SOUTH KOREA: Position Squaring Ahead of Holidays Sees Front End Perform

* Another calm night overnight in USTs and Japan closed provided a back drop for the front end KTBs to outperform longer bonds, seeing the curve relatively unchanged. * The 3-Yr is down -3.5bps to 4.051% as it continues to back off from last week's high of 4.08% as shorts are being closed out ahead of month end. For the month, the 3-Yr remains around +21bps higher and seems likely that further profit taking, and a light data release schedule - could see some further performance into month end. * The 10-Yr today is down -3.4bps at 4.45% as it too backs off its recent high of 4.59%. This leaves the 10-Yr up around +11bps for September. * The curve remains in a flattening trend as risks of a hawkish BOK remains key for investors, whilst the calming of oil markets in recent days gave longer bonds some respite. * The data flow into month end remains light, and there is no significant issuance for the remainder of September. WIth Korea closed for the remainder of the week, today's moves look more like position squaring in quiet markets rather than a change in trend.