1z}q12ou{nr58l6n5kufaf7z_media_dl_1.png Bloomberg, Bank of Korea

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(Bloomberg) — South Korea’s bond market is pricing in an excessive number of central bank rate hikes, creating buying opportunities in short-term debt, according to NH Amundi Asset Management Co.

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One- to two-year government bonds are “cheap” at current levels, Executive Director Han Sooil said in an interview with Bloomberg News on Friday, noting that swap markets are unrealistically pricing in multiple quarter-point hikes through the first half of 2027.

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“It is highly unusual for the market to price in four to five rate hikes before the rate-hike cycle has even begun,” Han said.

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Near-term inflation risks are being amplified by higher energy prices linked to the conflict between the US and Iran, reinforcing expectations of a hawkish tone from the Bank of Korea at this week’s meeting, where rates are widely expected to remain unchanged, according to a Bloomberg survey.

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Still, Han said oil prices are likely to settle in the $70-$90 per barrel range, with a bias toward $70 if the US-Iran conflict is resolved in the near future. Han added that the global semiconductor boom, which has underpinned Korea’s growth, is likely to peak later this year and that traders may recalibrate once the BOK delivers its first hike in July.

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Brent crude prices traded at around $96 per barrel on Monday.

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Looking ahead to Thursday’s policy meeting, Han said the key focus will be the BOK’s 2027 gross domestic product forecast to gauge the durability of the AI chip rally, rather than its near-term outlook for this year. He expects the central bank to project 1.9% economic growth for 2027 and to deliver a single hike in July followed by an extended pause.

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