Global Stock Market Shock Raises Government Bond Yields... 3-Year Bonds at 1.17% Annual Interest

Global Stock Markets Shocked by COVID-19 and International Oil Prices

Due to the impact of the COVID-19 pandemic, global stock markets plummeted, causing the KOSPI index to start the day with a sharp decline of over 8% on the 13th, breaking below the 1690 level during trading. On this day, dealers are busy working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Minwoo Lee] Bond yields, considered safe assets, are also soaring amid the spread of the novel coronavirus infection (COVID-19) and the shock to international stock markets caused by the plunge in international oil prices.

As of 9:45 a.m. on the 13th, the 3-year maturity government bond yield in the Seoul bond market recorded an annual rate of 1.170%, up 10.8 basis points (0.18 percentage points) from the previous trading day. The 10-year bond rose sharply by 21.2 basis points to 1.599% per annum. The 5-year bond also increased by 10.3 basis points to 1.290% per annum. The 20-year bond recorded 1.620% per annum, up 18.2 basis points, and the 30-year bond rose 19.2 basis points to 1.640% per annum.

The rise in bond yields means that bond prices have fallen. It is interpreted that the bond market reacted as the COVID-19 pandemic and the plunge in oil prices shocked stock markets worldwide.

On the 12th (local time), the three major stock indices in New York all closed with a sharp drop of around 9%. The KOSPI also fell more than 8% immediately after opening that day, dropping to the 1600 level. As of 11 a.m., it stands at 1685.08. Bonds, classified as safe assets, usually increase in value when stock indices fall, but when the entire financial market is shocked, they can also decline together.

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