Korea Bond Market Daily Report(Gemini): 12/16/2024
Korea Bond Market Daily Report
Treasury yields
| Treasury yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 3Y KTB | 2.54% | ▼ 0.8 | ▼ 69.9 | ▼ 92.4 |
| 10Y KTB | 2.68% | ▼ 2.4 | ▼ 63.0 | ▼ 84.9 |
| Term Spread(bp) | 13.5 | ▼ 1.6 | ▲ 6.9 | ▲ 7.5 |
| Corp. AA- 3Y | 3.20% | ▼ 0.3 | ▼ 78.3 | ▼ 98.9 |
| Credit spread(bp) | 65.6 | ▲ 0.5 | ▼ 8.4 | ▼ 6.5 |
US Treasury Yields
| US Treasury Yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 2Y US Treasury | 4.25% | ▲ 6.5 | ▼ 8.5 | ▼ 19.5 |
| 10Y US Treasury | 4.40% | ▲ 7.5 | ▲ 44.5 | ▲ 48.5 |
| Term Spread(bp) | 15 | ▲ 1.0 | ▲ 53.0 | ▲ 68.0 |
[Market Trends].
US Treasury yields rose after the November import price index rose by 0.1% MoM, as well as caution over Trump's second term policies and concerns that the FOMC will cut rates less. Long- and short-term interest rate differentials also widened.
In South Korea, domestic interest rates fell on the longer end of the spectrum, with strong buying in the 30-year bond ahead of the impeachment vote over the weekend. The 3-year, 10-year, and 30-year government bonds all fell, and the gap between long- and short-term rates narrowed. The won/dollar exchange rate rose.
[Top economic news and events].
Top U.S. News
The US import price index rose in November, raising concerns about possible future interest rate hikes. This could lead to higher US Treasury rates and a stronger dollar. You should closely monitor the trends in the US economy through relevant news and plan your response strategy.
Uncertainty surrounding the possible return of former President Trump to the White House is impacting U.S. financial markets. Concerns about the possibility of a repeat of the policies of the Trump administration will be an important factor in investment decisions. It is important to monitor the future actions of former President Trump and any changes in policy tone.
Featured News
Political uncertainty continues in South Korea ahead of the National Assembly's passage of the impeachment bill against President Yoon Seok-yul and the Constitutional Court's final ruling. The impeachment trial process has created market nervousness due to the unpredictability of the composition of the Constitutional Court and the timing of the ruling, which is expected to impact the domestic bond market.
Discussions on the supplementary budget (supplementary budget) are ongoing, but the opposition's proposed budget cuts have raised uncertainty over the size of the supplementary budget and the timing of its submission to the Diet. The size and timing of the supplementary budget are important factors that could affect domestic economic growth and interest rates, and should be closely monitored by markets.
Other News and Events
The European Central Bank (ECB) cut interest rates by a more modest 25 basis points than expected at its December meeting, with markets noting the removal of references to the need to return to inflation targeting and the possibility of further rate cuts in the future. The ECB's decision warrants further analysis of the European economic outlook and the future direction of monetary policy.
The Bank of Korea has released a document titled "Financial and Economic Impact Assessment and Response Direction after Emergency Martial Law." While the specific contents of the document have not been disclosed, it is believed to present the impact on the financial and economic system in the event of an emergency, as well as response measures. It is necessary to closely review the relevant contents and prepare for market uncertainties.
[Response Strategy].
Given the current market conditions, you need to strengthen your monitoring of political uncertainty and volatility in economic indicators, and have a strategy to maintain the stability of your portfolio. It is important to keep a close eye on the appropriations plan and the outcome of the Constitutional Court's impeachment trial, and to develop a rapid response system to changes in domestic and foreign interest rates and exchange rates. Movements in the US and European economies and forecasts for future monetary policy should also be reflected in your 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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