Kukgochae Interest Rate Surges 1.745%P This Year... Soaring Rates Amid Major Countries' Tightening

3-Year Korean Treasury Bond Yield Rises from 1.798% at End of Last Year to 3.543% on the 8th
US Fed's 'Giant Step' Warning May Push Rates Higher

[Asia Economy Sejong=Reporter Kwon Haeyoung] Bond yields, including government bonds, are rising due to global inflation and interest rate hikes by major countries.

According to the Korea Financial Investment Association on the 11th, the 3-year government bond yield recorded 3.543% as of the 8th. Compared to the year-end closing of 1.798% last year, it has risen by 1.745 percentage points this year.

With central banks worldwide, including the U.S. Federal Reserve (Fed), tightening monetary policy to curb rapid inflation, market interest rates are soaring. Government bond yields have been continuously rising this year. According to the National Assembly Budget Office, the average government bond funding rate was 3.42% as of June, steadily increasing from 2.1% in December last year, 2.52% in February this year, and 3.15% in April.

As market interest rates rise, corporate bond yields have also surged, increasing the financial burden on companies. The 3-year unsecured corporate bond yield for companies with a credit rating of 'AA-' was 4.541% as of the 8th, up 2.126 percentage points from 2.415% at the end of last year.

The Fed has hinted at the possibility of a third consecutive 'Giant Step' at the September Federal Open Market Committee (FOMC) regular meeting scheduled for the 20th-21st, suggesting that bond yields are expected to continue rising for the time being. A Giant Step refers to a 0.75 percentage point increase in interest rates at once.

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