"The Bond Market Remains Unstable in Q2"

[Asia Economy Reporter Hwang Junho] "The risk management trend in the bond market will continue in the second quarter of this year."

Park Tae-geun, Senior Research Fellow at Samsung Securities, stated at the bond forum held by the Korea Financial Investment Association on the 25th via an online webinar, "The effects of the $1.9 trillion U.S. economic stimulus package are becoming visible, and with herd immunity from COVID-19 in advanced countries leading to consumption recovery, along with base effects, concerns about long-term inflation and rising prices are expected."

He added, "With the bond market having already priced in the factors for interest rate hikes, if the base effects on prices ease and international oil prices decline after the second half of the second quarter, there is a possibility that bargain-hunting sentiment may somewhat recover." However, he noted, "From a buying perspective, the stance of policy authorities including the U.S. Federal Reserve (Fed), tax increase emphasis, and geopolitical risks are also issues to watch."

Accordingly, he forecasted, "In the case of U.S. bonds, U.S. high-yield bonds, which are expected to benefit from the economic stimulus compared to investment-grade bonds, will attract attention. Selective interest is expected to continue in countries such as China, Mexico, and Indonesia, where relative stabilization of interest rate volatility and currency value can be anticipated." He also said, "For currency diversification or portfolio investors, utilizing domestic and overseas bond ETFs for short-term active investment and mid- to long-term (EMP) investment seems useful."

At the same event, Moon Hong-chul, Partner at DB Financial Investment, shared his outlook on the domestic bond market and investment strategy, stating, "As the Fed's tightening stance continues, real interest rates may keep rising, and domestically, concerns about deficit bond issuance will persist ahead of major elections." In particular, he predicted, "In the one- to two-month timeframe, mid-term bonds have seen abnormally high interest rates due to supply-demand imbalances, so there is room for rates to stabilize downward near the historical average spread." Accordingly, he expected, "It is necessary to maintain a conservative investment stance on bonds while approaching areas with high time value and spread attractiveness."

This content was produced with the assistance of AI translation services.