3.745% on 3-Year Korean Treasury Bonds... Highest in 10 Years and 11 Months

5-Year, 10-Year, and 2-Year Bonds All Close Higher
Increased Volatility in the Bond Market

[Asia Economy Reporter Hwang Yoon-joo] The yield on the 3-year Korean Treasury bond reached its highest level in 10 years and 11 months.

On the 17th, in the Seoul bond market, the yield on the 3-year Korean Treasury bond closed at 3.745% per annum, up 1.7 basis points from the previous day. This is the highest level in 10 years and 10 months since August 4, 2011 (3.77% per annum).

The 5-year bond closed at 3.855%, up 1.8 basis points. The 10-year and 20-year bonds closed at 3.795% and 3.717%, up 2.8 and 2.9 basis points respectively.

Experts analyzed that concerns over the interest rate inversion between Korea and the U.S., caused by the Federal Reserve's (Fed) aggressive tightening, are increasing volatility in the bond market.

On the 16th, the Fed announced after its regular FOMC meeting that it would raise the benchmark interest rate by 0.75 percentage points. The U.S. benchmark interest rate rose significantly from the 0.75?1.00% range to the 1.50?1.75% range. As a result, the upper limit of the benchmark interest rates in Korea and the U.S. became equal, raising concerns about interest rate inversion.

A bond department official from the Korea Financial Investment Association explained, "There may be many cases where matured government bonds were settled instead of being extended," adding, "Since the Fed has left open the possibility of a 50 to 75 basis point hike in July, the market may be influenced by a wait-and-see approach."

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