Korean bonds extend gains

South Korean government bonds extended solid gains on Friday, with the 3-year note yield hitting an over three-month high, as investors increased their bets on the central bank keeping rates low for the near future. President Lee Myung-bak bolstered the view, saying that the economy would likely avoid contracting this year but that the government would maintain its expansionary policy for the time being.
The 3-year yield declined 7 basis points to 4.27 percent, the lowest since late July, while the 1-year treasury bond yield fell 5 basis points to a near 3-month low of 3.23 percent. Front-end treasury bond futures rallied for a fourth straight session, ending 13 ticks up at 109.50, the highest since early September.