On the 1st, the first day Korea's Government Bonds were included in the World Government Bond Index (WGBI), Treasury yields closed lower across the board. The WGBI is a global bond index created by FTSE, a British index provider, by grouping major countries' Government Bonds. Funds tracking this index total $2.5 trillion (about 3,794 trillion won), and it is interpreted that some of this flowed into Korea Treasury Bonds, pushing Treasury yields down (Treasury prices up).
On this day in the Seoul bond market, the three-year Treasury yield closed at an annualized 3.37%, down 18.2 bp (1 bp = 0.01 percentage point) from the previous day. The one-year closed at 2.96% and the two-year at 3.326%, down 5.6 bp and 15.5 bp, respectively, from the previous day.
The five-year fell 21 bp to 3.567%. The 10-year fell 19 bp to 3.689%, the 20-year fell 19.3 bp to 3.68%. The 30-year fell 16.6 bp to 3.609%, and the 50-year fell 16 bp to 3.486% at the close of transactions.
Inclusion in the WGBI appears to be stabilizing the Treasury market. In the WGBI, the weight of Korea's Government Bonds is known to be around 2%.
Koo Yun-cheol, Deputy Prime Minister for the Economy and Minister of Strategy and Finance, said on X (formerly Twitter) that "foreign financial institutions and primary dealers of Treasury bonds expect $50 billion to $60 billion in new inflows with the WGBI inclusion." He added, "In fact, inflows were confirmed this week," and noted, "It is expected to contribute to stabilizing our foreign exchange and financial markets, where volatility has increased due to the Middle East war."