Treasury bond interest rises sharply during June

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Treasury bond interest rises sharply during June

Bond interest last month rose sharply compared to the previous month as investors started dumping their treasury futures in anticipation of the tapering of quantitative easing in the United States.

According to the Korea Financial Investment Association (Kofia), interest on three-year treasuries as of end of June was 2.88 percent, compared to 2.78 percent in May.

Interest on longer maturity bonds surged higher. The 10-year treasury was 3.4 percent, up from 3.12 percent in May, while the 20-year maturity interest rose 0.31 percentage point from the previous month to 3.57 percent.

“The total amount of bond trading also fell as investment sentiments on bonds have fallen resulting from concerns over the U.S. Fed mentioning the possible end of quantitative easing,” an official with Kofia said.

In fact, the total amount of bonds traded over the counter shrunk 7.25 percent from May to 548.8 trillion won

Other factors, including expectations that the Bank of Korea will not further decrease its benchmark interest rate, have contributed to the rise in bond rates.

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