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S.Korean bonds rise early after U.S. Fed move
Reuters - Wednesday, August 11
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SEOUL, Aug 11 - South Korean government bond prices rose early on Wednesday, taking their cue from gains in U.S. Treasury debt prices on the Fed's decision to renew purchases of government debt in a step to avert a double-dip recession.
Analysts said the U.S. central bank's more somber assessment of growth boosted buying sentiment for bonds but would not significantly affect the market's view that South Korea's central bank would raise interest rates at least once more this year.
"The chances for a rate hike this week were already low and the Fed's move made a surprise hike even less likely, but I don't think the overall policy prospects are greatly affected," said Kong Dong-rak, a fixed-income analyst at Taurus Investment & Securities.
Bond traders shrugged off government data showing the country's unemployment rate rose in July but both employment numbers and job seekers posted strong growth. [ID:nTOE67908U]
The September contract on three-year treasury bond futures <KTBc1> rose 11 ticks to 110.93 by 0103 GMT. In the spot market, the benchmark five-year treasury bond yield was quoted down 3 basis points at 4.43 percent, traders said.
The Bank of Korea is widely expected to pause at Thursday's meeting but looks almost certain to lift the benchmark rate again to 2.5 percent next month, a Reuters survey conducted early this week showed. [ID:nSGE67806E]
Last month, the Bank of Korea raised the policy interest rate by 25 basis points from record-low 2.0 percent in its first tightening move since the global financial crisis, reflecting its confidence in the domestic recovery.
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