Korean government bond futures declined on July 20, with 3-year futures down 17 ticks to 102.72 and 10-year futures falling 43 ticks to 104.98 as of 8:59 AM, according to Yonhap Infomax. The decline followed international oil price surges driven by escalating US-Iran military conflict and renewed market speculation that the Bank of Korea may implement back-to-back interest rate hikes. Foreign investors net sold 205 contracts of 3-year bond futures and 52 contracts of 10-year futures during the session.
Korean Bond Futures Record Sharp Declines on July 20
On July 20 at 8:59 AM, 3-year Korean government bond futures traded at 102.72, down 17 ticks from the previous session, while 10-year futures fell 43 ticks to 104.98, according to Yonhap Infomax. Foreign investors net sold 205 contracts of 3-year bond futures and 52 contracts of 10-year futures during the trading session.
On the previous trading day (July 17), US Treasury 2-year yields rose 3.80 basis points to 4.1810%, while 10-year yields declined 0.50 basis points to 4.5500%.
WTI Crude Approaches $85 Amid US-Iran Airstrikes
West Texas Intermediate (WTI) crude oil for August delivery surged 4.48% on the previous trading day to $82.49 per barrel. In Asian market trading on July 20, prices rose an additional 2%, approaching $85 per barrel.
The US Central Command announced on July 19 (local time) that it initiated new airstrikes on Iran, marking the start of 9 consecutive days of operations. On July 18, one US soldier was killed while disposing of an unexploded ordnance from an Iranian suicide drone. On July 17, two US soldiers were killed and one went missing in Jordan.
BOK Issues Analysis on Trade Terms Improvement
The Bank of Korea issued a BOK Issue Note on July 19, analyzing that the ripple effects of improved terms of trade would appear at a significant level.
A bond dealer at a bank stated, "It seems a re-evaluation of the July Monetary Policy Committee meeting is happening, with August rate hike views emerging not only abroad but also domestically. The BOK appears to be sending signals through the BOK Issue Note, and with international oil prices rising significantly, the possibility of actually implementing back-to-back rate hikes seems to have increased."
FAQ
What caused Korean bond futures to decline on July 20?
Korean government bond futures declined on July 20 due to international oil price surges driven by escalating US-Iran military conflict and renewed market speculation about Bank of Korea back-to-back interest rate hikes. 3-year futures fell 17 ticks to 102.72 and 10-year futures dropped 43 ticks to 104.98 as of 8:59 AM.
How much did WTI crude oil prices increase on July 17?
West Texas Intermediate (WTI) crude oil for August delivery surged 4.48% on July 17 to $82.49 per barrel. In Asian market trading on July 20, prices rose an additional 2%, approaching $85 per barrel, driven by escalating US-Iran military conflict.
What did the Bank of Korea announce on July 19?
The Bank of Korea issued a BOK Issue Note on July 19, analyzing that the ripple effects of improved terms of trade would appear at a significant level. This publication contributed to renewed market speculation about potential back-to-back interest rate hikes following the July Monetary Policy Committee meeting.
