Bond Futures Higher, Kospi Retreats From Highs

10-year bond future is higher, last up 12 ticks at 129.68, grinding steadily higher from the open, regaining lost ground after dropping earlier this week on reports that the South Korean government were seeking cash handouts to citizens and compensation for SME's.

• There is some coronavirus concern permeating sentiment today, South Korea has reported 559 new cases of coronavirus infection, its highest daily increase in 10 days.
• Foreign inflows into South Korean bonds have gained recently; according to data compiled by Bloomberg the 5-day moving average of net foreign inflows increased to $149.2m, rising above the 20-day average of $139.1m.
• There has been some 20bps of steepening in South Korean government bonds in 2020, the 3-/10-year spread last around 83bps, a trend that NH Amundi Asset Management believe is ending. "We'll start to see a market response to a potential rate hike around the second-half of the year, when it's expected for vaccinations to have reached more than 50% of the population in major countries, and the economy starts to normalize," said Han Sooil FI CIO at the firm.
• Meanwhile, the KOSPI is higher, up around 0.3% at 3148, but is off highs having earlier risen as much as 1.3%.