South Korean government bond prices extended gains on Monday, as Seoul shares fell sharply on rising worries of a possible US recession while foreign investors continued their net purchases of treasury bond futures.
Seoul stocks fell 2.95 percent to a new five-month closing low, their biggest daily fall in two months, while March treasury bond futures rose three ticks to 107.08 as foreign investors bought a net 9,578 contracts. However, local brokerages took to selling a net 6,434 contracts near the end the session because they thought recent gains were not based on strong fundamentals.
The benchmark five-year Treasury bond yield eased two basis points to 5.38 percent, while the three-year Treasury bond yield dipped one basis point to 5.35 percent. The Bank of Korea is to sell a total 4 trillion won worth of monetary stabilisation bonds in two-year, 91- and 63-day paper on Tuesday.