Korea Treasury Bond Yields Fall Across the Board

Korea Treasury Bond. (Yonhap) Korea Treasury Bond yields fell across the board on Oct. 16. Despite the KOSPI rebound, foreign net buying of Treasury bond futures continued, turning yields lower across the board in the afternoon on this day. The yield on 3-year Korea Treasury Bonds fell by 13 bp this week, and the 10-year yield fell by about 21 bp. This means the 3-year yield has dropped to early September levels, and the 10-year yield has fallen to early August levels. In the Seoul bond market on this day, the yield on the 3-year Korea Treasury Bond closed at 3.854% per annum, down 1.3 bp (1 bp = 0.01% point) from the previous trading day. The 10-year yield fell by 1.1 bp to 4.182% per annum. The 5-year and 2-year yields fell by 1.9 bp and 0.7 bp, respectively, closing at 3.988% per annum and 3.818% per annum. The 20-year yield fell by 3.1 bp to 4.206% per annum. The 30-year and 50-year yields fell by 2.2 bp and 2.4 bp, respectively, recording 4.267% per annum and 4.291% per annum. The 3-year Treasury bond futures closed at 103.05, up 10 ticks from the previous day, and the 10-year Treasury bond futures closed at 106.64, up 34 ticks. Foreigners net bought 13,683 contracts of 3-year futures and 6,283 contracts of 10-year futures. The 3-year futures continued their net buying for 9 consecutive trading days since Oct. 2, and the accumulated net buying this month is around 79,000 contracts. The 10-year futures also showed net buying for most of this month, with a cumulative net buying of 19,000 contracts. Korea Treasury Bond yields showed a mixed trend on this day due to the fact that yields had already undergone a significant downward correction, weakening foreign futures buying in the morning, and the KOSPI rebound, despite the drop in U.S. long-term Treasury yields overnight. However, as foreign buying of Treasury bond futures expanded in the afternoon, the market turned strong across all maturities. A bond trader at a securities firm said, “There is an aspect where global yields have passed an inflection point and are falling, and it seems a lot of short-covering buying against the previous selling trend is also flowing in,” adding, “In addition, the bullish tone continues as foreigners buy Treasury bond futures in large quantities.” Meanwhile, in the auction of 50-year Korea Treasury Bonds worth 600 billion won (about $450.07 million) on this day, 1.476 trillion won was bid, and the winning yield was determined at 4.195%, lower than the market yield, showing favorable conditions.