Strategy Trade: Rates - Asia ex-Japan

Research evidence excerpt

Strategy Trade: Rates - Asia ex-Japan

Global Markets Research

15 July 2026Strategy Trade

Rates - Asia ex-Japan

Research Analysts

Korea rates: Maintain receive versus Taiwan Asia Rates Strategy

Albert Leung - NIHK

But we tactically reduce our conviction level into the BOK meeting. albert.leung1@nomura.com

+852 2252 1401

Trade: We reduce the conviction level on our receive Sep-5y Korea versus Taiwan NDIRS Clair Gao, CFA - NIHK

position to 3/5 from 4/5 (current levels: 4.10% and 2.31%). clair.gao@nomura.com

Rationale +852 2252 1081

1. The spread is still wide and has so far struggled to narrow. The premise to

receiving Korea rates is largely based on valuation, as the market is clearly pricing

Korea with the most hikes in AEJ (at least 100bp over next 12 months) versus 75bp of

hikes as the base case of our economics team (i.e., once per quarter). We noted that

2yfwd3y Korea NDIRS have already returned to levels similar to the high in 2022,

when CPI inflation was nearly 6%. The recent declines in the KOSPI and USD/KRW

should, at the margin, reduce the likelihood of a very hawkish BOK policy stance

tomorrow. That said, there remain some headwinds to receiving Korea rates, with the

governmentrevisingupits2026growthforecastto3% and with a second

supplementary budget likely (even though likely funded by extra tax revenue rather

than KTB issuance).

2. Taiwan rates are no longer obviously too low after the recent bounce .We

maintain our view of potential upside to Taiwan rates, with growth still strong and CPI

inflation having risen above 2% for two months in a row. Recent CBC NCD and TGB

auctions also have resulted in higher yields. That said, 5y Taiwan NDIRS have

rebounded by ~20bp from the lows over the past two weeks and, anecdotally, CTA