South Korean bonds to witness little impact of President Park’s impeachment next week, FOMC to direct market movements

The South Korean debt market is expected to witness a minimal impact next week, following the impeachment of President Park Geun-hye by a majority two-third vote by the National Assembly. However, the Federal Reserve’s last monetary policy decision for 2016 on December 14 will direct market movements next week.

The Korean bonds have been closely following developments in the U.S. debt market. The benchmark 10-year bonds witnessed a heavy sell-off, pushing yields by 5 basis points to 2.43 percent.

Today, South Korean National Assembly voted against President Park Geun-hye following months of public protests over an influence-peddling scandal.

The final vote count was 234-56. Impeachment requires a two-third majority in the 300-member National Assembly. The Prime Minister, whose position in government is largely ceremonial, will become the nation’s acting President, reported WSJ.

Moreover, the Federal Reserve is expected to increase the target range of the key interest rate by 25 basis points to 0.50 percent to 0.75 percent on December 14, with a unanimous decision. Little change to the statement, though the Committee is likely to acknowledge that market-based measures of inflation compensation have risen further.

On the other hand, benchmark bond yields in Japan, Korea, UK and the Eurozone are also expected to broadly track movements in U.S. Treasuries.

Meanwhile, USD/KRW little changed following President’s impeachment news, rising 0.3 percent to 1,166.41.