Government Bond Yields Hit New Annual Highs Amid Surge in International Oil Prices

Brent Crude Surpasses $100 per Barrel for the First Time in Two Months

On July 24, in the Seoul bond market, the yield on three-year government bonds ended trading at 3.959% per annum, up 4.2 basis points (1bp=0.01 percentage point) from the previous trading day. This is the highest level since November 2023.

The yield on ten-year bonds rose 5.5 basis points to 4.447% per annum. The five-year bond yield ended at 4.214% per annum, up 5.0 basis points, while the two-year bond yield closed at 3.801% per annum, up 5.5 basis points.

Seoul Jung-gu, Bank of Korea exterior. The Asia Business Daily DB

The yield on twenty-year bonds recorded 4.642% per annum, up 2.6 basis points. The thirty-year and fifty-year bond yields ended the session at 4.643% per annum and 4.538% per annum, respectively, rising 1.5 and 1.3 basis points. Except for the two-year maturity, yields for all other government bond maturities reached new annual highs.

The rise in government bond yields is attributed to growing concerns over inflation due to a sharp surge in international oil prices. Fears are spreading that the Bab el-Mandeb Strait, a key oil shipping route in the Red Sea, could also be blocked following the Hormuz Strait. As a result, Brent crude oil jumped more than 7% overnight. Within two months, the price of Brent crude surpassed $100 per barrel.

However, there are assessments that the increase in domestic yields was limited compared to major overseas markets, as the Korean won continued to strengthen. Earlier this month, the won-dollar exchange rate approached 1,560 won per dollar, but as of this day, it had dropped to the mid-1,460 won range.

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