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Korean Fixed Income & Currency (July 30 – August 3, 2018) | ||||||||
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(Yield, Generic Government Bonds) 3y 2.108% (-0.004%) / 5y 2.361% (+0.002%) / 10y 2.580% (+0.009%) | ||||||||
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USDKRW 1,127.6 (+0.85%) | ||||||||
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Comment | ||||||||
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Korean FI market ended with side-walked for a week, even though a little fluctuation was in the market. What we need to see is a signal of outflow of foreigners. At Aug 2, regional stock market plunged with KOPSI200 -1.72%. But yield of regional 10y government bond also went down by just 0.015% and 10y future, which got 758 short positions in the day by foreigners, was up by just 12 ticks. It was much lower than the plunge in past time. There are more signals of decreasing appeal of Korean government bond to foreigners. Another example for it is number in swap basis. The number in swap basis keeps lowering. During a month, from July 2 to August 3, swap basis had decreased like below chart.
Even though the foreigners had bought about KRW2tn of government bonds during a week, we need to keep seeing the participants’ movement with yield of US 10y T-Note and weakening KRW. USDKRW was showing volatility with a news of trade-war, but looks like the currency didn’t lose its fundamental fully. Even though KOSPI 200 was off 1.72% at Aug 2, USDKRW was up about 0.50%, which was far lower than 1%. Rise of at least 1% of USDKRW used to be accompanied by plunge of stock market. | ||||||||
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My opinions for this week are limited Bear in Korean Rate, and limited Bear in KRW. My bands for coming week are 3y Government bond 2.09 – 2.14 / 10y Government bond 2.56 – 2.60 / USDKRW 1,120 – 1,140 | ||||||||
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Mr. Banker, http://markety.tistory.com |
Korean FI and Currency in first week of August (from July 30 to August 3).pdf