South Korean government bond prices extended steep falls for a third consecutive session on Monday, with signs of economic improvement driving domestic shares to a fresh seven-month peak and the won currency higher. Bond futures tumbled on heavy selling from foreign investors who were net buyers of Seoul shares worth a net 417 billion won ($326 million) on the day.
The yield on benchmark 5-year treasury bonds shot up 21 basis points to close at 4.38 percent, while June treasury bond futures shed 51 ticks to 111.05. Financial markets in South Korea were closed on Friday for the May Day holiday, and will also be closed on Tuesday for a public holiday.
The three-year treasury bond yield added 19 basis points to end at 3.78 percent, after the finance ministry sold 1.7 trillion won worth of three-year treasury bonds at 3.71 percent in the morning. Seoul shares rose 2 percent on hopes that corporate earnings have been nearing a trough, and the won touched its highest for the year against the dollar.
South Korean exports in April fell less than expected and export earnings per day rose for the third month in a row, data showed on Friday, the latest signs that the global economic slump that drove Korea to the edge of recession may be easing. Finance Minister Yoon Jeung-hyun cautioned about optimism about the South Korean economy on Monday, although he hoped a rise in fiscal spending wuld boost job creation.
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