Korean warning for US Treasuries
Simon Ward
1 Comment
Bond yields fluctuate with economic momentum. Korea’s export dependence makes its economy especially sensitive to shifts in the global cycle. Its bond yields, therefore, often lead movements in US Treasuries.
For example, Korean 10-year yields plunged by 60 basis points between February and March, bucking a rising trend in the US. This proved a timely warning of an April peak and subsequent big decline in Treasury yields – see chart.
The two markets are now diverging again, with 10-year Korean yields up by 60 basis points over the last three weeks versus little change in the US. If the Korean rise reflects stronger global / US economic momentum, Treasury yields should follow, notwithstanding Fed buying.
View Printer Friendly Version
Email Article to Friend
Reader Comments (1)
yes but korea has no QE ... and as you point out, its export dependency had implied USD dollar buying by korean authorities which in turn ... buy treasuries with the dollars.
perhaps more appropriate would be to compare korean headline inflation with US core PCE ... seems to me US is creating inflation everywhere in world.
cheers