SOUTH KOREA: Country Wrap: BOK to Cut Rates by 25bps
May-28 05:16
- MNI BOK Preview - May 2025: BOK to Cut. The BOK to cut rates by 25bps this week whilst tempering expectations for further cuts given contraction in Q1 GDP, • CPI manageable and in line with target with expectations it could moderate further, whilst exports have rebounded, ongoing tariff concerns cloud the outlook and the currency and equity markets have rebounded strongly providing good back drop for rates move. (source MNI Market News)
- Presidential frontrunner Lee Jae-myung’s liberal Democratic Party publishes pledge book on Wednesday ahead of June 3 election. These include: To appoint chief AI officer in presidential office, To introduce online platform bill to prevent power abuse by local and international big platform cos, To expand the duty of loyalty for corporate boards to include safeguarding the interests of shareholders, To reduce small merchants’ burden via debt adjustments or forgiveness, To consider institutionalization of treasury stock cancelation of listed companies, To allow crypto spot ETFs; to prepare measures on using won-based stablecoin, To seek 4.5-day workweek (source BBG)
- The KOSPI is the regional outperformer today, rising +1.66% easily wiping out yesterday's modest losses.
- The Won is in a holding pattern as the economy awaits the BOK decision tomorrow, trading at 1,376.40
- Bonds are stronger with yields lower across the curve by up to -2.5bps. KTB 10YR 2.71%
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JGBS: Twist-Steepener, Market Closed Tomorrow, BoJ Decision Thursday
Apr-28 05:15
JGB futures are stronger, +16 compared to the settlement levels, hovering just below Tokyo session highs.
- (MNI) The BoJ board is expected to keep its 0.5% policy interest rate unchanged at the two-day meeting ending May 1, as policymakers monitor the economic and inflationary impact of recent U.S. trade policies and volatile markets.
- Greater clarity on the economic outlook – particularly regarding the U.S. economy and Fed policy – is expected by July, when the BoJ releases its updated medium- to long-term growth and inflation forecasts. Should the U.S. fall into recession, it would likely remove any chance of a BoJ rate hike this year.
- Cash US tsys are 1-2bps cheaper, with a flattening bias, in today's Asia-Pac session after Friday's solid gains. GDP, ISM Manufacturing and NFM payrolls are the main events in this week's US calendar. Trump's first 100 days in office speech is tomorrow.
- Cash JGBs are 1-2bps richer out to the 20-year benchmark and 1-3bps cheaper beyond. The benchmark 10-year yield is 2.1bps lower at 1.321% versus the cycle high of 1.596%.
- Swap rates are 1-3bps lower. Swap spreads are mixed.
- Tomorrow, the local market is closed for the Showa Day holiday.
EURUSD TECHS: Corrective Pullback
Apr-28 05:11
- RES 4: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1608 High Nov 9 2021
- RES 1: 1.1573 High Apr 21 and the bull trigger
- PRICE: 1.1376 @ 06:10 BST Apr 28
- SUP 1: 1.1308 Low Apr 23
- SUP 2: 1.1217 20-day EMA and a key support
- SUP 3: 1.1144/0968 High Apr 3 / 50-day EMA and a pivot level
- SUP 4: 1.0805 Low Apr 3
The latest pullback in EURUSD is considered corrective and the trend structure remains bullish. Moving average studies are in a bull-mode position signalling a dominant uptrend, and the latest move down is allowing an overbought condition to unwind. A resumption of gains would open 1.1608 next, the Nov 9 2021 high. Key support is unchanged at the 20-day EMA, at 1.1217. A break of this average would signal scope for a deeper retracement.
AUSSIE BONDS: Richer A Data-Light Session, Q1 CPI On Wednesday
Apr-28 05:08
ACGBs (YM +3.0 & XM +5.0) are richer and near Sydney session highs on a data-light day.
- Cash US tsys are slightly mixed, with a flattening bias, in today's Asia-Pac session after Friday's solid gains.
- The focus of the week locally will be on Wednesday’s Q1 CPI, which is forecast to show the RBA’s preferred trimmed mean falling below the top of the 2-3% target band for the first time since Q4 2021. This should signal another 25bp cut on May 20. Retail sales are on Friday, and the Federal Election Saturday.
- Cash ACGBs are 4-7bps richer with the AU-US 10-year yield differential at -8bps.
- Swap rates are 6-8bps lower, with the 3s10s curve flatter.
- The bills strip has bull-flattened, with pricing -2 to +4.
- RBA-dated OIS pricing is flat to 5bps softer across meetings today. A 50bp rate cut in May is given a 12% probability, with a cumulative 118bps of easing priced by year-end.
- Tomorrow, the local calendar will see a speech from RBA Kent, Assistant Governor (Financial Markets) on Australia’s External Position and the Evolution of the FX Markets.
- The AOFM plans to sell A$1200mn of the 2.75% 21 June 2035 bond on Friday.
