National Treasury Bond 3-Year Yield Rises to 2.561%... Impact of Fed Remarks

3-Year Treasury Yield Rises 6.1bp
Fed's Cautious Stance on Rate Cuts Influences Market
Foreign Investors Maintain Net Selling in Treasury Futures Market

On the 10th, government bond yields in the Seoul bond market rose across the board. The 3-year government bond yield closed at 2.561% per annum, up 6.1 basis points (1bp=0.01%) from the previous trading day.

The 10-year yield also increased by 5.9bp to 2.837% per annum, while the 5-year and 2-year yields rose by 5.7bp and 4.1bp, closing at 2.684% and 2.650% per annum, respectively. Long-term bonds such as the 20-year rose 2.3bp to 2.729% per annum, and the 30-year and 50-year bonds increased by 3.0bp and 2.8bp, recording yields of 2.708% and 2.594% per annum, respectively.

This rise in yields is analyzed to have originated from remarks by officials of the U.S. Federal Reserve (Fed). The Fed maintained a cautious stance on rate cuts, influencing the market.

Fed Governor Michelle Bowman emphasized that inflation risks still exist and expressed a preference for a "cautious and gradual approach" to rate adjustments. Susan Collins, President of the Boston Fed, also mentioned "considerable uncertainty" and expressed the view that slowing the pace of rate adjustments would be advantageous. Patrick Harker, President of the Philadelphia Fed, stated that he is prepared to support rate cuts, but the timing depends on economic conditions.

Foreign investors showed a net selling position in the futures market on the day. They net sold 903 contracts of 3-year government bond futures and 1,926 contracts of 10-year government bond futures. Notably, foreign investors have continuously sold 10-year government bond futures since January 7, except for that single day since January 24 of last month.