Treasury 3year 3.77%…7Monetary Policy Board meeting in month, downward pressure on rates dominates
11On day, Samsung Securities researcher Kim Ji-man said 7Ahead of the Monetary Policy Board meeting in month, he forecast that if the policy statement and press briefing are less hawkish than the market expects, downward pressure on rates could dominate, taking into account the sharp drop in oil prices and the stabilization in core inflation. He said the bond market has already largely priced in the possibility of a rate hike.
11On day, Samsung Securities researcher Kim Ji-man said in a preview ahead of the regular meeting in month that he raised several points. He cited the sharp fall in oil prices and the observed stabilization in core inflation.7:
Researcher Kim said that if the policy statement and press briefing are less hawkish than the market expects, downward pressure on rates could dominate. His remarks suggested they could affect the direction of rates.
He judged that the bond market has already largely priced in the possibility of this rate hike. He noted that Treasury bond 3year yields were around 3.77%, about 130bp above the benchmark rate.
It also added that tightening itself is unlikely to become an additional factor pushing up bond yields. Specifically, it suggested that external variables such as oil prices and the trend in underlying inflation could become bigger factors.
The report pointed out that the wording of the rate decision statement and the press briefing will determine how the market reacts going forward. It explained that the bond market and short-term rates could respond sensitively depending on the strength of the language.
The statement suggests the possibility that the market will reposition ahead of the Monetary Policy Board meeting in the month.7However, the report itself repeatedly said that the wording of future official announcements and the actual trend in indicators will be important.
Sources: 연합인포맥스
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