Short End Supported By MSB Issuance Reduction

In similar price action to yesterday, the 10-year future is lower, while 3-year future is continuing to gain. The divergence comes as the BoK pledges to reduce the size of short term MSB (Monetary Stabilisation Bonds) by 50%. Yesterday's 2-year MSB auction featuring the newly reduced size of KRW 1.1tn saw strong demand.

• Bond inflows overall continue to slow, but remain positive. Yesterday foreign funds bought $320m of South Korean bonds, down $208m from the previous day. The last day there was net selling, however, was February 25.
• The KOSPI is enjoying a positive day after its drop yesterday, Samsung leads the advance after sustaining heavy losses in the previous session, while institutional investors are seen as heavy buyers after being reassured of low rates by the Fed.
• The BoK delivered a statement following the FOMC meeting and subsequent market reaction, it said will take steps to stabilise FX and financial markets if needed, and will strengthen the monitoring of markets. The bank added that the FOMC meeting was in line with expectations.
• South Korea reported 445 new daily new coronavirus cases, bouncing back to over 400 for a second day, stoking worries over a resurgence down the road. The daily caseload was sharply up from 363 on Tuesday. During the first two days of this week, the daily virus cases stayed in the 300s on account of fewer tests over the weekend.
• Elsewhere US Secretary of State Antony Blinken met with South Korean Foreign Minister Chung Eui-yong in Seoul and reiterated his criticism of China for its use of "coercion and aggression" on the international stage. "It's critical that we stand up to the values especially now because we are witnessing a dangerous erosion of democracy around the world including in this region," Blinken said.