Bond yield drops to five-year low as inflation loses steam
Korea’s benchmark five-year bond yield fell to an all-time low after the government reported the slowest inflation in 12 years.The nation’s debt and the won were also supported by speculation the U.S. Federal Reserve will press ahead with a third round of quantitative easing, a policy that boosts the supply of dollars and spurs demand for emerging-market assets.
Fed Chairman Ben S. Bernanke said on Friday that U.S. joblessness was a “grave concern” and that further monetary easing cannot be ruled out.
“There are hopes for a liquidity-driven rally as Bernanke signaled further stimulus and foreign investors are buying aggressively,” said Lee Seung-hoon, a fixed-income analyst at Samsung Futures in Seoul. “The inflation data gave an added boost to the bond market.”
Bloomberg
with the Korea JoongAng Daily
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