South Korea's yield curve is expected to become steeper in early 2025 due to a significant increase in new debt coinciding with anticipated interest rate cuts by the Bank of Korea.
Analysts predict that these cuts, which may start in January, will result in lower yields on shorter-dated securities.
On the other hand, the government's record gross issuance to address its revenue shortfall, along with higher yields on US Treasuries, is likely to push yields higher on longer-dated bonds.
This demonstrates the complex relationship between domestic monetary policy and international market conditions, highlighting the challenges faced by South Korea's financial landscape.