Korean rates are up across the board today....>

KOREA: Korean rates are up across the board today with the 10-year rising

4.85bps to a two-month high of 2.2185%. The combination of higher Korean

interest rate swaps and a weaker won could be turning into a trend thanks to the

ongoing rise in US yields and Korean inflation expectations, thanks in part to

the surge in oil prices. 

- While rising Korean rates would put some downward pressure on USDKRW, the

spread vs the US is so deeply negative from a historical perspective that it

would take a much steeper rise in rates to prevent won weakness. 

- Should the surge in US 2-year yields reverse, this would likely be triggered

by a rise in global risk aversion, and so would not necessarily benefit the won

given how tight Korean CDS spreads currently are.