Government bond yields rise across the board... 3-year bond up to 3.081% annually

[Image source=Yonhap News]

[Asia Economy Reporter Eunmo Koo] Government bond yields rose across the board on the 1st. In the Seoul bond market that day, the yield on 3-year government bonds closed at 3.081% per annum, up 7.2 basis points (1bp = 0.01 percentage points) from the previous trading day.

The 10-year yield rose 5.7bp to 3.184% per annum. The 5-year and 2-year yields increased by 6.3bp and 4.1bp, closing at 3.130% and 3.093% per annum, respectively. The 20-year yield rose 7.8bp to 3.183% per annum. The 30-year and 50-year yields increased by 10.4bp and 10.3bp, recording 3.152% and 3.107% per annum, respectively. On the 29th of last month (local time), the 10-year US Treasury yield fell to 2.67%, dropping into the 2.6% range for the first time since early April.

As the US Federal Reserve (Fed) continues monetary tightening, concerns over an economic recession have intensified, increasing the preference for bonds as relatively safe assets. Bond yields and prices move inversely. The US gross domestic product (GDP) growth rate recorded negative growth for two consecutive months, entering a technical recession, and the Chicago Purchasing Managers' Index (PMI) for July also declined to 52.1 from 56.0 the previous month, showing a sluggish trend. At the same time, the US June Personal Consumption Expenditures (PCE) price index rose 6.8% year-on-year, hitting a 40-year high, indicating persistent inflationary pressure.

Experts interpreted the simultaneous rise in government bond yields as a temporary rebound due to the recession issue not being immediately reflected. Kim Sang-hoon, a researcher at Hana Securities, explained, "It is true that the domestic economy is slowing down, but there will be a time lag compared to the recessions in the US and Eurozone," adding, "In fact, the coincident index of economic activity, which reflects the current economy, has been rising for two consecutive months." He further noted, "The simultaneous rise in government bond yields appears to be a technical rebound." Additionally, Bank of Korea Governor Lee Chang-yong's remark that the possibility of an additional big step (a 0.50 percentage point hike in the base rate at once) cannot be ruled out likely influenced the rise in yields that day.

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