Treasury bond yields closed higher across the board on the 27th.
On this day in the Seoul bond market, the 3-year Treasury bond yield closed at an annual 3.582%. That was up 3 bp (1 bp=0.01 percentage point) from the previous transaction day.
Except for the 3-year, other Treasury maturities hit a record high for the first time in as little as 1 year and 7 months and as long as 2 years and 5 months. The 5-year closed at 3.838%, up 3.7 bp from the day before, and the 10-year finished the same period up 5 bp at 3.915%. That was the highest since Nov. 2023 (5-year 3.905%, 10-year 3.98%).
The 20-, 30- and 50-year notes also hit a record high since Nov. 2023 (20-year 3.933%, 30-year 3.812%, 50-year 3.754%). On this day, these Government Bonds closed in sequence at 3.92%, 3.81% and 3.681%. The 1-year was 3.002%, and the 2-year closed at 3.499%. The 1-year and 2-year were the highest since Sep. 2024 (3.01%) and May 2024 (3.507%), respectively.
This is seen as the result of rising international oil prices due to the war between the United States and Iran, which has heightened the possibility of inflation. When inflation concerns grow, Central Banks respond by raising interest rates, pushing Treasury yields up as well. Overnight, May-delivery Brent crude futures settled at $108.01 per Barrel, up 5.8% from the previous session.
Although the government released measures to stabilize the bond market the previous day, the market showed little effect. On the 26th, the Ministry of Economy and Finance said it would conduct Treasury bond buybacks (Buy-Back) totaling 5 trillion won in two rounds, on this day and on the 1st of next month.
Gong Dong-rak of Daishin Securities said, "Since the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve (Fed) ended in March, scenarios related to a Fed benchmark rate hike have circulated, mainly among foreign institutions," adding, "That mood continued through today."