Futures Lower With Focus On Budget

10-year futures in South Korea are lower today, H1 contract down 35 ticks at 128.20. The space came under pressure from the open and has hit contract lows today at 128.10. extending losses seen on Friday.

• A robust auction saw the contract come off its lows, 5-year fungible issue yielded 1.385% and was covered 3.1x, a 4.5bps yield concession from the January auction and slightly stronger coverage.
• South Korean finance minister Hong Nam-ki said that South Korea aims to submit extra budget to parliament next week. The leader of the ruling party said the size of the package will be decided by Feb 28, there is speculation the budget will be between KRW 12tn and KRW 20tn, the amounts floated by the ruling democratic party and the finance ministry respectively.
• The market was spooked slightly late last week when South Korean President Moon Jae-in said the nation may consider cash handout to all citizens when pandemic eases, sparking fears of a further budget and extra issuance before a fourth round of cash handouts has been finalized.