Treasury Yields Fall Across the Board: "Weak GDP and Declining U.S. Treasury Yields to Blame"

Yields on Korean Treasury bonds fell across the board due to a decline in U.S. Treasury prices and weak economic growth indicators in Korea.

On January 22 in the Seoul bond market, the yield on three-year Treasury bonds closed at 3.109% per annum, down 0.029 percentage points from the previous day. The yields on 10-year, 5-year, and 2-year Treasury bonds ended at 3.558%, 3.397%, and 2.878% per annum, respectively, down by 0.044 percentage points, 0.033 percentage points, and 0.022 percentage points.

The yield on 20-year bonds fell by 0.031 percentage points to 3.544% per annum, while the yields on 30-year and 50-year bonds dropped by 0.044 percentage points and 0.04 percentage points to 3.428% and 3.321% per annum, respectively.

On this day, foreign investors net sold 14,692 contracts of three-year Treasury bond futures and 5,292 contracts of ten-year Treasury bond futures.

Analysts attribute the drop in Treasury yields to weak domestic economic indicators. The Bank of Korea announced that Korea's real gross domestic product (GDP) growth rate for the fourth quarter of last year (preliminary, quarter-on-quarter) was -0.3%. This figure is 0.5 percentage points lower than the Bank of Korea's forecast of 0.2% and marks the lowest level in three years since the fourth quarter of 2022 (-0.4%).

The decline in U.S. Treasury yields also played a role. As President Trump decided not to use force regarding the Greenland annexation issue, easing geopolitical tensions, the yield on the U.S. two-year Treasury note fell by 0.01 percentage points to 3.59%, while the yield on the ten-year note dropped by 0.049 percentage points to 4.25%.

Meanwhile, the won-dollar exchange rate fell for the second consecutive day, closing at 1,469.9 won, down 1.4 won from the previous trading day.