SEOUL: South Korean treasury prices rose early on Wednesday, with foreign investors covering short positions built since the start of the year after fourth-quarter economic growth came in line with market expectations.
Separate data showed the expected consumer inflation rate for the next 12 months has soared, but investors have yet to adjust expectations for the timing of the next policy rate increase, awaiting the January inflation reading due early next week.
"The market had already priced in the strong GDP figure and inflation expectations will increase," said a fixed-income trader at a local brokerage. "The figure for projected inflation came in worse than expected, but unless January's CPI tops four percent, the market view that the next rate rise will come as early as in March won't change."
Three-year treasury futures for March delivery gained 0.11 point, with foreign investors buying a net 351 billion won South Korea's economy expanded by 0.5 percent in the fourth quarter of 2010 from three months before, marking its slowest growth in a year as a fall in investment offset strong growth in exports.
Consumer inflation expectation in January soared to an 18-month high, and key consumer sentiment index slipped to a three-month low, central bank data showed.
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