'Ukraine Invasion' Drives Safe-Haven Demand, Pushing Government Bond Yields Down... 3-Year Bonds Hit Lowest in a Month

On the 1st (local time), residents in Zhytomyr, northwestern Ukraine, are seen training to throw Molotov cocktails to resist Russian troops. (Image source=Reuters Yonhap News)

[Asia Economy Reporter Moon Chaeseok] On the 2nd, government bond yields fell across the board as the preference for safe assets expanded due to the Ukraine crisis.

In the Seoul bond market that day, the yield on 3-year government bonds closed at 2.187% per annum, down 5.5 basis points (1bp=0.01 percentage points) from the previous trading day. The 3-year yield fell to its lowest level in a month since March 3 (2.158% per annum). It also fell below 2.2% per annum for the first time since April 4 (2.194% per annum).

The 10-year yield dropped 6.2bp to 2.613% per annum. The 5-year and 2-year yields fell 6.2bp and 3.3bp respectively, closing at 2.406% and 1.958% per annum. The 20-year yield declined 4.5bp to 2.650% per annum. The 30-year and 50-year yields fell 4.8bp and 4.2bp respectively, recording 2.584% and 2.568% per annum.

Due to Russia's invasion of Ukraine and the international community's sanctions, global yields plunged on the previous holiday, causing domestic yields to move in tandem.

As the preference for safe assets increased and concerns about tightening eased, the U.S. 10-year Treasury yield fell to 1.72%, the lowest since January 13. During the session, it dropped to 1.68%, the lowest since January 15.

Kim Sanghoon, a researcher at Hi Investment & Securities, explained, "Yields plunged as concerns about economic slowdown grew amid the spread of expectations for prolonged geopolitical risks due to stronger-than-expected clashes and sanctions."

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