Upside momentum in Korean rates that....>

KOREA RATES: Upside momentum in Korean rates that has been seen over the past

two days looks to be faltering today with the swap curve down 0.25bp across the

board with the 10 year failing to break back above the 1.8% resistance level.

This comes as the 10 year bond future holds above its 21-dma to keep the broader

bullish trend intact. 

- Part of the long term decline in Korean rates can be put down to still-low

inflation expectations, which have failed to rise much despite the month long

rally in local stocks, as well as the ongoing drop in CDS spreads reflecting

Korea's solid external position. However, we see upside pressure on the long end

from a potential rise in fiscal spending to combat rising unemployment as seen

in the Jan jobs report. 

- South Korea's presidential office has begun preparing plans for a possible

visit by North Korean leader Kim Jong Un to the South around end-March or early

April, DongA Ilbo newspaper reports, citing unidentified government sources. 

- Money supply data will be released at 3:00GMT which should shed some light on

the sustainability of the uptrend in liquidity conditions.