Yields on South Korean Treasury Bonds Surge Amid Oil Prices and U.S. Bond Yields; 3-Year Yield Hits 4% Range for First Time in Three Years

Yields on South Korean Treasury bonds rose across the board today (the 11th), hitting yearly highs for all maturities except ultra-long-term bonds.

The surge was driven by overnight spikes in U.S. Treasury yields, fueled by rising oil prices and fiscal concerns.

The yield on 3-year Treasury bonds surpassed 4%, crossing the 4% threshold for the first time in about three years since November 2023.

The 10-year Treasury yield also reached its highest level since October 2022.

In the Seoul bond market today, the yield on 3-year Treasury bonds closed up 8.4 bp (1 bp = 0.01 percentage points) from the previous trading day at 4.014% per annum.

The 10-year yield rose 8.7 bp to 4.540% per annum.

The 5-year and 2-year yields rose 8.1 bp and 8.3 bp, respectively, closing at 4.267% and 3.920% per annum.

The 20-year yield climbed 8.5 bp to 4.633% per annum.

The 30-year and 50-year yields rose 5.3 bp and 5.8 bp, respectively, recording 4.714% and 4.621% per annum.

Treasury yields rose today due to the overnight surge in U.S. Treasury yields.

U.S. Treasury yields increased primarily in short-term maturities amid growing concerns over high inflation as oil prices once again broke past 100 dollars per barrel.

Overnight, the Producer Price Index (PPI) for August came in high as expected by the market, and President Donald Trump's promise to pay a dividend of 5,000 dollars per U.S. citizen if he wins the midterm elections also added to fiscal concerns, acting as a negative factor.

Treasury futures also declined.

The 3-year Treasury futures fell 30 ticks from the previous day to close at 102.65, while the 10-year futures dropped one tick (100 ticks) to close at 103.68.

Ahead of next week's roll-over of Treasury futures contract months, foreign investors net sold 23,103 contracts of 3-year futures and 2,765 contracts of 10-year futures.

The bond industry is closely watching how long the upward trend in oil prices will continue and the resulting strength of the rise in U.S. Treasury yields.

With a monetary policy event by the U.S. Federal Reserve (Fed) scheduled for next week, the U.S. Consumer Price Index (CPI) for August, released this evening, is also a key factor.

Meanwhile, according to the financial investment industry, the Bank of Korea announced its schedule for outright purchases of Treasury bonds today.

The BOK plans to conduct outright purchases amounting to 1.2 trillion won for five issues of 10-year to 20-year Treasury bonds on the 14th.
※ Please note: This article was translated by AI and may contain errors.