[Bond Market Closing]Korea 3-Year Treasury Yield Reclaims 2.9%—Foreign Investors Offload 22,000 Futures Contracts

(Seoul=Yonhap Infomax) Jee Hyun Son – South Korean government bond yields rose on the 20th, pressured by a global shift toward risk assets.

The risk-on sentiment weighed on the bond market, with foreign investors intensifying the sell-off by offloading more than 22,000 contracts of 3-year Treasury futures.

According to the Seoul bond market, the yield on the benchmark 3-year government bond closed at 2.908%, up 3.9 basis points from the previous session. This marks a return to the 2.9% range for the first time since the 17th, when it stood at 2.914%.

The 10-year government bond yield ended at 3.325%, up 4.4 basis points.

Three-year Treasury futures fell 14 ticks to 105.77. Foreign investors were net sellers of 22,696 contracts, while securities firms bought a net 21,031 contracts.

Ten-year Treasury futures plunged 45 ticks to 113.78, with foreigners selling 840 contracts and securities firms buying 1,112 contracts.

Thirty-year Treasury futures dropped 0.34 points to 133.30, with 226 contracts traded.

Market Outlook

Market participants are closely monitoring foreign investor activity.

“With global yields generally trending higher, it appears CTAs (Commodity Trading Advisors) may have triggered sell signals. The market is overwhelmed by the volume,” said a bond dealer at a local bank.

Another bond dealer at a securities firm noted, “The preference for risk assets is boosting equities, and with weekly real estate price indicators showing renewed gains, there are no supportive factors for bonds.”

Intraday Developments

The 3-year benchmark bond (issue 25-4) opened at 2.887%, up 1.7 basis points from the previous session’s private evaluation rate.

The 10-year benchmark bond (issue 25-5) started at 3.291%, up 0.9 basis points.

Overnight, US Treasury yields rose, with the 2-year up 1.90 basis points and the 10-year up 2.50 basis points.

The Seoul bond market showed weakness in early trading.

Stronger-than-expected earnings from Nvidia fueled a sharp rally in the KOSPI, reinforcing risk appetite.

Foreign investors gradually increased their net selling of Treasury futures.

News that China’s benchmark lending rates would remain unchanged had little impact, as it was in line with market expectations.

The People’s Bank of China (PBOC) kept the one-year Loan Prime Rate (LPR), a benchmark for general loans, at 3.0%, and the five-year LPR, a benchmark for mortgage loans, at 3.5%.

According to Korea Real Estate Board data released in the afternoon, the average apartment sale price in Seoul rose 0.20% in the third week of November (as of November 17), up from a 0.17% increase the previous week, marking the first acceleration in four weeks.

As the session neared its close, foreign investors ramped up their net selling, deepening the market’s decline.

The USD/KRW exchange rate briefly touched the 1,470 won level during intraday trading.

Near the market close in Asia, US Treasury yields rose further, with the 2-year up 2.3 basis points and the 10-year up 0.5 basis points.

Trading volume for 3-year Treasury futures reached 182,924 contracts, with open interest down by 11,964 contracts. Ten-year Treasury futures saw 86,913 contracts traded, with open interest down by 10,615 contracts.

Korea Financial Investment Association Final Quotation Yields (as of 20th)

jhson1@yna.co.kr

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