As the U.S. employment indicator fell below market expectations, expectations for a base interest rate cut grew, and Treasury bond yields fell all at once on the 4th.
On this day, in the Seoul bond market, the three-year maturity treasury bond interest rate closed at 3.128%, down 3.2bp (1bp = 0.01% point) from the previous trading day.
It broke the lowest record of the year (3.160% per year) recorded the previous day in one day.
The 10-year interest rate fell 4.0bp to 3.234% per annum. The 5-year and 2-year notes fell 2.7bp and 4.3bp, respectively, and closed at 3.161% and 3.156% per year.
The 20-year yield fell 3.0bp to 3.209% per annum. 30-year and 50-year bonds fell 2.7bp and 2.8bp, respectively, recording 3.148% and 3.122% per year.
On this day, the bond market showed strength throughout the day as expectations for the Bank of Korea's base interest rate cut in August grew further following news of a slowdown in U.S. employment indicators.
According to the ADP National Employment Report the previous day, private sector employment in the United States increased by 150,000 in June compared to the previous month, falling short of market expectations (an increase of 163,000).
Min Ji-hee, a researcher at Mirae Asset Securities, said, “After the (domestic) consumer price increase rate (2.4%) in June came out lower than expected, bets on a base interest rate cut in August are coming in,” adding, “Like these days, signs of a slowdown in the U.S. economy are an indicator. “If this continues to be confirmed, bond interest rates will fall further,” he said.
He continued, “If the number of new non-agricultural workers in June announced by the U.S. Department of Labor on the night of the 5th falls below the consensus (market average forecast), the level of bond interest rates may fall further,” adding, “Until the Bank of Korea Monetary Policy Committee in July (11th), “It will fluctuate depending on the material,” he said.
However, regarding the current bond interest rate level, he said, "There is a burden that the market moved first and the level was lowered quickly even though the Bank of Korea did not give a signal to lower the base rate," and "the degree of advance reflection is excessive."
On this day, foreigners net bought 2,858 contracts in 3-year government bond futures and 3,045 contracts in 10-year government bond futures.