As the domestic stock market suffered a sharp decline for the second consecutive day, Treasury bonds extended their strength (falling yields) today (July 29), following the previous day.

In the Seoul bond market, the yield on three-year Treasury bonds closed at 3.800% per annum, down 2.9 basis points (1 bp = 0.01 percentage point) from the previous trading day.

This marks the lowest level since the 10th of this month (3.768%).

The yield on 10-year bonds fell 3.2 basis points to 4.257% per annum.

The 5-year and 2-year yields fell 3.1 basis points and 1.6 basis points, respectively, closing at 4.037% and 3.690% per annum.

The 20-year yield fell 4.6 basis points to 4.485% per annum.

The 30-year and 50-year yields fell 2.8 basis points and 2.7 basis points, respectively, recording 4.515% and 4.414% per annum.

Foreign investors net bought 16,174 contracts and 110 contracts of 3-year and 10-year treasury bond futures, respectively.

The strength in Treasury bonds today is attributed to a growing preference for safe-haven assets, as the domestic stock market, classified as a risky asset, suffered a sharp decline for the second straight day.

On this day, both the KOSPI and KOSDAQ markets triggered sidecars (temporary suspension of program sell orders) and circuit breakers (halting trading for 20 minutes) for the second consecutive day, finishing the session with declines of around 6% compared to the previous day.

Additionally, the won-dollar exchange rate hitting its lowest level in about five months had a positive impact.

In the Seoul foreign exchange market, the won-to-dollar exchange rate stood at 1,446.7 won as of 3:30 PM, down 15.8 won.

Based on the 3:30 PM closing price, this is the lowest level since February 27 (1,439.70 won), just before the outbreak of the Middle East war.

Cho Yong-gu, a researcher at Shinyoung Securities, analyzed, "As the stock market underwent a sharp correction, the preference for safe-haven assets strengthened as a trade-off, causing Treasury yields to fall. The drop in the exchange rate also appears to have contributed to the decline in yields."