Korean rates continue their advance.....>

KOREA RATES: Korean rates continue their advance helped by comments earlier

today by the BOK that household debt is rising faster than the OECD average,

which may have been interpreted as a signal that monetary policy needs to be

tighter.

- The 2-year swap now trades up 2bps at 1.9373%, marking its sixth consecutive

daily rise to a cumulative 12bps. The 6-month swap has remained relatively

unchanged as rate hike expectations are mainly being priced in for 2019 and

beyond. 

- Keep in mind that while rates have been rising, real rates have remained near

cycle lows as breakeven inflation expectations have risen to new multi-year

highs. 

- With oil import prices rising, inflationary pressures are likely to pick up,

putting pressure on the BOK to hike.