Bonds Lower After Issuance Plan, Data

Bonds pressured lower on positive data and increased issuance. 10-year future down 13 ticks at 126.32, 3-year future flat at 110.83.

• The MOF plans to sell KRW 14.5tn of bonds in April, compared to KRW 17.2tn in March against an original plan of KRW 14tn. It was flagged previously that South Korea would minimise issuance of longer-tenure bonds in order to address yield curve inversion in the long end. 2-Year auction KRW 100bn bigger, 10-Year auction KRW 100bn smaller, 20-Year auction KRW 200bn smaller.
• Data released earlier showed CPI rose 1.5% Y/Y, in line with estimates, while the core reading rose 1% against estimates of 0.9%. The gains were driven by higher oil prices, and a pick up in consumer demand, a stronger consumer confidence figure earlier this week bodes well for domestic demand in the coming months. The 1.5% print is the fastest increase since January 2020. The increase in CPI drove the third consecutive monthly drop in the country's real 10-year yield to 0.6%
• Elsewhere, South Korea has informed the US that there are signs China and North Korea are preparing for a summit. Officials said the US would closely monitor progress in relations between China and North Korea, but the US had little desire to conduct talks with North Korea, and said China had the potential to not be a positive player on the global stage.
• On the coronavirus front South Korea has secured 432,000 doses of Covavax vaccine, to be delivered on April 3. It was previously reported the delivery would take place later in April.
• Several markets are closed for holidays today, (details available in previous bullets), which is expected to keep newsflow light and volumes thin during the session