South Korea’s government bonds fell for a second day after central bank governor nominee Lee Ju-yeol signaled that the chances of an interest-rate cut are slim.

The notes snapped a five-day advance yesterday as Lee said in a prepared statement to lawmakers that the Bank of Korea’s benchmark is “accommodative” and that households need to prepare for higher rates.

Lee, who will appear before a parliament hearing tomorrow, is set to replace BOK chief Kim Choong-soo when his term ends on March 31.

The monetary authority has held its key interest rate at 2.5 percent since May. Data showed U.S. factory output rose 0.8 percent in February, exceeding the highest forecast in a Bloomberg survey.

“It looks like expectations of a rate cut will vanish after the governor nominee speaks tomorrow,” said Park Dongjin, a fixed-income analyst at Samsung Futures Inc. in Seoul. 

“The U.S. factory output figures indicate recent weak data may have been a temporary result of harsh weather.” (Bloomberg)