Authorities Pledge Support For Bond Market

Bonds are higher in South Korea as equity markets come under pressure 10-year future some 51 ticks higher at 126.82, while 3-year future is 8 ticks higher at 110.85.

• Earlier in the session BoK Gov Lee said he expects growth and inflation to be faster this year, but that this won't necessitate early rate hikes. The positive assessment of the economy mirrors comments from President Moon earlier this week.
• Lee also touched on bond purchases, he noted the amount of purchases from the market depends on how quickly yields rise, as well as the reasons behind the rise. He said managing liquidty after the purchases was important, and that the bank could buy bonds without any difficulties. He also mentioned elevated yield spreads and long end inversion, for which he said the bank could adjust bond issuance via MSB sales. These comments echo those of Vice FinMin Kim who said the government could "flexibly intervene" if market volatility increases, actions could include making adjustments to issuance.
• Data today showed South Korean produce prices rose 2.0% Y/Y in February, up from a revised 0.9% in January. The increase is attributed to a rise in oil prices and denotes the fourth straight month of gains.
• Elsewhere, South Korea reported 428 daily new coronavirus cases, back to above 400 after a brief dip below yesterday. There are still concerns of a potential resurgence as the AstraZeneca vaccine rollout for elderly citizens begins after a one-month delay over safety concerns.
• Government bonds could come under pressure from the announcement of corporate issuance by Lotte Shopping. The retailer plans to sell up to KRW 400bn of bonds in April in a triple tranche deal, while E-Mart plans a similar size issuance.