Yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 2Y US Treasury | 4.10% | ▼ 2.2 | ▼ 23.2 | ▼ 89.2 |
| 10Y US Treasury | 4.26% | ▼ 2.4 | ▲ 30.6 | ▼ 58.4 |
| Term Spread(bp) | 15.8 | ▼ 0.2 | ▲ 53.8 | ▲ 30.8 |
[Market Trends].
U.S. Treasury yields fell following a strong 7-year Treasury auction, weak jobs data, and a downgrade in the Atlanta Fed's GDP forecast.
We forecast a flattening of the Treasury long- and short-term curves (10/3 years) on slowing growth.
[Top economic news and events].
Top U.S. News
The 10-year U.S. Treasury bounced back to 4.25% as September JOLTs job openings missed both expectations and the prior month by a wide margin.
U.S. Treasury yields fell following a strong 7-year Treasury auction, weak jobs data, and a downgrade in the Atlanta Fed's GDP forecast.
Featured News
The Conference Board Consumer Confidence Index for October came in at 108.7 points, above expectations (99.5 points), and the JOLTS Job Openings for September came in at 744.3k, below expectations (800.0k).
The BOK governor dismissed the possibility of a recession in his State of the Nation address, saying that growth this year is still above potential (2%), pushing domestic interest rates higher.
Other News and Events
November has a number of important events coming up. These include US October Employment (11/1), US Election (11/5-6), November FOMC (11/6-7), US October CPI (11/13), and November Monetary Policy (11/28).
Bond markets are most wary of a Trump win + Red Wave (Republican control of both houses of Congress) scenario.
[Response Strategy].
We do not believe there is much utility in betting on further declines in Treasury rates in an inverse relationship with base rates. We recommend taking advantage of some of the arbitrage opportunities in the event of a decline in Treasury yields and investing in credit with de-coupled carry.
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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