Korean swaps have resumed their.........>

KOREA RATES: Korean swaps have resumed their broader bearish trend with the 2

year breaking back below 1.8% to bring the cycle lows at 1.73% back into focus.

The swap rate curve remains inverted at the short end with 6.6bps now separating

the 6-month from the 2-year contract, indicating a slight easing bias among

investors. 

- The correlation with US yields has picked up over the past two weeks,

particularly at the short end as the BOK's policy outlook looks set to become

increasingly determined by that of the US. 

- Yesterday saw a large jump in Korean breakevens, putting renewed downside

pressure on real rates. 

- The ongoing surge in the equity market, with the Kospi up another ~0.8% today,

suggests a growing disconnect between rates and stocks.