S.Korea T-bonds jump on dismal job data

(Updates to close)

SEOUL, Jan 14 (Reuters) - South Korean government bond prices
jumped on Wednesday as dismal jobs data added to the case for
more domestic rate cuts in the near future, dealers said.

Official data showed on Wednesday that South Korea lost
12,000 jobs in December over a year ago, the first decline in
five years, adding to a flurry of recent economic data pointing
towards recession in Asia's fourth-largest economy.
[ID:nSEV000574]

The yield on benchmark 5-year treasury bonds KR5YT=KSDA
fell 10 basis points to 3.94 percent while the March treasury
futures contract KTBc1 rallied as much as 41 ticks before
slightly retreating to close 36 ticks higher at 112.71.

"Our economy is already in recession mode and we will see
more depressing economic figures well into the first quarter,"
said Yang Jin-Mo, a fixed-income analyst at SK Securities.

"With the economy seen falling into a deep and long slump,
the central bank would have to cut the rates further and may
resort to quantitative easing by keeping long-term interest rates
lower," he said.

Under quantitative easing, central banks flood their banking
systems with masses of money to promote lending. They usually do
this when lowering official interest rates is no longer
effective because they already are at or near zero.

Yang said that longer-term treasuries and corporate debt
would likely enjoy further a rally, with yields on the short-term
government bonds having fallen sharply to near the central bank's
base rate of 2.5 percent.

The yield on three-month certificates of deposit KRCD=KQ
fell to a fresh record low of 3.02 percent while the yield on
three-month commercial paper KRCP=KQ, debt issued by companies,
extended steep declines well into five weeks amid more liquidity
support from the central bank for cash-strapped firms.

close prev close
5-yr treasury bonds 3.94 pct 4.04 pct
3-yr treasury bonds 3.36 pct 3.50 pct
1-yr monetary stabilisation bonds 2.63 pct 2.74 pct
3-mth certificates of deposit 3.02 pct 3.13 pct
Average call rate 2.36 pct 2.52 pct
6-mth *KORIBOR 3.71 pct 3.78 pct
~ not quoted
* Korea interbank offered rate
(Reporting by Seo Eun-kyung; Editing by )