Treasury Bonds Rally Across the Board Amid Plunging Stock Prices; 3-Year Yield at 3.829%

Treasury bond yields fell today (the 28th), marking a downward trend for the second consecutive day.

A drop in yields signifies strength in Treasury bonds.

This was interpreted as the result of a risk-off sentiment coming into play, as the KOSPI and KOSDAQ indices suffered sharp drops, leading to the simultaneous activation of sell sidecars and circuit breakers.

In the Seoul bond market today, the yield on 3-year Treasury bonds closed at 3.829% per annum, down 3.6 bp (1 bp = 0.01 percentage points) from the previous trading day.

The yield on 10-year bonds fell by 4.4 bp to 4.289% per annum.

The 5-year and 2-year yields dropped by 4.9 bp and 1.7 bp, respectively, closing at 4.068% and 3.706% per annum.

The 20-year yield fell by 3.0 bp to 4.531% per annum.

The 30-year and 50-year yields declined by 2.4 bp and 2.0 bp, respectively, recording 4.543% and 4.441% per annum.

In the treasury futures market, 3-year futures closed up 12 ticks at 103.00, and 10-year futures rose 38 ticks to 105.55.

Foreign investors net-bought 11,177 contracts of 3-year treasury futures and net-sold 2,440 contracts of 10-year treasury futures.

Treasury bond yields started mixed in early trading today, but turned downward amid a risk-off atmosphere as domestic stock markets, including the KOSPI, widened their losses.

The KOSPI index closed down 10.84% from the previous day at 6,023.66, and briefly fell below the 6,000 mark during the session.

The KOSDAQ also dropped 7.72% on the same day, briefly falling below the 700 mark at one point during trading.

Sell sidecars and circuit breakers were simultaneously triggered in both markets today.

The drop in stock prices was interpreted as an effect of CXMT—evaluated as the vanguard of China's semiconductor industry self-reliance amid debates over a semiconductor peak—achieving a successful box-office debut upon its IPO.

CXMT's stock price surged more than 400% after listing, rising to the top spot in market capitalization among mainland Chinese listed companies.

A bond trader at a securities firm said, "Seeing bonds strengthen as the stock market weakness deepened after the opening, it appears that risk-off sentiment had an impact," adding, "Foreigners also bought treasury futures."

As Treasury bond yields fell, the spread (yield differential) between 3-year Treasury bonds and 3-year corporate bonds rated AA- widened to 71.6 bp, breaking the highest record for the year for the second consecutive day.

This was due to the larger decline in Treasury bond yields amid risk-off sentiment.

(Photo: Provided by Korea Financial Investment Association and Yonhap Infomax; Yonhap News)
※ Please note: This article was translated by AI and may contain errors.