Influenced by external interest rate trends, government bond yields closed higher across all maturities.
On January 19 in the Seoul bond market, the yield on three-year government bonds ended at 3.130% per annum, up 5.0 basis points (1bp = 0.01 percentage point) from the previous trading day.
Long-term yields also rose in tandem. The yield on ten-year government bonds climbed 7.7 basis points to 3.565% per annum, while five-year and two-year bonds rose by 6.9 basis points and 3.1 basis points, ending at 3.389% and 2.910% per annum, respectively.
Ultra-long-term bonds also showed an upward trend. The yield on twenty-year bonds increased by 6.0 basis points to 3.493% per annum, while thirty-year and fifty-year bonds rose by 6.3 basis points and 5.9 basis points, closing at 3.386% and 3.279% per annum, respectively.
As a result, government bond yields once again set new annual highs across all maturities, surpassing the previous records set on January 15 following the hawkish stance of the Bank of Korea's Monetary Policy Board.
On this day, foreign investors were net sellers of 7,907 contracts of three-year government bond futures, while they were net buyers of 3,382 contracts of ten-year government bond futures.
The domestic bond market moved in line with the rising government bond yields in major countries such as Japan and the United States. In the Tokyo bond market, the yield on Japan's benchmark ten-year government bond temporarily rose to 2.275%, marking the highest level in about 27 years since February 1999.
The yield on Japan's ultra-long-term thirty-year government bond also soared to 3.585%, a temporary increase of 11.5 basis points compared to the previous weekend.
Market participants believe that the rise in Japanese long-term yields was influenced by expectations that, with Prime Minister Sanae Takaichi set to hold an early general election next month, an election victory for the ruling party would pave the way for aggressive fiscal policy measures.
Additionally, the weakness in the U.S. Treasury market at the end of last week also contributed to the rise in domestic yields. This was due to the diminished likelihood of Kevin Hassett, a dovish member of the White House National Economic Council (NEC), being nominated as the next Federal Reserve Chair.
It is analyzed that market expectations for a rate cut weakened somewhat after U.S. President Donald Trump made remarks suggesting that Hassett would be excluded from consideration as the next Federal Reserve Chair.
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