The rally in South Korean bonds may not be sustainable: effect of stabilization measures weakens and rate hike expectations rise
智通财经2026/10/12 01:05- Strategists have pointed out that the recent rally in Korean bonds may be short-lived, as the effects of government measures to stabilize market volatility are fading, while expectations for further monetary policy tightening are rising.
- While global bond yields remain at multi-decade highs, strategists from Gama Asset Management and Hana Securities expect yields on Korea’s 3-year and 10-year bonds to resume their upward trajectory and test the four-year highs recorded last month.
- Another factor fueling bearish sentiment toward Korean bonds is the pricing in the Korean won interest rate swap market: there is roughly a 70% probability that the Bank of Korea will raise rates by a cumulative 50 basis points over the next six months.
- Korean authorities have said that if yields surge, they will consider emergency measures such as bond buybacks to curb the rise.
- Rajeev, Global Macro Portfolio Manager at Gama Asset Management, said: “I am more cautious on Korean bonds. Inflation remains above the Bank of Korea’s target, and the possibility of further policy tightening is high.”
- He added: “If the sell-off in global bond markets continues, it will become increasingly difficult for Korean bond yields to withstand upward pressure.”
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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