Futures Higher, Markets Circumspect On Budget

Bond futures in South Korea are higher, 10-year future up 16 ticks at 128.16, the contract made a fresh low yesterday at 127.96.

• Risk off flows are supporting the space, equity markets in South Korea are down around 1% but off their lows. Upside is tempered as markets are still wary of risks surrounding the proposed extra budget, with indications from the government that they will decide on the size of the budget by Feb 26 and submit the proposal in early March.
• Bank of Korea Governor Lee is on the wires, he said the BOK has a role in stabilising markets, but direct purchases of bonds are undesirable. The bank purchased around KRW 5tn of bonds directly from the market from in Q4 2020 and currently conducts a bond conversion offer to lengthen maturities in the market. Lee was positive on the economy, he said GDP growth was broadly in line with November's projection (3.0%).
• Markets await a 20-year bond auction later in the session, after a well-received auction yesterday.