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South Korea Bonds Drop As CPI Exceeds BoK Target

ASIA RATES
  • INDIA: Yields higher across the curve, some steepening seen. Bonds fell yesterday as crude oil rallied, extending gains from a 7-year high which stoked inflationary concerns, the decline was tempered by the RBI's 7-day reverse repo operations which saw a cut-off lower than expected. The operation was conducted at 3.61%, compared to 3.99% at the previous operation which was just 1bp below the RBI policy rate of 4.00%. Crude futures have softened slightly in the Asia-Pac session but remain elevated, while markets will also assess Moody's decision to raise India's outlook to stable from negative. The ratings agency said "The downside risks from negative feedback between the real economy and financial system are receding". Markets look ahead to the RBI rate announcement on Friday while closer on the horizon is the RBI's INR 200bn bond sale.
  • SOUTH KOREA: Futures in South Korea are lower, tracking in a move in US Tsys where the 30-Year yield hit the highest since June 29. The move was exacerbated by inflation figures. Data earlier showed CPI rose 2.5% Y/Y in September, slightly higher than consensus 2.4%, while core CPI rose 1.9% also 0.1ppts above estimates. Prices rose 0.5% M/M. The annual reading has now been above the BoK's 2% target for six straight months. As a reminder the BoK raised its 2021 inflation outlook to 2.1% from its earlier estimate of 1.8%. The rise was attributed to high prices of farm and oil products. Elsewhere the BoK sold KRW 2.5tn of 2-Year MSB's, the sale drew a yield of 1.56% and was covered 1.08x.
  • CHINA: Market closed for National Day holiday.
  • INDONESIA: Yields higher, moves mixed across the curve. Yesterday's Shariah-compliant bonds and T-bills raised IDR 5tn, with total bids of IDR 46.1tn. Coordinating Econ Affairs Min Hartarto and Investment Min Lahadalia will take part in a webinar on 2022 economic outlook hosted by Sinar Mas today. Looking ahead a couple of consumer confidence reports headline the local data docket this week.
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