Q2 Growth Rate Exceeds Expectations, but Government Bond Yields End Flat

Although the economic growth rate for the second quarter, announced by the Bank of Korea, significantly exceeded market expectations, government bond yields ended the day mostly flat on July 23.

On this day at the Seoul bond market, the yield on 3-year government bonds closed at 3.917% per annum, up 0.4 basis points (bp; 1bp=0.01 percentage point) from the previous trading day. In contrast, the 5-year yield fell by 0.8bp to 4.164% per annum, and the 10-year yield decreased by 0.2bp to 4.392% per annum. The 2-year bond yield rose by 1.8bp, closing at 3.746% per annum.

Long-term bonds also showed a slightly stronger, yet generally flat, trend. The yield on 20-year bonds fell by 0.1bp to 4.616% per annum, the 30-year yield declined by 0.7bp to 4.628% per annum, and the 50-year yield decreased by 0.2bp to 4.525% per annum, respectively.

In terms of supply and demand, foreign investors showed mixed activity in the futures market. Foreigners were net buyers of 1,729 contracts of 3-year government bond futures, while they were net sellers of 5,850 contracts of 10-year government bond futures.

The real gross domestic product (GDP) growth rate for the second quarter, on a preliminary, quarter-on-quarter basis, announced by the Bank of Korea that day, was tallied at 0.6%. This figure is 0.4 percentage points higher than the Bank of Korea's previous projection in May of 0.2% for second-quarter growth, reflecting a much stronger pace than anticipated by the market.

This content was produced with the assistance of AI translation services.