Government Bond Yields Open Lower but End Mixed on Bank of Korea's Hawkish Stance

Three-Year Bond at 2.460%, Ten-Year Bond at 2.820%

On June 25, government bond yields remained mixed within a narrow range, influenced by the decline in U.S. Treasury yields and a report from the Bank of Korea.

On this day in the Seoul bond market, the yield on three-year government bonds closed at 2.460% per annum, down 0.1 basis points (1bp = 0.01 percentage points) from the previous trading day. The yield on ten-year bonds fell by 0.3bp to 2.820% per annum. The five-year and two-year bonds closed at 2.619% and 2.463% per annum, respectively, with the five-year yield rising by 0.3bp and the two-year yield remaining unchanged. The twenty-year bond yield dropped by 1.2bp to 2.820% per annum. The thirty-year and fifty-year bonds each fell by 1.0bp, closing at 2.728% and 2.629% per annum, respectively.

On this day, government bond yields opened lower across the board, affected by the decline in U.S. Treasury yields. However, the Bank of Korea's "Financial Stability Report for the First Half of 2025," released on the same day, was interpreted as somewhat hawkish (favoring monetary tightening), which narrowed the decline in government bond yields. The yields on one-year and five-year bonds ended higher.

In the report, the Bank of Korea identified the debt burden of self-employed individuals and the increase in household debt due to rising housing prices in the Seoul metropolitan area as potential risk factors for Korea's financial system. The Bank stated, "We will determine the pace and extent of monetary policy easing by comprehensively considering macroeconomic conditions and financial stability."