BOK Rate-Cut Bets Risk Outflow as Premium Shrinks: Korea Markets
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Bets that the Bank of Korea will cut interest rates for a second time this year have slashed the yield premium on the nation’s bonds to a seven-year low, risking an outflow from won debt.
The extra yield that 10-year sovereign notes offer over Treasuries fell to 39 basis points on Sept. 26, the least since 2007, data compiled by Bloomberg show. Global funds pulled $83 million from South Korean bonds in September, according to EPFR Global data. This followed the withdrawal of 82 billion won ($78 million) from local debt in August, the first outflow in six months based on government data.