South Korean government bond prices closed slightly higher on Monday, but trading was slow as investors weighed up upcoming interest rate-setting meetings at home and in the United States.
Debt investors shrugged off upbeat comments on the economy by the finance minister as well as government data showing weak service sector output. But analysts expect foreign trade and inflation data due on Tuesday to get some attention.
The yield on the three-year treasury bond finished two basis points lower at 4.95 percent, while the five-year treasury yield closed unchanged at 5.22 percent.
"Few paid attention to the minister's comments today or the service sector data because people are now focusing on the FOMC and inflation data," said Shin Dong-jun, a fixed-income strategist at Samsung Investment Trust Management Co.
The December contract on treasury bond futures closed up four ticks at 107.86, while the won currency finished local trade up 0.2 percent at 1,040.2 per dollar.
Finance Minister Han Duck-soo told foreign journalists South Korea's economic growth would accelerate in the fourth quarter to nearly 5 percent on a year-on-year basis from 4.4 percent set in the third quarter, led by exports and private consumption.
Private consumption, which had contracted both in 2003 and 2004, would likely expand by between 4-5 percent in 2006, he added. The central bank expects private consumption to grow 2.7 percent this year.
Hours earlier, data showed the service sector shrank by a seasonally adjusted 0.5 percent in September from August for the first time in five months.
Economists expect the Federal Open Market Committee (FOMC) to raise US interest rates by a quarter-percentage point to 4.0 percent when it holds its policy-setting meeting on Tuesday.
South Korea's central bank, the Bank of Korea, also holds its policy meeting on November 10 for the first time since it raised borrowing costs earlier this month, citing future inflation pressure and increasing US interest rates.
Bond investors are also awaiting consumer inflation and foreign trade data for October, both on Tuesday, which will supply the Bank of Korea's monetary policy committee with more information when it meets on November 10 to set interest rates.