* New Zealand yields rise after confidence data
* Korean bond-CD spreads wider as rhetoric flows on
* Malaysian short-end swaps up as traders wait for budget
By Vidya Ranganathan
SINGAPORE, Sept 30 (Reuters) - New Zealand bill yields rose further on Wednesday and markets priced in even greater monetary tightening in the months to come after a survey showed businesses were turning more optimistic about their prospects.
Korean short-term bond yields also extended gains amid a steady stream of comments from policy makers, including Tuesday's minutes of the August Bank of Korea policy meeting and the country's president's reiteration of his preference of easier policy for much longer. [ID:nSEO122655]
NEW ZEALAND, KOREA
Data on Wednesday showed more companies in New Zealand expected their businesses to improve in the coming year [nSP488577], pushing yields slightly higher.
Three-month bank bill yields
"It's all smoke and mirrors," said one New Zealand rates trader in Singapore, referring to the uncertainty about policy and communication from the authorities.
South Korean markets, meanwhile, persisted with their hawkish positioning in rates, driving short-end spreads wider and flattening the yield curve.
Minutes of the Aug.11 BOK meeting showed one of the six members of its policy committee said policy makers should consider a shift away from the loose monetary stance to curb asset price growth. On Wednesday, in a scheduled report to parliament, the BOK again said it will manage its rates policy while keeping a close eye on asset prices.
The spread between 1-year bonds and the 2 percent policy rate widened to 154 bps on Wednesday, double the spread two months ago. Bond yields were trading near their highest levels this year, with one-year yields near 3.55 percent.
MALAYSIAN RATES
In Malaysia, an already lacklustre market was even more so weeks before the government unveils its 2010 budget, on Oct. 23, there being little hope of a consolidation in the budget next year while the authorities sustain their pump-priming measures.
Ringgit interbank rates
But swap rates have risen through September, particularly at the short end, with the one-year swap rate having moved 6 basis points higher to 2.34 percent.
The government will announce its 2010 budget on Oct.23, but broad expectations are that its budget deficit next year will stay just about the same as this year's 7.6 percent of GDP.
"It is month end and quarter end and everyone has marked their positions and is not prepared to take up new positions unless the picture gets a little clearer on the budget policy," Suresh Kumar Ramanathan, a strategist at CIMB Investment Bank.
The move in short end swaps was merely a catch-up to the sell-off in the longer part of the curve previously, he said. "The market is purely wanting to price in any eventuality of recovery process as a signal that rates will head up." (Editing by Kim Coghill)