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SOUTH KOREA: Futures Rally as Yields Lower Post Cut.

SOUTH KOREA
EM BulletBulletSouth KoreaAPACEmerging Market News
  • Korean futures are stronger again today, posting their fourth straight day of gains.
  • Korea’s 10YR future is up +.48 at 119.30, following last nights close of 118.82
  • The 10YR has broken through the 20-day EMA of 118.34 over the last few trading sessions.
  • Korea’s 3YR future is up +.08 at 106.85, following last nights close of 106.77.
  • The move sees the 3YR above the converged 20-day and 50-day EMA at 106.72
  • Government bonds are stronger again today, with yields lower across the curve with the 10YR leading the rally.
  • KTB 10YR is lower in yield by -4.5bps at 2.75%.
  • Government bonds had rallied leading into the BOK decision with the KTB 2YR below base rate and the cut in rates sees convergence of the 2YR and the base rate. 
image
  • The Korean market can at different times exhibit higher than regional peers correlation to US yields. At a time when US rate expectations are unclear, and very little priced in both the bond market and forwards, the forwards market and the  2YR bond yield will be looking for a catalyst from either domestic economic data or US Federal Reserve to define its next trend.
  • If Governors comment that there are 2-3 cuts priced in (including February) is correct, there appears scope for bond markets to re-price leading up to the next BOK meeting on April 17.
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  • Korean futures are stronger again today, posting their fourth straight day of gains.
  • Korea’s 10YR future is up +.48 at 119.30, following last nights close of 118.82
  • The 10YR has broken through the 20-day EMA of 118.34 over the last few trading sessions.
  • Korea’s 3YR future is up +.08 at 106.85, following last nights close of 106.77.
  • The move sees the 3YR above the converged 20-day and 50-day EMA at 106.72
  • Government bonds are stronger again today, with yields lower across the curve with the 10YR leading the rally.
  • KTB 10YR is lower in yield by -4.5bps at 2.75%.
  • Government bonds had rallied leading into the BOK decision with the KTB 2YR below base rate and the cut in rates sees convergence of the 2YR and the base rate. 
image
  • The Korean market can at different times exhibit higher than regional peers correlation to US yields. At a time when US rate expectations are unclear, and very little priced in both the bond market and forwards, the forwards market and the  2YR bond yield will be looking for a catalyst from either domestic economic data or US Federal Reserve to define its next trend.
  • If Governors comment that there are 2-3 cuts priced in (including February) is correct, there appears scope for bond markets to re-price leading up to the next BOK meeting on April 17.