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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
SOUTH KOREA
2-Year Korean government bonds offer a ~90bps pickup over US Tsys from the perspective of an FX-hedged US investor and even higher for equivalent domestic bonds for Australian, UK and European investors, with similar spreads for other developed currencies. Korean cross currency basis swaps remain negative and have recovered less even as others have narrowed back to pre-pandemic levels. USD/KRW XCCY have stayed relatively wide thanks to a number of factors including structural supply-demand imbalances with Korean shipbuilders and Korean investors in foreign stocks selling FX forwards.
- The BoK has signalled that rate hikes will come later this year which has been factored into bond markets, short end bond remain a target for foreign investors (foreigners have bought around $30bn of Korean government bonds with maturities less than 3-years so far in 2021, around 75% of total inflow). GDP data today was slightly disappointing, but the lack of anything major to derail rate hike expectations has seen Korean risk assets strengthen and kept cross currency basis swaps around recent levels.
- Fig.1: KRW, AUD, EUR, GBP 3-Year XCCY
Source: Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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