Treasury bonds remain strong as foreigners continue to buy futures... 3-year yield fell 3.8% (comprehensive)

(Seoul = Yonhap News) Reporter Kang Su-ji = On the 26th, interest rates on government bonds fell all at once.

This month, the buying trend of government bond futures by foreigners continued, and risk aversion sentiment, including the weak domestic stock market, was influenced by a combination of factors.

On this day, in the Seoul bond market, the three-year maturity treasury bond interest rate closed at 3.789%, down 1.4bp (1bp = 0.01% point) from the previous trading day. It is the lowest level since late August.

The 10-year interest rate fell 2.3bp to 4.074% per annum. The 5-year and 2-year notes fell 1.6bp and 2.1bp, respectively, and closed at 3.932% and 3.739% per year.

The 20-year yield fell 0.6bp to 4.164% per annum. 30-year and 50-year notes fell 1.8bp and 1.6bp, respectively, recording an annual rate of 4.171% and 4.215%.

3-year Treasury bond futures closed at 103.25, up 10 ticks from the previous trading day, and 10-year Treasury bond futures closed at 107.50, up 37 ticks. Foreigners net bought 18,624 3-year futures contracts and 7,171 10-year futures contracts. Foreigners purchased nearly 130,000 3-year futures contracts this month.

On this day, government bonds showed strength amid a risk-aversion atmosphere caused by foreigners continuing to buy government bond futures and domestic stock markets such as KOSPI showing a downward trend.

In Asian trading, the decline in long-term U.S. Treasury yields and the slight decline in international oil prices also had an impact on the strength.

However, in the bond market, as government bond interest rates fell rapidly in October, caution has grown about how long the strong trend will continue.

Kiwoom Securities researcher Ahn Ye-ha said, “Recently, foreign government bond futures supply and demand have been strong,” adding, “There seems to be an underlying perception that Korea and the United States will not be able to aggressively raise interest rates due to concerns about financial instability.”

He added, “Because oil prices are still at a high level, it is difficult for bonds to trend stronger.”

Meanwhile, the Bank of Korea announces the real gross domestic product (GDP) update for the third quarter on the 27th. If solid growth is confirmed, the strength of bonds due to risk aversion may be partially limited.

Today (afternoon, %) Previous day (%) Compared to previous day (bp) Treasury bonds (1 year) 3.658 3.668 -1.0 Treasury bonds (2 years) 3.739 3.760 -2.1 Treasury bonds (3 years) 3.789 3.803 -1.4 Treasury bonds (5 years) 3.932 3.948 -1.6 Treasury bonds (10 years) 4.074 4.097 -2.3 Treasury bonds (20 years) 4.164 4.170 -0.6 Treasury bonds (30 years) 4.171 4.189 -1.8 Treasury bonds (50 years) 4.215 4.231 -1.6 Monetary stabilization bonds (2 years) 3.765 3.772 -0.7 Corporate bond (3 years without guarantee) AA- 4.476 4.492 -1.6 CD 91-day contract 3.260 3.260 0.0