Concerns about supply and demand pressure from an expansion of corporate bond issuance at the start of the year and diminished expectations for U.S. benchmark rate cuts worsened bond market sentiment for January next year.
On Dec. 23, the Korea Financial Investment Association released the "January 2026 Bond Market Index," which showed the composite Bond Market Survey Index (BMSI) at 99.9, down 3.3 points from the previous month.
The BMSI is based on responses from 100 professionals involved in bond holdings and management at 52 institutions. When the BMSI is above 100, it indicates stronger expectations that bond prices will rise (yields will fall), suggesting favorable bond market sentiment. Conversely, when it is below 100, it indicates depressed bond market sentiment.
The association said, "Although the number of respondents expecting treasury yields to fall increased, bond market sentiment in January was found to have deteriorated from the previous month as concerns grew over supply and demand pressure from expanded corporate bond issuance at the start of the year and expectations for U.S. benchmark rate cuts decreased."
Bond market sentiment related to market interest rates improved from the previous month. The share of respondents expecting "rate increases" was 11%, down 10 percentage points from the previous month, while the share expecting "rate decreases" was 55%, up 27 percentage points. Thirty-four percent of respondents answered "rates unchanged."
The association said, "With the real economy's recovery momentum weak, bargain hunting by institutions flowed in after the release of the November minutes of the Bank of Korea's monetary policy committee, increasing respondents expecting lower rates in January compared with the previous month."