- Stocks plunged, yet the data driving the BOK's decisions moved the other way. The dollar value of semiconductor exports jumped 259.4% year on year in October, and the BOK expects growth and inflation next year to exceed its August forecasts.
- A November hike is the consensus; the path afterward is not. iM, Daishin and SK Securities forecast a 3.50% peak in early 2027. KB Securities expects the BOK to stop at 3.25% after a November hike.
- The bond market has already priced in an approaching end to the cycle. KTB yields fell despite the prospect of more BOK hikes. As reported on November 8, interest-rate swap pricing suggested roughly one further hike after November.
- Three rate measures tell three different stories. The BOK's six-month rate-path dot plot(a conditional projection), the terminal policy rate(broker forecasts), and the three-year KTB yield(a traded market yield) are three different things.
- Getting the policy-rate path right is not the same as making money on bonds. Yields have already fallen, making bonds more expensive to buy. If the three-year KTB yield rises from 3.73% on November 11 to 4.00%, the bond price would fall roughly 0.8% in an illustrative calculation.
Hover over dotted-underlined terms for definitions, or tap on mobile. Green underlines identify key concepts.
On November 6, a circuit breaker halted trading on the KOSPI. The closing index stood 44.5% below its June 22 peak.1 Our analysis of the selloff appears in NO.29. The index fell another 0.81% on November 9 to close at 5,018.85—the lowest close of the decline, 44.9% below its peak.2 Stocks then rebounded for two sessions, rising 4.39% on November 10 and 2.60% on November 11. The November 11 close of 5,375.36 was still 41.0% below the peak.3, 4
The bond-market picture looked very different. three-year KTB yield fell from 4.02% at the end of September to 3.633% on November 10.5, 6 But on November 11 it jumped 9.6bp in a single day to close at 3.729%. U.S. October inflation had come in above expectations, reviving talk that the Federal Reserve might raise rates by half a percentage point in December.7, 8 While stocks bounced, bond traders began repricing U.S. inflation and the risk of further rate hikes.
After the crash, one question dominated bond-market conversations: “Surely this is enough to make the BOK pause?”
A month ago, NO.13 asked whether rates would rise in October. The answer was a unanimous hold. Now there are two questions: At what level does the BOK stop tightening? And how much of that expectation is already embedded in bond prices.
Next stop: 3.25%.
After that, the forecasts diverge.
The BOK base rate rose twice, in July and August, to 3.00%. The Monetary Policy Board then voted unanimously to hold in October.
BOK policy-rate timetable
| Date | Stop | Base rate | Notes |
|---|---|---|---|
| H1 2026 | Passed | 2.50% | Hold |
| Jul 16 | Passed | 2.75% | Hike · KOSPI −6.37% that day (NO.13) |
| Aug 27 | Passed | 3.00% | Hike · 6–1 vote; one member favored holding9 |
| Oct 22 | Paused | 3.00% | Unanimous hold10 |
| Nov 26 | Next stop | 3.25%? | Updated Economic Outlook · rate-path dot plot released alongside the decision |
| Jan 14, 2027 | Scheduled | TBD | First meeting of 202711 |
| Feb 25, 2027 | Terminal? | 3.50%? | Final hike envisaged by SK and iM Securities |
Sources: BOK policy decisions (reported by iNews24 and Kyunghyang Shinmun), SBS Biz, iM Securities and SK Securities
Five brokers, five rate paths:
the disagreement is over the terminal rate
| Broker (report date) | November | After November | Terminal rate | Key view |
|---|---|---|---|---|
| iM Securities · Rates (Nov 10) | 3.25% | 3.50% in Q1 2027 | 3.50%; 3.75% only conditionally | The stock-market crash does not signal the end of hikes |
| Daishin Securities (Nov 9) | 3.25% | One additional hike next year | 3.50% | Bond yields fell somewhat too far on stock-market weakness |
| SK Securities · Rates & Credit (Nov 9–10) | 3.25% | February 2027 | 3.50% | Terminal rate no higher than the prior cycle's 3.50% peak |
| Meritz Securities (reported Nov 10) | Assumes a hike | Another hike in H1 2027 | 3.50%; also notes a possible 3.25% outcome | Reassess if the KOSPI remains near 5,000 through Q1 |
| KB Securities (reported Nov 8) | 3.25% | Hold | 3.25% | Weak stocks undermine confidence in the terminal rate forecast |
Sources: iM Securities (Nov 10), Daishin Securities (Nov 9), SK Securities (Nov 9–10); Meritz view reported by EToday and KB view by Aju Press12, 13, 14, 15, 16, 17
What matters
- The October hold was not a declaration that tightening was over. Minutes released on November 10 show most board members favored assessing the effects of the previous two hikes before deciding when and how quickly to tighten further. Some also warned that semiconductor-led growth could keep core inflation elevated for longer.18
- Nor did the BOK precommit to a November hike. One member stressed the need to balance the case for tightening against the sectors left behind by the boom. Domestic-demand recovery was also described as gradual.18
- The previous tightening cycle also peaked at 3.50%, in January 2023. SK Securities expects the current cycle to end at or below 3.50%, noting that the economy is less overheated and rates have already risen in advance.14
Stocks matter to the BOK.
But the selloff alone will not change its outlook.
The BOK is not ignoring the stock market. In October, the governor acknowledged a temporary, modest pullback in consumption caused by falling share prices. But he urged investors to focus on semiconductor prices and contracts, rather than share prices. Those underlying indicators have yet to turn.19
Four readings from June through October:
KOSPI, semiconductor exports, memory prices and inflation
KOSPI
Month-end closes since the June 22 peak; latest Nov 11
Semiconductor exports
USD 100m · By value · October +259.4% YoY
DDR5 16Gb contract prices
USD · Cited by iM Securities
Inflation, % YoY
Core services(iM's definition) · Headline CPI(gray)
Sources: Daum Finance (Korea Exchange), Korea's trade ministry, iM Securities and national statistics agency. June headline inflation of 3.2% is the published one-decimal figure.
The numbers driving the BOK's decision
- Exports. October exports rose 93.7% year on year to $115.28 billion; semiconductor exports surged 259.4% to $56.44 billion. These figures are measured by value, so higher memory-chip prices account for a substantial share. The timing of last year's Chuseok holiday, which fell in October, also inflated the comparison: average daily exports rose a smaller 76.0%.20 Exports in November 1–10 increased 111.9% to $33.46 billion. With half an additional working day, daily average exports were up 97.7%. Chip exports climbed 331.2% to $16.6 billion, or 49.7% of the total. Ten-day readings can be volatile.21
- Memory prices and contracts. The DDR5 16Gb contract price rose from $40 in June to $50 in October, according to figures cited by iM Securities. SK Hynix said long-term agreements with 14 major customers covered more than half of its 2027–28 production capacity.12
- Inflation. Headline CPI inflation slowed from 3.2% in June to 2.8% in October. iM Securities attributes much of that decline to supply-side factors such as oil prices. Yet core inflation(excluding agricultural products and petroleum) rose from 2.7% in September to 2.8% in October.12, 22, 23
- Projections. At its October meeting, the BOK expected 2027 growth, headline inflation and core inflation to exceed their respective August forecasts of 2.9%, 2.3% and 2.5%. The governor projected that inflation would approach the 2% target in 2028.10, 24, 25 IBK Securities argues that tightening remains defensible as long as inflation stays above target, even if it moderates.26
Consumption has indeed weakened: retail sales fell 1.0% quarter on quarter in Q3, while private consumption declined 0.2%. But June's spending rise had been boosted by temporary factors, including purchases brought forward ahead of an automobile excise-tax change; the subsequent reversal also mattered. iM Securities says the slowdown cannot be attributed solely to falling stocks.12 KB Securities, by contrast, worries about a negative wealth effect: lower equity valuations could erode household financial assets and spending.17 October employment data released November 11 showed a net gain of 139,000 jobs, yet the youth employment rate fell 1.7 percentage points year on year to 42.9%.27 More evidence is needed before concluding that the export boom is spreading broadly to domestic demand and employment.
iM Securities' core-services inflation series tracks demand-sensitive service categories (2.13% in June; 2.18% in October). It suggests underlying pressure has not eased; it does not prove overheating has intensified, nor is it directly comparable with the 2% headline inflation target.
Bond prices, however, tell a different story. KTB yields fell even as analysts maintained that the BOK could hike again. That raises the question that matters to investors: how much of an approaching end to the hiking cycle is already priced into bonds?
The bond market has already
bet on an early end to hikes.
Bond prices rise when yields fall. To see how far investors have brought forward the expected end of rate hikes, look at swaps, spreads among one-, two- and three-year KTB yields, and the implied average short-term rate.
A yield-scale comparison:
the three-year KTB sits near the low end of broker estimates.
% · BOK base rate path, the three-year KTB yield, and broker forecasts
These are different measures, not a hard floor for market yields. iM's fair-value range assumes the BOK reaches 3.50% and then holds for the rest of the year. Daishin's 3.90% refers to the next two quarter-end forecasts; SK's 3.75% is a Q4 average forecast. The 23bp spread is between the November 11 three-year KTB yield and the 3.50% projected terminal policy rate (13bp on November 10). Sources: iM, Daishin and SK Securities; Special Times.
How far ahead did the market move?
- Swaps implied roughly one more hike (as reported Nov 8). Interest-rate swap pricing had previously reflected another 100bp of tightening. But KB Securities analysis reported on November 8 interpreted prices as implying just 27.5bp over six months and 31.5bp over nine months.17 That implied little tightening beyond a single November hike. U.S. inflation data and the subsequent November 11 yield jump may have changed the pricing. Swap rates also reflect term and liquidity factors, not just policy-rate expectations.
- One-, two- and three-year yields converged. By November 6, the gap between one- and three-year yields had narrowed from 15.5bp to 2.5bp in just one week (see chart below). iM Securities interprets the convergence as the market already pricing the end of the hiking cycle.5
- Vulnerable to U.S. surprises. When Korean yields spiked on November 11, the ten-year KTB yield also climbed to 3.950%. On the same day, the U.S. ten-year Treasury yield jumped 11.9bp to 4.98%.7, 8 Even a market priced for an imminent end to hikes can be pushed around by U.S. developments.
- Working backward implies a 3.2–3.4% average short-term rate. iM Securities models the three-year KTB's fair-value yield as the expected average short-term rate over three years plus a 30–50bp premium.12 Applying that assumption to the November 11 yield of 3.73% implies an average short-term rate of roughly 3.2–3.4% over the next three years—below the 3.50% terminal rate forecast by several brokers. That could indicate a lower peak, but it could also reflect expectations of subsequent cuts or a narrower risk premium.
One-, two- and three-year KTB yields:
end-October versus November 6
KTB yields, % · Hollow circles: end-October; green circles: Nov 6 (3.590%, 3.597%, 3.615%)
Source: iM Securities (Yonhap Infomax)
Three distinct rate measures
| Measure | What it represents | What it cannot tell you |
|---|---|---|
| November rate-path dot plot | Conditional projections for the policy rate six months ahead (around May 2027) | Whether that level is the peak of the cycle |
| Terminal rate: 3.50% | A broker's projection for the peak policy rate this cycle | How long that rate will be held |
| 3Y KTB: 3.729% (Nov 11) | A market yield reflecting expected policy rates over three years plus term and supply-demand premiums | The market's single, definitive terminal-rate forecast |
SK Securities illustrates the distinction: it forecasts the BOK holding the base rate at 3.50% through end-2027, yet projects an average three-year KTB yield of 3.45% in Q4 2027.14
Why did yields fall so quickly? SK Securities attributes much of the fourth-quarter rally to supply and demand. In October, foreign investors bought a net 129,000 three-year and 46,000 ten-year KTB futures contracts, while the government cut planned November KTB issuance by KRW 5 trillion. The KOSPI fell on four of the five days with the largest October yield declines.5, 14 If risk appetite returns, yields could retrace much of that move.
Foreign buying of cash bonds was less sustained. Of October's KRW 6.45 trillion in net purchases, 87% had three years or less remaining to maturity, and a single day, October 30, accounted for 38%. Investors then sold a net KRW 820 billion in November 2–6.5 They bought 11,000 three-year KTB futures contracts on November 10, then sold 8,684 on November 11.6, 7
CP The 91-day A1-rated commercial paper yield stands at 3.82%, 82bp above the BOK base rate. One-month paper trades near the policy rate, leaving a spread of as much as 53bp to three-month paper. iM Securities interprets this not as a credit problem, but as reluctance to lock into maturities crossing the November policy meeting and year-end. MMF assets reached a record KRW 273 trillion.28 Short-term funding markets are still pricing in a November hike. iM Securities expects some of the extra yield premium to unwind after year-end, although expectations of a February hike should limit that reversal. Retail bank deposit rates are set separately from these wholesale-market benchmarks.
Where will rates peak:
3.25% · 3.50% · 3.75%
Most brokers favor the middle outcome, 3.50%. The question is whether the evidence begins to favor stopping sooner—or hiking further.
Five ways to test the case:
FX, inflation, growth, markets and financial stability
| Why stop at 3.25%? | Why continue to 3.75%? | |
|---|---|---|
| FX & the United States | USD/KRW was 1,333.6 on November 11.29 The exchange rate has fallen about 8% during this tightening cycle, weakening the case for following U.S. hikes mechanically (SK Securities).14 | U.S. October CPI rose 0.4% month on month, above expectations of roughly 0.3%; core CPI rose 0.3% for a third consecutive month.30, 31 Before the CPI release, Fed Governor Waller expressed the personal view that if core inflation remained around 0.3% or higher, a 50bp hike in December should be considered.32 Fed funds futures implied a 100% probability of a December hike: 88.8% for 25bp and 11.2% for 50bp (CME FedWatch, Nov 11, 2 p.m. KST).8 Hana and SK Securities forecast two more Fed hikes, taking the upper end of the target range to 4.50%.14, 33 |
| Inflation | Headline CPI: 3.2% in June → 2.8% in October | Core inflation rebounded to 2.8%, with upward momentum intact. Restaurant prices and rents are lifting services inflation (SK Securities).14 |
| Economic activity | Q3 retail sales −1.0% and private consumption −0.2% (iM Securities); falling stocks could weigh on household wealth and spending (KB Securities); October youth employment 42.9% (−1.7pp YoY).27 | Chip exports +259.4%; the BOK itself signaled growth would substantially exceed its prior forecast. |
| Market pricing | One-, two- and three-year KTB yields converged near 3.6% on Nov 6; swaps implied roughly one more hike in the Nov 8 report. | The rally was fueled by foreign futures purchases and reduced bond supply, so yields could reverse (SK Securities). |
| Financial stability | A credit squeeze or impaired market functioning could shift the policy response even before real-economy data deteriorates (iM Securities). | Bank household lending increased by KRW 5.0 trillion in October (versus KRW 0.5 trillion in September): mortgages +KRW 3.3 trillion; other lending +KRW 1.7 trillion. Group loans and funding for equity purchases increased (BOK, Nov 11).34 The household-lending growth target was eased from 1.5% to 3.0% in August; home prices in Seoul and the wider capital region are still rising (SK Securities).14, 15 |
Sources: iM, SK, Hana and KB Securities (the KB view as reported by Aju Press); national statistics agency, EToday, Special Times, CME FedWatch (reported by Aju Press) and BOK (reported by Dailian)
What would change the brokers' forecasts?
iM Securities says further evidence would be needed: cancelled orders, cuts to customers' capital spending, declining export volumes, weaker consumption or employment, or a credit crunch.12
iM Securities says export strength would have to spread to household consumption, employment and wages, with persistent pressure in services inflation and inflation expectations.12
Neither set of conditions is clearly in place yet. Major producers have not publicly disclosed meaningful order cancellations; long-term supply agreements have instead expanded. Nor is there clear evidence of a sustained spillover to wages and service prices.
SK Securities argues that since 1999, Korea has closely followed an aggressive U.S. tightening cycle only once, in 2022–23. The Fed raised rates by more than 500bp and USD/KRW climbed 10% during that cycle. This time, the won has moved in the opposite direction.14
November 26: the dot plot and revised outlook
may matter as much as the rate decision.
Even if the BOK raises its rate to 3.25% as expected, the accompanying six-month rate-path dot plot and updated forecasts could change the assessment of where rates ultimately peak.
August's dot plot:
six of the 21 dots were at 3.50%.
Appropriate base rate six months ahead (around February 2027) · 7 members × 3 dots each
Conditional projections, not commitments. November's plot refers to around May 2027. Source: BOK (reported by SBS Biz)
- Twenty-one dots do not represent 21 votes. Each of the seven board members submits three dots to reflect a central projection and upside/downside risks. Six dots at 3.50% do not mean six members support 3.50%.
- The target date rolls forward three months. August's projections referred to around February 2027; November's refer to around May. A higher distribution does not necessarily mean the BOK raised its forecast for the same date.35
November 26 checklist:
compare the outcome with pre-meeting expectations
| What to assess | Before the meeting | Signals favoring 3.50%+ | Signals favoring a 3.25% stop |
|---|---|---|---|
| Decision &dissenting votes | A 3.25% hike is the base case | Hike with no dissent | A dissenting vote for holding |
| Dot plot | August median: 3.25%; six dots at 3.50% | More dots at 3.50% or above, plus guidance leaving room for further hikes | Dots cluster at 3.25% |
| Updated Economic Outlook | In October, the BOK expected growth,core inflation and headline inflation to exceed its prior forecasts | Larger upgrades, particularly to 2027 core inflation | Only the previously signaled upgrades, with emphasis on slowing inflation in 2027 |
| Governor's press conference | October: the timing and pace of future hikes would depend on inflation, growth and financial stability | Emphasis on services prices, wages, housing and household borrowing | Assessment of cumulative tightening and concern over credit stress or market functioning |
| Market response | Three-year KTB yield 3.73% (Nov 11) | Stays above 3.70% after the announcement | Returns to the 3.5% range |
Compiled from BOK releases and iM/KB Securities research. Sources: SBS Biz, Kyunghyang Shinmun, Aju Press and iM Securities5, 10, 35
A dissent in favor of holding can mean different things. KB Securities expects it to accelerate downward revisions to the terminal-rate forecast , whereas17 iM Securities says investors must distinguish a call to slow the pace of hikes from a call to lower their eventual peak.5 There were no dissenting votes in October.
If the decision surprises the market,
consider four possible outcomes.
How bond prices respond will depend on which way the checklist tilts. These are scenarios, not probability estimates. Even an actual hike can move yields in the opposite direction if it surprises the market less—or more—than expected.
| Scenario | Conditions | Immediate reaction | What to monitor next |
|---|---|---|---|
| APath to 3.50% | A hike plus 3.50% signals on the checklist | Some reversal of lower terminal-rate expectations; short- and medium-term yields could rebound | January's dissenting votes and whether the BOK hikes on Feb 25 |
| BStop at 3.25% | A hike plus 3.25% signals on the checklist | Confirms the market's “nearly done” view; potential pressure for the three-year KTB yield to retreat toward the 3.6% range (3.729% on Nov 11) | CP three-month funding premium: does it narrow? |
| CHold | Hold at 3.00% | Short-dated bonds rally; possible downward pressure on the won | Whether dissenting votes and the dot plot point to hikes in January or February |
| DConditional 3.75% path | A hike, more dots at 3.75% or above, and the governor signaling possible additional tightening | Pressure for the three-year KTB yield to move toward iM's 3.85% fair-value midpoint or 4.00% upper end. But that range assumes a 3.50% terminal rate and is NOT the fair-value yield for a 3.75% scenario. | Services inflation, wages and household lending |
Scenarios constructed from the analytical frameworks of iM, SK and KB Securities5, 14, 17, 28
Getting the terminal rate right
doesn't guarantee a return on bonds.
Three-year KTB yields need only rise to the midpoint of iM Securities' fair-value range (3.85%) for a newly purchased three-year bond to lose roughly 0.3% of its price. For loans, the first step is to check your contract.
If the three-year KTB yield moves here,
what happens to a bond bought today?
Illustrative instantaneous-yield-change calculation · Assumes a modified duration of 2.8; excludes coupon income · NOT a forecast
Coupon income received while holding the bond can partly offset a price decline. Actual one-year holding-period returns depend on purchase price, coupons and subsequent yields; selling early can crystallize a price loss. Calculation details are in the expandable “Methodology” section.
SK Securities favors holding three-year KTBs for income in the first half of 2027 (carry strategy), then adding longer-maturity bonds in H2 (extending duration). iM Securities prefers not to chase yields below its 3.70% fair-value floor, instead buying in stages if yields rebound.12, 14 By November 11, the three-year yield had risen back to 3.73%, just above that lower bound.7
First, check which benchmark your loan uses—COFIX, CD rates or bank bond yields—and the next reset date. An increase in the BOK base rate does not lift every loan rate by the same amount on the same day. CD The 91-day CD rate is 34bp above the policy rate, compared with a historical average spread of 19bp. Loans linked to CDs already reflect some expected tightening.28
For a closer look at how rate hikes affect bank earnings (including NIM), see NO.13.
The calendar to the terminal rate
- Nov 10 (Tue) · 10:30 p.m.U.S. October CPIHeadline +0.4% MoM; core +0.3%. Because comparable data were unavailable following last year's U.S. government shutdown, year-over-year figures for headline and core inflation were not released.
- Nov 11 (Wed)Korea's Nov 1–10 export figures (Customs Service)$33.46bn (+111.9% YoY); daily average +97.7%; chips +331.2%
- Nov 11 (Wed) · NoonBOK October financial-market trendsBank household lending +KRW 5.0tn (Sep: +KRW 0.5tn); outstanding KRW 1,203.9tn
- Nov 13 (Fri) · 10:30 p.m.U.S. October PPIThe next inflation gauge after CPI; could shift expectations for the size of the Fed's December hike
- Nov 18 (Wed) · 7:00 a.m.NVIDIA earnings call5 p.m. U.S. time on Nov 17; a test of AI-chip demand
- Around Nov 21Nov 1–20 export dataCheck the pace of semiconductor growth
- Nov 26 (Thu)BOK rate decision, Updated Economic Outlook · rate-path dot plotDecision in the morning, followed by the governor's press conference
- Dec 1 (Tue)November trade figures
- Early DecemberNovember CPICore and services inflation
- Dec 10 (Thu) · 4:00 a.m.FOMC FOMC decisionDec 8–9 meeting
- Jan 14, 2027First BOK meeting of 2027
- Feb 25, 2027BOK decision, economic outlook & dot plotWhere brokers expect the cycle to end
Times in KST · Sources: SBS Biz, U.S. Bureau of Labor Statistics, Federal Reserve, Korea's trade ministry, Korea Customs Service, BOK and NVIDIA11, 36, 37, 38
What could delay or overturn the conclusion?
In October, participation in A-rated corporate bond bookbuilding fell to 390%, down from 625% a year earlier.39 If that chill turns into a broader credit squeeze, the case for stopping outlined in Section 04 could strengthen before a deterioration appears in the real-economy data.
The next tests are the U.S. producer-price report on November 13 and the FOMC decision on December 10, Korea time. Fed funds futures favor a 25bp hike but still leave room for a 50bp move.8 If the Fed continues tightening beyond December, pressure on the won could increase, opening a conditional path to a 3.75% BOK terminal rate.33
If semiconductor export growth slows or order cancellations emerge in the November 1–20 trade data due around November 21, that would strengthen the case iM Securities describes for a lower, 3.25% peak. Watch memory-chip contract prices as well.12
- Unanimous hold on Oct 22; BOK base rate 3.00%
- Semiconductor exports: October +259.4% YoY; November 1–10 +331.2% YoY
- Core inflation: 2.8%; October bank household loans: +KRW 5.0 trillion
- 3Y KTB yield End-September 4.02% → Nov 10 3.63% → Nov 11 3.73%
- Terminal rate 3.50% (iM · Daishin · SK) vs 3.25% (KB)
- iM's fair-value range for 3Y KTBs: 3.70–4.00%
- CME FedWatch probabilities implied by futures: a 100% chance of a December U.S. hike, split between 25bp (88.8%) and 50bp (11.2%), as of 2 p.m. KST on November 118
- The distribution of November's rate-path dots and the size of the upgrades to 2027 forecasts
- Where this hiking cycle peaks: 3.25%, 3.50% or 3.75%
- How much of the stock-market collapse feeds through to consumption and employment
The stock-market crash alone may not stop a November hike.
The terminal rate is the real story.
The export data and growth outlook that matter to the BOK have not weakened, while inflation remains above its 2% target and core inflation pressures have not eased decisively. That is why a November hike remains the consensus despite the equity selloff. The real question is what comes next: does the cycle stop at 3.25% or 3.50%?
Bond markets have already put down an answer: 'almost over.' That makes predicting the terminal rate very different from profiting on bonds bought today. As November 11 showed, a single U.S. surprise can shift KTB yields by 9.6bp in a day. Three tests matter before November 26.
- Do the BOK's fundamentals finally turn?Semiconductor exports, core inflation, consumption and employment
- Does the dot plot and revised outlook signal a new destination?Whether more dots appear above 3.50%—and what the governor says about further hikes
- How much of the expected rate path has bond pricing already anticipated?Spread between the three-year KTB yield and the terminal-rate forecast (a 23bp gap on November 11)
Not a recommendation to buy or sell. The rate paths,fair-value yields, and investment strategies belong to the respective brokers; the bond-price changes are illustrative calculations. Data cutoffs and calculation methods appear in the expandable sections below.
- NO.13Will the BOK Hike Despite Falling Stocks? July's Precedent and Bank NIM
- NO.14U.S. Ten-Year Treasury Yields Near Their Peak Around the Final Fed Hike
- NO.16The Won Has Strengthened—But Its Effective Exchange Rate Still Lags
- NO.20The Fed Leans Toward a December Hike. Oil Prices Could Decide What Follows
- NO.29Record Earnings, Yet the KOSPI Has Nearly Halved—Why?
Glossary
- Terminal rate
- The peak policy rate at the end of the current tightening cycle; presented as the last stop on a route in this report.
- Rate-path dot plot (conditional projections)
- Each of the BOK Monetary Policy Board's seven members submits three dots for an appropriate policy rate six months ahead, reflecting a central scenario and upside/downside risks. One dot is not one vote. First published in February 2026, the projections appear in February, May, August and November.
- Dissenting vote
- A board member's vote against the majority decision. One member favored holding in August; there was no dissent in October.
- Core services inflation
- An iM Securities measure covering demand-sensitive service categories. It is not an official inflation series.
- Core inflation
- Korea publishes two series: excluding agricultural products and petroleum (October 2.8%; September 2.7%), and excluding food and energy (October 2.8%; September 2.8%).
- Interest-rate swap (IRS)
- An exchange of fixed- and floating-rate payments. The term structure of swap rates can be used to infer market expectations for future policy rates, subject to other premiums.
- KTB futures
- Contracts to buy or sell Korean government bonds at a predetermined future price. Heavy foreign buying can coincide with falling yields in the cash market.
- Fair-value yield
- A broker's estimate derived from its expected policy-rate path plus term and supply-demand premiums. iM uses the average short-term rate over three years plus 30–50bp.
- CP·CD
- CP is commercial paper; CD is a negotiable certificate of deposit. Both provide benchmarks for short-term funding rates around three months.
- Carry & duration
- Carry is the income earned from holding a bond. Duration measures how sensitive a bond's price is to changes in yield.
Differences across sources & data cutoffs
| Peak headline inflation | June 3.2% (3.16% as calculated by iM); iM's credit team identifies August's 3.1% as the peak. August's figure included a base effect from a telecom-fee discount the previous year. July: 2.8%; September: 2.9%; October: 2.8% (2.82%). |
| September core inflation | 2.7% excluding agricultural products and petroleum, versus 2.8% excluding food and energy. The difference reflects the measures' definitions. |
| Timing of a second hike | February 2027 (SK and iM credit); Q1 2027 (iM rates); one hike next year (Daishin); none (KB). The 2027 policy meetings are Jan 14 and Feb 25. |
| KB & Meritz views | Cited from Aju Press (Nov 8) and EToday (Nov 10), rather than the underlying research reports. The swap-implied moves of 27.5bp over six months and 31.5bp over nine months are also KB figures quoted in the Nov 8 article, not subsequent market prices. |
| Daishin forecast table | The report labels columns only “one quarter ahead,” “two quarters ahead,” etc. Given the policy-rate sequence of 3.25% followed by 3.50%, we interpret these as end-2026 and end-Q1 2027. Its three-year KTB yield forecast is 3.90% for both dates. |
| Three-year KTB yields | Nov 6: 3.615% (iM), 3.61% (Daishin), 3.613% (EToday); Nov 9: 3.639% (Eugene), 3.635% (Kiwoom); Nov 10: 3.633% (Special Times); Nov 11: 3.729% (Special Times / SBS Biz); end-October: 3.710% (iM), 3.715% (reported KOFIA data). |
| USD/KRW | Nov 9: KRW 1,347.10 (Eugene, local weekly close), 1,341.35 (Kiwoom, including overseas trading); Daishin's “current level”: KRW 1,363; Nov 10: 1,337.5; Nov 11: 1,333.6 (both at 3:30 p.m.). |
| Foreign net cash-bond buying in October | KRW 6.45tn (iM data) versus KRW 8.45tn in won-denominated bonds (reported KOFIA data). The reporting scopes differ. |
| Foreign KTB futures buying in October | Three-year: 128,718 contracts; ten-year: 46,199 (iM) versus approximately 131,000 and 48,000 (SK). The basis for the difference could not be established. |
| Memory pricing | The rise in the DDR5 16Gb contract price from $40 to $50 is quoted by iM Securities. It is not a spot-market price. |
| KOSPI drawdown from the peak | Jun 22: 9,114.55 → Nov 6: 5,059.69 (−44.5%); Nov 9: 5,018.85 (−44.9%, lowest close); Nov 10: 5,239.13 (−42.5%); Nov 11: 5,375.36 (−41.0%). iM Securities described the fall as “roughly 45%.” |
| Export growth | October semiconductor exports +259.4% by value. Total export growth of 93.7% includes a base effect from the October 2025 Chuseok holiday; average daily exports increased 76.0%. |
| October policy meeting minutes | Released Nov 10. Cross-checked against reporting quoting the minutes (EToday and NewsPim). |
Broker rate-path tables (source data)
| Daishin Securities (Nov 9) | Current | +1Q | +2Q | +3Q | +4Q |
|---|---|---|---|---|---|
| BOK base rate | 3.00 | 3.25 | 3.50 | 3.50 | 3.50 |
| 1Y Monetary Stabilization Bond | 3.46 | 3.50 | 3.60 | 3.60 | 3.60 |
| 3Y KTB | 3.61 | 3.90 | 3.90 | 3.85 | 3.80 |
| 10Y KTB | 3.85 | 4.20 | 4.20 | 4.15 | 4.05 |
| USD/KRW | 1,363 | 1,330 | 1,320 | 1,300 | 1,320 |
| SK Securities (Nov 10) | Q4 2026 | Q1 2027 | Q2 2027 | Q3 2027 | Q4 2027 |
|---|---|---|---|---|---|
| Base rate (quarter-end) | 3.25 | 3.50 | 3.50 | 3.50 | 3.50 |
| 3Y KTB (quarterly average) | 3.75 | 3.75 | 3.60 | 3.55 | 3.45 |
| 10Y KTB (quarterly average) | 4.10 | 4.10 | 4.00 | 3.95 | 3.90 |
iM Securities (Nov 10): +25bp in November to 3.25%, another +25bp in Q1 2027 to 3.50%; 3.75% is conditional. Three-year KTB fair-value range: 3.70–4.00% (midpoint 3.85%), assuming a 3.50% terminal rate followed by a year-long hold.
Methodology
- Implied average short-term rate: 3Y KTB yield of 3.729% (Nov 11) less iM's assumed 30–50bp premium = 3.23–3.43% (or 3.13–3.33% using Nov 10's 3.633%). This is a model-derived inference, not a direct observation of market expectations.
- Bond price sensitivity: approximate percentage price change = −modified duration × change in yield. Assuming duration of 2.8, a move from 3.729% to 3.85% gives −2.8 × 0.121 percentage points ≈ −0.34%. Excludes coupon income, convexity (the error from a linear approximation for larger yield moves) and transaction costs.
- Three-year KTB yield minus terminal-rate forecast: 3.729% − 3.50% ≈ 23bp; spread over the current base rate ≈ 73bp (Nov 10: 13bp and 63bp).
- KOSPI drawdown: 5,059.69 / 9,114.55 − 1 = −44.5% (Nov 6); 5,018.85 = −44.9% (Nov 9, lowest close); 5,239.13 = −42.5% (Nov 10); 5,375.36 = −41.0% (Nov 11).
- Dot-plot horizon: six months after the meeting. Aug 27 → approximately February 2027; Nov 26 → approximately May 2027.
Sources
- Daum Finance, KOSPI daily prices (Korea Exchange regular-session closes), accessed Nov 10, 2026. finance.daum.net
- News1, “KOSPI Closes Down 0.81% at 5,018.85; KOSDAQ Falls 0.82%,” Nov 9, 2026. news1.kr
- Polinews, “KOSPI and KOSDAQ Rebound More Than 4% on Bargain Hunting; Foreigners Return as Buyers,” Nov 10, 2026. polinews.co.kr
- Financial News, “Korean Stocks Close Sharply Higher Despite Fears of a Big Fed Hike,” Nov 11, 2026. fnnews.com
- iM Securities, “Yields Have Fallen Quickly: Conditions for Further Buying” (Rates Brief), Nov 9, 2026.
- Special Times, “Korean Government Bond Yields Fall as Foreign KTB Futures Buying Picks Up Despite Stock Rally,” Nov 10, 2026. specialtimes.co.kr
- Special Times, “Korean Government Bond Yields Surge on Fears of a Large U.S. Rate Hike,” Nov 11, 2026. specialtimes.co.kr
- Aju Press, “U.S. CPI Exceeds Forecasts; Talk of First 50bp Fed Hike in Four Years as December Hike Odds Reach 100%,” Nov 11, 2026. ajunews.com
- iNews24, “BOK Monetary Policy Board August Decision: Base Rate at 3.00%” (Full Statement), Aug 27, 2026. inews24.com
- Kyunghyang Shinmun, coverage of BOK's October rate hold, Oct 22, 2026. khan.co.kr
- SBS Biz, “BOK Sets Jan 14 for Its First Rate Decision of 2027,” Oct 29, 2026. biz.sbs.co.kr
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- Federal Reserve, FOMC meeting calendar. federalreserve.gov
- U.S. Bureau of Labor Statistics, “Schedule of Releases for the Producer Price Index.” bls.gov
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