Why Korean bank bonds?

Korea has more to offer than just K-pop. Its banks are among the best in the world.

<a href=”https://staging.metrobank-wi.make.technology/explainer/invest-in-bonds/”>LINK TEST</a>

Top Picks

2- to 5-year Korean Banks
– <a href=”#” download=””>Kookmin Bank</a>

2- to 5-year Japanese Banks
– <a href=”#” download=””>Sumitomo Mitsui Banking Corporation</a>

Obligor
– <a href=”#” download=””>Republic of the Philippines</a>

Bond Market Themes Bond Market Themes

High inflation puts pressure on interest rates High inflation puts pressure on interest rates

Vladimir Putin’s invasion of Ukraine has become more than just a war for security, territory, or pride. With Russia and Ukraine producing about 28% of the world’s wheat, and with Russia being one of the world’s top producers of oil, inflation has become inevitably more pronounced.

The cost of food and energy is rising all around the world. Millions are about to go hungry and poverty levels in the poorest countries will become worse. Combined with pandemic-induced supply chain bottlenecks, the cost of goods is likely to be elevated for the rest of the year.

As a result, central banks have begun raising policy rates to help tame demand for goods and services and thereby keep inflation at bay.

Weekly Update (May 16-20)

Last week, US stocks narrowly avoided breaching bear territory after the latest economic data in the US pointed to a weakening of consumer demand. Many are cutting down on expenses allotted for dining out, travel, gadgets, and other non-essential goods.

US dollar yields also fell due to dampened risk sentiment. Credit spreads also widened. Inflation as measured by the US April Consumer Price Index (CPI) was higher than expected. Year-on-year headline and core readings reached 8.3% and 6.2%, respectively. Consensus estimates were only 8.1% and 6%, respectively.

Updated Medium Term Outlook

The US dollar is expected to be higher by yearend. A weak US economy, however, may compel the Fed to hike its policy rates at a more tempered clip compared to current expectations.

Credit spreads will also widen by approximately 10 to 20 bps as fears of a recession become more pronounced because of increasing inflation. We prefer bonds with 2- to 5-year tenors, given how flat the yield curve is already and the decent credit spreads available.

We don’t recommend anything longer than 10 years because of the potential steepening of the yield curve because of the Fed’s balance sheet reduction.

header 1

header 2

header 3

header 4

header 5

header 6