South Korean government bonds closed flat on Friday, with a benchmark treasury yield sticking to its lowest levels in more than a month, after industrial output growth slowed as expected and ahead of US GDP data. South Korea's factory output growth moderated in June from May, although an unusually high factory operation rate suggested Asia's fourth-largest economy would see an increase in corporate investment.
The data comes just ahead of Japan's industrial output indicator which marked its biggest fall in more than a year in June, and as worries mounted US second-quarter economic growth might surprise on the downside. Government bond yields returned to the levels seen before the Bank of Korea unexpectedly raised its policy rate on July 9 for the first time since the onset of the financial crisis. The benchmark five-year treasury yield held flat at 4.38 percent, its weakest level since June 10. The three-year treasury yield was unchanged at 3.80 percent, its lowest reading since July 1 and shaving five basis points during the week.