Korea Bond Market Daily Report(Gemini): 1/22/2025
Korea Bond Market Daily Report
Treasury yields
| Treasury yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 3Y KTB | 2.58% | ▼ 4.4 | ▲ 7.2 | ▼ 72.8 |
| 10Y KTB | 2.82% | ▼ 5.0 | ▲ 6.9 | ▼ 60.4 |
| Term Spread(bp) | 23.9 | ▼ 0.6 | ▼ 0.3 | ▲ 12.4 |
| Corp. AA- 3Y | 3.23% | ▼ 4.1 | ▲ 3.0 | ▼ 83.1 |
| Credit spread(bp) | 64.8 | ▲ 0.3 | ▼ 4.2 | ▼ 10.3 |
US Treasury Yields
| US Treasury Yields | Recent | DoD (bp) | YTD (bp) | YoY (bp) |
|---|---|---|---|---|
| 2Y US Treasury | 4.28% | ▲ 0.6 | ▲ 2.6 | ▼ 11.4 |
| 10Y US Treasury | 4.58% | ▼ 3.4 | ▲ 0.6 | ▲ 42.6 |
| Term Spread(bp) | 30 | ▼ 4.0 | ▼ 2.0 | ▲ 54.0 |
[Market Trends].
Sharp drop in international oil prices following President Trump's declaration of an energy emergency and comments on expanding oil drilling. Decline in U.S. Treasury yields (focusing on longer duration) due to pending signing of tariff executive orders. Decline in the dollar exchange rate and lower Treasury rates.
The 10-year U.S. Treasury rate has fallen (to its lowest level since December 30 last year). Korean bond market more sensitive than the US. Improving domestic economic data or the need for a large supplementary budget as a requirement for a rebound in government bond rates.
[Top economic news and events].
Top U.S. News
The executive orders proposed in President Trump's inaugural address, including those related to immigration, energy and EV deregulation, and trade. Stopped short of imposing tariffs, but ordered investigations into major trading partners. The dollar index and the USD/USD exchange rate fell significantly as tariff concerns eased.
Redfin reports that home prices are on the rise in 50 major U.S. metros. This is the first time since May 2022 and could be interpreted as a positive sign for the U.S. economic recovery.
Featured News
Analyzing and forecasting the impact on the domestic bond market of the anticipated tougher immigration and tariff policies following President Trump's inauguration. In particular, we analyze the overreaction of the domestic bond market relative to the U.S. bond market and suggest conditions for a meaningful rebound in Treasury rates in the future (improved domestic economic data or a large tax increase).
A look at the Bank of Korea's January economic forecast (growth revised downward) and the inflection point for interest rates depending on the size and timing of expansionary fiscal policy. Analysis of the rising long-term interest rates in the US and Europe and the decoupling phenomenon in Korea. The outlook for domestic benchmark interest rate cuts this year (three) and the outlook for government bond rates (3-year at 2.4% and 10-year at 2.6%).
Other News and Events
News that President Trump will announce a major infrastructure policy announcement on Tuesday local time, according to a White House spokesperson.
Home prices rose year-over-year in December in all 50 major U.S. metro areas, according to a report from Redfin. First time since May 2022, median price up 6.3% year-over-year.
[Response Strategy].
Continuous monitoring of domestic and international interest rate and currency volatility. Analyzing the market impact of the Trump administration's change in policy direction and developing strategies to respond. Adjusting portfolio strategies based on improving domestic economic indicators and the implementation of expansionary fiscal policies. Strengthening short-term risk management.
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
Download the PDF report: Download PDF
Original Post: https://aicraft.life/korea-bond-market-daily-reportgemini-1-22-2025/
Comments
Post a Comment