02.02.202604:58:39UTC+00South Korea 10Y Bond Yield Hits 21-month High

South Korea's 10-year government bond yield has risen to approximately 3.65%, marking the highest level in nearly two years. This surge is attributed to diminishing expectations for interest rate cuts and increasing funding costs. As investors anticipate a more gradual approach to accommodative monetary policy, demand for longer-term bonds has diminished, resulting in higher yields. Domestic corporations are opting for shorter-term debt, with LG Energy Solution contemplating a delay in its $700 million bond issuance in light of the rising yield environment. Adding to the uncertainty, President Trump’s nomination of Kevin Warsh as the Federal Reserve chair has cast doubt on U.S. monetary policy, with potential repercussions for global markets. Concurrently, the sustained weakness of the South Korean won has exerted upward pressure on domestic yields. Substantial foreign securities investment by residents, totaling $129.4 billion from January to November last year, has caused a supply-demand imbalance in the foreign exchange market. This tightening of local liquidity further elevates borrowing costs.