HSBC-Global Rates Ideas-EM DM

Disclosures & Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. Issuer of report: HSBC Bank plc View HSBC Global Research at: https://www.research.hsbc.com THIS CONTENT MAY NOT BE DISTRIBUTED TO MAINLAND CHINA  We maintain our buy trade idea on 10Y Korean government bonds: yields tend to peak in advance of the last rate hike  The inverted French covered bond curve gives an opportunity to switch into shorter maturities for a yield pick-up  We reiterate our trade idea to buy 30Y gilts on ASW – UK long-end supply might not be as heavy as investors fear EM and DM trades and strategy We reiterate our buy trade on 10Y Korea Treasury Bonds Page 3 The Bank of Korea delivered a hawkish pause on 23 February, but kept open the possibility of another rate hike. Lessons from previous hiking cycles argue for taking duration exposure in Korea Treasury Bonds in advance of the last rate hike. Switch from 6Y into 2Y French covered bond for a yield pick-up Page 5 Short-dated covered bonds look attractive given the current inverted covered bond yield curve. Investors could benefit from yield-pick up and yield curve normalisation. Eurozone: ‘No landing’ versus immaculate disinflation Page 7 We reiterate our “receive 1Y1Y vs pay 1Y EUR IRS’ trade idea: despite the recent hawkish surge in yields, the market has shown reluctance to price cuts out of 2024. It may only take one weak data print to disrupt hawkish market sentiment. UK long-end: supply outlook might not be as bad as you think Page 9 Stronger data and a heavy supply outlook have been feeding the gilt bears but we think the long-end could soon be offered respite with long-end issuance in 2023/24 lighter than many fear. We continue to favour buying 30Y UKT on ASW (vs Sonia). The week ahead: Events and views Week ahead in EM Page 11 Week ahead in DM Page 14 For trades closed in this publication please see Table 8 on page 19. Chris Attfield European Rates Strategist HSBC Bank plc christopher.attfield@hsbcib.com +44 20 7991 2133 Steven Major, CFA Global Head of Fixed Income Research The Hongkong and Shanghai Banking Corporation Limited steven.j.major@hsbc.com.hk +852 2996 6590 24 February 2023 Global Rates Ideas Fixed Income Rates Global EM & DM Fixed Income ● Rates 24 February 2023 2 EM & DM trades and views 3 Korea: Looking beyond the BoK’s hawkish pause 3 Switching from 6Y into 2Y French covered bond for a yield pick-up 5 ‘No landing’ versus immaculate disinflation 7 UK long-end: supply outlook may not be as bad as you think 9 Week ahead in EM 11 China 11 India 11 Korea 12 Thailand 12 Mexico 12 Brazil 13 Week ahead in DM 14 Eurozone – Core 14 Eurozone – Non-core 14 UK 15 Australia 15 Emerging Market Central bank monitor 17 Recent publications 18 Trade tracker 19 Disclosure appendix 23 Disclaimer 27 Contents 3 Fixed Income ● Rates 24 February 2023 Korea: Looking beyond the B