Korean Bond Rally Seen Faltering as Traders Brace for Rate Hikes

Korean Bond Rally Seen Faltering as Traders Brace for Rate Hikes A rally in South Korean bonds may prove fleeting as the effect of government-led measures to quell volatility fades and expectations of further monetary policy tightening build, according to strategists. With global bond yields hovering around multi-decade highs, strategists at Gama Asset Management SA and Hana Securities Co. are among those expecting Korean three- and 10-year yields to resume their climb and retest the four-year highs reached last month. Adding to the bearish outlook, won swaps are pricing in about a 70% chance that the Bank of Korea will raise interest rates by a cumulative 50 basis points over the next six months.