Korea's credit default swap (CDS) premium has been restored to its initial high due to US quantitative austerity.
The Korean 5-year CDS premium trade reached 23.13bps on the 6th, up 0.59bps from the previous day, close to 23.68bps on March 10th last year.
In the stimulus package that the US strengthened quantitative easing, Korea's CDS premium reached an all-time low of 17.80bps in September of last year, and the average CDS premium in December of the 4th pandemic was 21.68bps.
The minutes of the U.S. Federal Open Market Committee (FOMC), released on the 5th, showed that the US Federal Open Market Committee (FOMC) minutes of last year started tightening up to $4 trillion in March due to a rate hike and simultaneous operation of quantitative tightening (QT). A sudden braking was foretold in the expansion.
The CDS premium rose as Korean stocks, bonds, and foreign exchange markets fluctuated after the US Nasdaq plunged 3% or more. There was no change in Britain, Germany, and France.
The minutes of the FOMC for quantitative tightening in the US, which led the stock market decline at the beginning of the year, said that US Fed members "agreed to raise the policy rate sooner than previously expected due to soaring inflation and a very tight labor market." “It is appropriate to start reducing the size of our holdings, including $760 trillion in Fed bonds.”
On March 15, 2020, in the early stages of the corona virus, the US started quantitative easing by purchasing US$7,000 government bond mortgage-backed securities (MBS) at a 0.00-0.25% cut in the base rate, and injected US$2.3 trillion in liquid cash in April, followed by Korea. Low interest rates followed with a supplementary budget for bonds.
Korea's total financial assets stood at 2605.1 trillion won in the third quarter of last year, maintaining a surge of more than 2% from 473.2 trillion won in the previous quarter.
The increase in household financing increased by 48.5 trillion won in the third quarter of last year from the 45 trillion won increase in financial loans in the second quarter of 2020 (compared to the previous quarter) in the early stages of the coronavirus. expanded to 2 billion won.
As for household financial assets, domestic and foreign stocks accounted for 21.0% (1019.6 trillion won) of 4845.8 trillion won in the third quarter of last year, and the stock surged to an all-time high since the second quarter (1031.9 trillion won).
The Bank of Korea revealed that 951.7 trillion won in domestic stocks and 67.9 trillion won in overseas stocks accounted for 40.7% of deposits and 2.7% of bonds.
Market currency (M2) in October last year was 3550.6 trillion won, a 38 trillion won (1.1%) increase from the previous month, a sharp increase from 17.4 trillion won in September, and a 12.4% increase from the same period last year.
In the Corona government's consumption stimulus policy, the market money supply surpassed 3,000 trillion won in April 2020 and set a record high every month at a steep increase.
On the 6th, the won-dollar exchange rate exceeded 1,200 won for the first time in one year and six months.