South Korean treasury bonds fell on Monday as investors sold debt to capitalise on recent solid gains, pressured by auctions and an impending central bank vote on interest rates. An industry association poll showed on Monday that fewer bond dealers in South Korea than a month ago see the central bank keeping interest rates on hold this week, raising investor jitters over the possibility of a surprise rate hike.
"The odds of a rate hike this week are very low, but investors fret over any surprise move as they believe February may be the last chance for a rate hike during the first half of this year," said Yoon Yeo-sam, a fixed-income analyst at Daewoo Securities.
The March treasury futures contract fell 17 ticks to 109.82, retreating from a two-month high set on Friday. The benchmark five-year treasury bond yield rose 1 basis point to 4.80 percent after the government sold a more-than-planned 2.7 trillion won ($2.31 billion) worth of 5-year new issues at an average rate of 4.77 percent.