South Korean government bonds extended losses on Monday, with yields advancing to a near 1-month high due to renewed inflation fears on the won's fall to a six-week low and new supplies from bond auctions. Increasing bond sales by local banks also dampened investors' buying appetite in government bonds by offering an alternative to treasury bonds, traders said.
The yield on benchmark five-year treasury bonds rose three basis points to 5.94 percent, and the three-year treasury bond yield added two basis points to 5.87 percent, highest since their closing on July 22. September treasury bond futures shed 8 ticks to end at 105.43.
Domestic bonds have been on a losing streak for the last week, weighed by the falling won and views the yield curve had flattened. The won fell as low as 1,046.9 per dollar on Monday, its weakest since July 4.
The Finance Ministry sold 1.052 trillion won ($1.01 billion) of 10-year treasury bonds at a yield of 6.00 percent, after initially offering 1.075 trillion won in the auction. The Bank of Korea also sold 1.12 trillion won worth of monetary stabilisation bonds out of 1.2 trillion won offered.
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