Bonds Bid As COVID-19 Cases Pick Up

Futures are higher in South Korea, 10-year future up 19 ticks at 126.10, the contract is still off opening highs above 126.15 though, having dipped as low as 125.96 before bouncing. 3-Year seeing less of a bid, last up 5 ticks, ahead of the BoK KRW 2.1tn 2-year auction of monetary stabiisation bonds (MSB).

• South Korea reported 668 more COVID-19 cases in the past 24 hours, a sharp rise from 478 the previous day and the largest since 621 daily infections on Feb. 18. The daily caseload had been hovering above 500 since Wednesday last week, before falling to 473 on Monday due to fewer COVID-19 tests over the weekend. Authorities have warned that the country may see the daily caseload of over 600 amid increased spring travel and loosened vigilance against the virus, signaling that enhanced virus curbs may be adopted to stem the further spread of COVID-19. Local authorities plan to release new social distancing guidelines, which will be implemented starting next week.
• South Korean Finance Minister Hong was on the wires, he noted that the IMF report that upgraded global growth forecasts meant that growth in South Korea could also rise above forecasts, adding that a recovery in the US would boost South Korean exports. Hong also said that a recovery expectation could increase caution on inflation. Data last week showed March CPI rose 1.5% y/y, up from February's 1.1% gain and the fastest since January 2020; inflation picked up as oil prices remain high and consumer demand starts to recover after a year of slump
• Data earlier showed the February current-account surplus at $8.03bn from $7.06bn in January, goods trade surplus at $6.05b in Feb. from $5.73b surplus for Jan, while the services surplus at $129.8m in Feb. compared to a deficit of $606.3m in Jan.
• Elsewhere, Samsung Electronics reported earnings above estimates for Q1, the company reported a 44% rise in Q1 profit, while operating income at KRW 9.3tn was above estimates of KRW 8.8tn. Samsung did initially warn that Q1 could be weak, but strong demand for electronics buoyed the earnings report.
• Looking ahead, Seoul and Busan, South Korea's two largest cities, will hold mayoral by-elections. President Moon's ruling Democratic Party could be headed for defeat in what would be a troubling signal for his government.