Auction Preview

The Bank of Korea will today auction KRW 2.1tn of 2-year monetary stabilization bonds (MSB). Results due after 0230BSST/1030KST. The BoK last sold 2-year MSB on April 7, the sale was larger than advertised at KRW 2.35tn, it drew a yield of 0.905% and was covered 1.3787x.

• Yields seem to have topped out in South Korea after Marching higher from around August 2020. 10-Year yield is at 2.024% from highs around 2.18%. Still, the BoK has emphasized it does have the ability to purchase more bonds from the market if needed to subdue yields.
• Foreigners continue to be buyers of South Korean debt, April has seen net purchases by foreign funds every day. The latest data showed purchases of $180bn on Monday, compared to total net purchases of $1.154bn last week. Elsewhere, data compiled by Bloomberg showed US listed EM focused ETF's took in $413.8m in the latest week, the twenty fourth straight week of inflows. Overseas investors, led by the sovereign wealth funds, are expected to continue favouring KTBs for yield pickup on a FX-hedged basis.