Economy
S. Korean Gov't Bond Yield Gaps Narrow to Lowest Since Global Financial Crisis
Written: 2019-08-16 18:47:49 / Updated: 2019-08-16 18:51:58
The yield gap between long-term and short-term government bonds in South Korea has narrowed to an 11-year low as South Koreans are joining global investors in flocking to safer assets amid the growing economic uncertainties.
According to the Korea Financial Investment Association, the three-year government bond yield in the bond market in Seoul closed at an annual rate of one-point-095 percent on Friday, falling five-point-four basis points from the previous day. It marks the first time that the yield on three-year South Korean government bonds has dropped below two percent.
The yield on 10-year government bonds also fell to a record low, one-point-172 percent.
The gap between the three and 10-year bond yield is now only seven-point-seven basis points, the lowest since the height of the global financial crisis in August of 2008.
This comes after yields of 10-year government bonds in the U.S. and the U.K. fell below those of shorter-maturity bonds for the first time since the financial crisis.
Usually, short-term bond yields are higher than longer-term bond yields, but the gap tends to narrow or be inverted when investors feel pessimistic about the economic situation.
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