Korea rates: Reduce receive 2yfwd5y NDIRS position

Research evidence excerpt

Korea rates: Reduce receive 2yfwd5y NDIRS position

Global Markets Research

15 June 2026Strategy Trade

Rates - Asia ex-Japan

Research AnalystsKorea rates: Reduce receive 2yfwd5y NDIRS

Asia Rates Strategyposition

Albert Leung - NIHK

Some “sell the news” flows are possible after US-Iran agreement to albert.leung1@nomura.com

reopen Hormuz. +852 2252 1401

Trade: We reduce the conviction level on our receive 2yfwd5y KRW NDIRS position from Clair Gao, CFA - NIHK

4/5 to 3/5 (current level 4.006%) and maintain a target move to 3.90% by end-July. clair.gao@nomura.com

Rationale +852 2252 1081

1. Korea rates are no longer at extreme levels after the rally over the past week.

From the high just one week ago, the 1y1y Korea NDIRS has come off by over 40bp

to latest ~4.00%. While the market is still pricing a fairly fast BOK hiking cycle starting

in July, pricing is no longer extreme. Market pricing is now more consistent with about

four hikes priced over the next 12 months (Figure 1). This is still more than the three

hikes expected by our economics team by January 2027, but not substantially so, if

we take into account the usual term premium into the start of a hiking cycle.

2. Property market concerns increased after the local election and housing data.

The weekly Seoul property price data show a re-acceleration since May, with weekly

gains consistently above 0.2% (latest 0.27%; Figure 2). With rising housing market

pressures one of the focal points in the local elections two weeks ago, our economics

team expects the election to strengthen the BOK’s hawkish stance and increase its

sensitivity to inflation and housing market risks relative to growth concerns.

3. Markets could price some cyclical rebound if the Iran war ends. Over the past