3-year and 10-year treasury interest rates fall to early September levels

3-year and 10-year treasury interest rates fall to early September levels

(Seoul = Yonhap News) Reporter Kang Su-ji = On the 2nd, interest rates on government treasury bonds fell all at once, reversing all the interest rate spikes after the Chuseok holiday.

The previous day, the Ministry of Finance and Economy reduced the size of treasury bond issuance in October, which was affected by the decline in U.S. Treasury bond interest rates last night.

The interest rate on 3-year Treasury bonds fell below 4% for the first time in 14 trading days, hitting the lowest level since the 10th of last month. The 10-year interest rate also hit the lowest since the 4th of last month.

On this day, in the Seoul bond market, the three-year maturity treasury bond interest rate closed at 3.937%, down 7.3bp (1bp = 0.01% point) from the previous trading day.

The 10-year interest rate fell 7.1bp to 4.365% per annum. The 5-year and 2-year notes fell 7.1bp and 6.2bp, respectively, and closed at 4.129% and 3.905% per year.

The 20-year yield fell 5.1bp to 4.373% per annum. 30-year and 50-year notes fell 4.1bp and 3.3bp, respectively, recording an annual rate of 4.497% and 4.493%.

3-year Treasury bond futures closed at 102.64, up 28 ticks from the previous day, and 10-year Treasury bond futures closed at 104.84, up 72 ticks. Foreigners net purchased 730 3-year futures contracts and 1,214 10-year futures contracts.

The Ministry of Finance and Economy's decision to reduce the size of treasury bond issuance in October was generally in line with market expectations. The Ministry of Finance and Economy announced that it plans to reduce the issuance size by 5 trillion won in October compared to the original plan and conduct a buyback (purchase of government bonds) of 3.5 trillion won.

Deputy Prime Minister and Minister of Finance and Economy Lee Hyung-il also once again emphasized the authorities' will to stabilize the market, saying at a market situation review meeting with major financial officials that day, "We will closely monitor treasury bond market trends and consider further reducing the amount of treasury bond issuance if necessary."

Timely, interest rates on government bonds fell sharply in the United States last night, especially in short-term bonds, strengthening the strength of government bonds in the domestic financial market. The U.S. 2-year Treasury yield fell 9.8bp, and the 10-year Treasury yield fell 4.5bp. Accordingly, interest rates in major countries such as Australia also fell in the Asian market.

September consumer prices announced by the National Data Agency on this day rose 2.9% compared to the same month last year, and the rate of increase fell back to the 2% range.

Min Ji-hee, a researcher at Mirae Asset Securities, said, "The decline in U.S. bond yields due to the possibility of adjusting the pace of U.S. policy rate hikes has had a positive effect on supply and demand in the bond market to some extent, as it can also affect the pace of monetary tightening in Korea. The reduction in government bond issuance is also a positive material for long-term bonds."

Meanwhile, the US non-agricultural employment indicator for September will be announced this evening in Korean time. As volatility in the domestic bond market has recently been influenced by external factors rather than domestic factors, market attention has been focused on trends in US economic indicators at the beginning of the month.

Same day (pm/%) Previous day (%) Compared to previous day (bp) Treasury bonds (1 year) 3.734 3.744 -1.0 Treasury bonds (2 years) 3.905 3.967 -6.2 Treasury bonds (3 years) 3.937 4.010 -7.3 Treasury bonds (5 years) 4.129 4.200 -7.1 Treasury bonds (10 years) 4.365 4.436 -7.1 Treasury bonds (20 years) 4.373 4.424 -5.1 Treasury bonds (30 years) 4.497 4.538 -4.1 Treasury bonds (50 years) 4.493 4.526 -3.3 Monetary stabilization bonds (2 years) 3.898 3.969 -7.1 Corporate bond (3 years without guarantee) AA- 4.638 4.701 -6.3 CD 91-day contract 3.210 3.210 0.0