Korean Bond Futures Fall on Rising Japanese Yields and Weakening Yen

Korean government bond futures reversed to decline in afternoon trading on July 6, led by long-term maturities. The 10-year bond futures dropped 3 ticks to 106.22 while 3-year futures remained flat at 103.06 as of 2:48 PM. The reversal followed rising Japanese government bond yields, with Japan's 10-year yield climbing 3.93 basis points to 2.8175 percent. Market participants attributed the shift to weakening yen, as the USD/JPY exchange rate rose 0.601 yen to 161.938 per dollar, pressuring domestic bond prices after morning gains.

Korean Bond Futures Reverse Morning Gains

The 3-year government bond futures traded at 103.06, unchanged from the previous session. The 10-year bond futures declined 3 ticks to 106.22. Benchmark yields rose across maturities, with the 3-year treasury yield climbing 4.0 basis points to 3.785 percent and the 10-year yield advancing 0.8 basis points to 4.203 percent. Bond prices had shown strength during morning trading before reversing direction in the afternoon.

Foreign Investors Net Buy Bond Futures

Foreign investors purchased 5,940 contracts of 3-year bond futures on a net basis. They also net bought 975 contracts of 10-year bond futures during the session.

Japanese Yields Drive Korean Market Weakness

The Japanese government bond market influenced Korean bond price movements. Japan's 10-year yield rose 3.93 basis points to 2.8175 percent. The USD/JPY exchange rate climbed 0.601 yen to 161.938 per dollar, weakening the yen. A bond dealer at a securities firm stated that the weakening yen drove Japanese long-term yields higher, affecting the domestic bond market.

Three-Year Treasury Auction Settles at 3.765 Percent

The morning treasury auction allocated 3.3 trillion won of 3-year government bonds at a yield of 3.765 percent. Total bids reached 8.6230 trillion won.

FAQ

What caused Korean bond futures to decline on July 6? Korean bond futures reversed to decline in afternoon trading on July 6 due to rising Japanese government bond yields. Japan's 10-year yield climbed 3.93 basis points to 2.8175 percent, pressuring Korean bond prices. The weakening yen, with the USD/JPY exchange rate rising 0.601 yen to 161.938 per dollar, contributed to the shift in Japanese yields.

How did Korean benchmark bond yields perform on July 6? The 3-year Korean treasury benchmark yield rose 4.0 basis points to 3.785 percent, while the 10-year benchmark yield increased 0.8 basis points to 4.203 percent. Bond yields had declined during morning trading before reversing to gains in the afternoon session.