Treasury bond yields closed higher across the board on the 9th.
On this day in the Seoul bond market, the 3-year Treasury bond yield finished transaction at 3.42%. It rose 19.3 bp (1 bp = 0.01 percentage point) from the previous trading day. This is the highest level in 1 year and 9 months since June 3, 2024 (3.434%), a record high.
It is seen as the result of heightened inflation fears as crude prices rose amid the Middle East crisis. When prices rise, expectations grow that the Central Bank will raise the base rate, and Treasury bond yields tend to rise (bond prices fall).
On this day, the 1-year and 2-year rose 8.9 bp and 15.6 bp, respectively, to close transaction at 2.831% and 3.148%. The 1-year is at the highest level since Nov. 27, 2024 (2.846%), and the 2-year since July 11, 2024 (3.209%). The 5-year also climbed 18 bp to end the session at 3.652%, the highest since Nov. 28, 2023 (3.67%).
The 10-year rose 12.3 bp to 3.739%. The 20-year and 30-year were up 9.3 bp and 8.1 bp, respectively, at 3.711% and 3.599%. The 50-year finished transaction up 8.1 bp at 4.81%.
As Treasury bond yields climbed, the Bank of Korea announced it will buy up to 3 trillion won of Treasurys on the 10th. According to the "Treasury bond outright purchase notice" posted on the Bank of Korea (BOK) website on this day, the Bank of Korea (BOK) will purchase up to 3 trillion won of Treasurys through a competitive auction for 10 minutes starting at 11 a.m. on the 10th. The targets are 3-, 5-, and 10-year Treasurys. The Bank of Korea (BOK) said the reason was "to respond to the recent increase in rate volatility."