South Korean government bond prices bucked earlier weakness to close firmer on Friday, supported by a late bout of foreign buying in thin trade. The market opened lower, pausing after sharp swings earlier in the week and in response to the Bank of Korea's revision of its consumer inflation projection for 2011 by one percentage point to 3.5 percent.
The yield on three-year treasury bonds shed three basis points to close at 3.14 percent, gaining just two basis points on the week. The most liquid three-year treasury yield plunged to a record low of 2.89 percent on Tuesday on supply concerns, widening its spread over the benchmark five-year yield to the highest in more than 1-1/2 years. By comparison, the five-year treasury yield was unchanged at 3.96 percent before an auction for the same maturity notes worth 0.86 trillion won on Monday.
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