South Korean government bond prices advanced on Wednesday after a weaker leading indicator and President Lee Myung-bak's comment to the incoming central bank governor boosted hopes that policy rates would stay low. The debt market started higher on expectations that the country's industrial output in February might come in weaker than expected, with local stocks coming off a 2-month peak.
It gained further support after Lee advised new Bank of Korea Governor Kim Choong-soo that any exit strategy should be taken with international co-ordination, when awarding a letter of appointment to Kim who is to take office on Thursday. The benchmark five-year treasury yield dropped 4 basis points to 4.52 percent, losing 46 basis points in the first quarter after it touched a near 11-month low early last week. Front-month three-year treasury bond futures pared most of their early sharp gains to close up 8 ticks at 110.50.
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