US/SK 2-Year Yield Spread Narrows In August

Moves mutes in the space, 3-Year future down 6 ticks at 110.39 while the 10-Year future is up 3 ticks at 128.17. Risk environment is generally supportive, equity markets in the region in the green – the KOSPI is up over 2% at the time of writing. Yields slightly lower in the cash space, markets await the results of the 20-Year auction. US/SK 2-Year yield spread has narrowed slightly in August, last at 114bps from 123bps on July 30.

• There were reports that the national budget for 2022 should be bigger than the KRW 604 trillion earmarked for this year to finance the country's efforts to tackle the COVID-19 crisis. The leader of the ruling Democratic Party said the 2022 budget should include compensation for small merchants and small business owners affected by the pandemic, noting the current budget measures did not go far enough.
• On the coronavirus front there were 1,509 new cases in the past 24 hours, back above 1,500 after reporting 1,418 on Monday.
• As a reminder South Korea plans to buy a total of KRW 2tn in government bonds between August 25 and 31 August in a bid to pay off part of its national debt. The planned bond buyback will be the largest size among debt repayments carried out with extra budgets. The finance ministry said the purchase will lower the debt/GDP ratio by 1ppt to 47.2%.