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Bond yields gather pace on hopes of economic recovery

Economy 08:31 February 16, 2021

SEOUL, Feb. 16 (Yonhap) -- Bond yields in South Korea are climbing at a fast pace on hopes of an economic recovery and more stimulus measures in major economies, analysts said Tuesday.

The final offer rate on 10-year Treasurys came to an annual 1.871 percent on the local bond market Monday, the highest return in 21 months.

The yield was close to levels months before the outbreak of the new coronavirus in South Korea in January last year.

Rising bond yields means falling prices, which reflect investors' weaker appetite for safer bonds than riskier stocks.

Bond yields in Asia's fourth-largest economy have been on the rise since August thanks to expectations of an economic recovery here and major nations' efforts to kick-start their economies battered by the COVID-19 pandemic.

In particular, U.S. President Joe Biden's push for a fresh stimulus package is putting upward pressure on bond yields, combined with Seoul's move to offer its fourth coronavirus relief handouts, according to analysts.

"Despite negative factors, such as setbacks in coronavirus vaccination programs, investors remain wary of safe assets on expectations for fiscal stimulus measures," Samsung Securities analyst Park Tae-keun said.

Some analysts voiced concerns that an upturn in bond yields could lead to increased volatility in the local stock market as it may lower the appeal of risky assets.

Electronic signboards at a Hana Bank dealing room in Seoul show the benchmark Korea Composite Stock Price Index (KOSPI) closed at 3,147.0 on Feb. 15, 2021, up 46.42 points, or 1.5 percent, from the previous session's close. (Yonhap)


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