Bonds Shrug Off Corona Concerns; Strong 5-Year Auction

South Korean Disease Control Agency on the wires saying they expect daily coronavirus cases of 550-750 this week, and could see up to 900 daily cases next week. South Korea is raised its Covid-19 alert level over the weekend as it struggles with a rise in infections. Gatherings of more than 50 will be banned in the from Tuesday, while gyms and karaoke bars will be closed. On Sunday 631 new infections were reported, the highest single day figure in nine months.

• The risks, however, have had little effect on the South Korean curve. Yields are marginally lower in the short end and the belly, the long end seeing yields rise slightly. Selling in the long end saw the curve bear steepen slightly. The 3/10-year spread last at 76.928bps, touching new highs.
• The 5-year sector saw some buying on the back of a strong auction of 5-year paper. South Korea Ministry of Finance sold KRW 1.05tn of bonds due September 2025, the issue saw bid/cover of 3.14 (previous 2.4) with a yield of 1.335% (previous 1.275%).