South Korea 10Y Yield Nears 2022 Highs

South Korea’s 10-year government bond yield rose to around 4.54% in late September, nearing its highest level since October 2022 and mirroring a broader global bond selloff after local trading resumed following the holidays. The move was driven by mounting inflation concerns as oil prices climbed amid persistent Middle East tensions. Higher US yields also added pressure on Korean bonds, as Korea-US long-term yields tend to move together, while expectations of further US rate hikes increased the prospect of additional Bank of Korea tightening. Policymakers have now raised the policy rate by 50 bps in two consecutive 25-bps moves to 3.00%, as stronger-than-expected economic growth, driven by a semiconductor boom, added to price pressures. The central bank cited inflation and financial stability risks, while saying further hikes would depend on economic conditions.