S. Korean bond yields tumble on Fed's rate cut

All News 12:07 March 04, 2020

SEOUL, March 4 (Yonhap) -- South Korean Treasury yield rates fell steeply on Wednesday following a surprise U.S. rate cut.

The three-year Treasurys, which move inversely to prices, tumbled 7.9 basis points to 1.040 percent as of 10:43 a.m. from the previous session's close. The mark replaces the previous record low on Aug. 19, 2019, when the rate dipped to 1.093 percent amid Sino-American trade uncertainties.

The five-year government bond dipped 10 basis points to 1.110 percent, replacing the previous record low of 1.127 percent. The 10-year Treasurys contracted 3.5 basis points to 1.345 percent.

The 20-year and 30-year state bond yields fell 6.3 basis points and 5.5 basis points, respectively.

The South Korean bond yields declined quickly after the U.S. Federal Reserve cut interest rates by half a percentage point in an emergency move to try to minimize the economic fallout from the coronavirus.

The Fed's move is raising possibilities of a key rate cut by the Bank of Korea (BOK). Last week, the BOK froze the benchmark interest rate at 1.25 percent.

The BOK cut its growth estimate for this year to 2.1 percent from 2.3 percent forecast three months earlier, citing the impact from the novel coronavirus and other downside risks.

On Wednesday, South Korea proposed an extra budget worth 11.7 trillion won (US$9.82 billion) to help minimize economic fallout from the coronavirus.