The South Korean government bonds are likely to gain as South Korea's government is expected to lower its 2016 growth forecast to below 3 pct. Meanwhile, the 10-year bonds yield, which is inversely propositional to bond price stood unchanged at 1.803 pct and 2-year bonds yield also remained steady at 1.482 pct.
According to latest report from Donn-A Ilbo newspaper, the South Korea's government will cut its 2016 growth forecast to below 3 pct from 3.1 pct when it releases economic policy plans for the second half of 2016 in June.
Moreover, there is no key release this week but it is worth pointing out that April IP is due the following week. Recall that March IP data showed output contracting by 1.5% y/y (consensus was for +0.3% y/y) and on a sequential basis, IP contracted by 2.2% m/m s-adj in March. Still, the BoK’s business sentiment survey showed the manufacturers’ confidence index increasing to 73 in May from 70 in April.
The Bank of Korea’s Monetary Policy Board in its May monetary policy meeting unanimously decided to maintain the key policy rate at 1.5 pct and also did not make any considerable changes in May’s policy statement. According the monetary policy’s board concluded that the global economy will continue with its recovery, but at a slower pace. Meanwhile, the central bank of Korea foresees modest rebound in the Korean economy, especially domestic demand. However, it is highly uncertain regarding the growth trajectory and projected the CPI inflation to remain at low levels.
The Korea Composite Stock Price Index (KOSPI) closed up 0.39 pct at 1,955.25 points.
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