3-Year Treasury Futures Turn Bearish—Won Rebounds vs Credit Market Sentiment

(Seoul=Yonhap Infomax) Hyun Woo Roh = South Korean Treasury futures turned bearish in the afternoon session on the 24th, with weakness most pronounced in short- to mid-term maturities.

The decline was largely attributed to continued net selling by foreign investors in Treasury futures.

Another factor cited was the intraday rebound of the USD/KRW exchange rate, which had been falling earlier in the session.

According to the Seoul bond market, as of 13:26 KST, the 3-year Treasury futures contract was down 2 ticks from the previous session at 105.88.

Foreign investors were net sellers of approximately 1,100 contracts, while financial investment firms were net buyers of about 3,700 contracts.

The 10-year Treasury futures contract rose 2 ticks to 114.39. Foreign investors sold 1,300 contracts, while banks purchased over 3,100 contracts.

A bond dealer at Securities Firm A commented, "There was significant selling (bid) pressure in the short-term segment of the swap market, and the overall tone has been hawkish since this morning."

However, the dealer added, "The credit market appears to be showing signs of recovery. For example, demand was strong and performance was robust in the Korea Gas Corporation bond auction."

The auction for 5-year Korea Treasury Bonds held today was assessed as lackluster.

A bond dealer at Securities Firm B noted, "Despite the 5-year KTB having a Monetary Policy Board option, the auction was not particularly strong. After the auction, market yields rose by about 2 basis points."

The 5-year KTB auctioned today totaled 2.8 trillion won ($2.1 billion) at a yield of 3.060%, with bids amounting to 7.715 trillion won ($5.8 billion).

hwroh3@yna.co.kr

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