Korea Bond Market Daily Report(Gemini): 11/22/2024
Korea Bond Market Daily Report
Treasury yields
| Treasury yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 3Y KTB | 2.83% | ▼ 4.4 | ▼ 41.1 | ▼ 81.5 |
| 10Y KTB | 2.98% | ▼ 3.9 | ▼ 32.8 | ▼ 74.8 |
| Term Spread(bp) | 14.9 | ▲ 0.5 | ▲ 8.3 | ▲ 6.7 |
| Corp. AA- 3Y | 3.40% | ▼ 4.2 | ▼ 58.4 | ▼ 104.0 |
| Credit spread(bp) | 56.7 | ▲ 0.2 | ▼ 17.3 | ▼ 22.5 |
US Treasury Yields
| US Treasury Yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 2Y US Treasury | 4.35% | ▲ 4.1 | ▲ 2.1 | ▼ 50.9 |
| 10Y US Treasury | 4.42% | ▲ 1.4 | ▲ 47.4 | ▲ 1.4 |
| Term Spread(bp) | 7.3 | ▼ 2.7 | ▲ 45.3 | ▲ 52.3 |
[Market Trends].
US initial jobless claims missed expectations, while continuing jobless claims beat expectations. Despite these conflicting data points, US Treasury rates moved higher on the back of solid unemployment data, hawkish Fed officials, and a return to risk appetite.
South Korean interest rates fell on concerns of a slowing domestic economy and news of Lotte affiliates failing to comply with financial covenants. Unlike the rise in U.S. Treasury rates, the decline in domestic rates is a prime example of the differential movement of domestic and foreign markets. The 10-year Treasury bond rate fell below 3%, reflecting market anxiety.
[Top economic news and events].
Top U.S. News
Initial jobless claims in the US came in below expectations, suggesting a robust labor market. This is an important economic indicator that influences market expectations for future interest rate hikes by the Federal Reserve.
Chicago Fed President Goolsbee's hawkish comments sent a hawkish signal to the market and pushed U.S. Treasury yields higher, which is important news because it influences market participants' predictions about the direction of the Fed's interest rate policy going forward.
Featured News
The President's office has left open the possibility of a supplemental budget (supplemental budget), saying it is not ruling out an active fiscal role. While the specific timing is under consideration, the office has not set a timeframe for the supplementary budget, which is expected early next year. The news suggests that the government may seek to stimulate the economy amid concerns of a slowing domestic economy.
Domestic interest rates fell on concerns of a slowdown in the domestic economy and news of Lotte affiliate's non-compliance with financial covenants. The 3-year, 10-year, and 30-year government bond rates fell by -4.4, -3.9, and -3.1 basis points, respectively, reflecting market uncertainty. The news demonstrates a decline in investor sentiment in the domestic market and a preference for safe assets.
Other News and Events
The escalation of missile attacks between Russia and Ukraine has pushed up international oil and gold prices. Russia's ballistic missile launches have increased geopolitical risk and contributed to market volatility.
Comments from Fed officials have been mixed. Bowman has been cautious about further rate cuts, while Cook has characterized rate moves toward a neutral stance as appropriate. This internal disagreement increases uncertainty about future interest rate policy.
[Response Strategy].
With increasing uncertainty in market conditions, you need a prudent investment strategy. You should closely monitor domestic and international economic indicators and political events to adjust your portfolio and manage risk. Maintaining an appropriate allocation to safe-haven assets is also an important 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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