The rally in South Korean bonds may not be sustainable: effect of stabilization measures weakens and rate hike expectations rise

智通财经2026/10/12 01:05

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Strategists have pointed out that the recent rally in Korean bonds may be short-lived, as the effects of government measures to stabilize market volatility are fading, while expectations for further monetary policy tightening are rising.
While global bond yields remain at multi-decade highs, strategists from Gama Asset Management and Hana Securities expect yields on Korea’s 3-year and 10-year bonds to resume their upward trajectory and test the four-year highs recorded last month.
Another factor fueling bearish sentiment toward Korean bonds is the pricing in the Korean won interest rate swap market: there is roughly a 70% probability that the Bank of Korea will raise rates by a cumulative 50 basis points over the next six months.
Korean authorities have said that if yields surge, they will consider emergency measures such as bond buybacks to curb the rise.
Rajeev, Global Macro Portfolio Manager at Gama Asset Management, said: “I am more cautious on Korean bonds. Inflation remains above the Bank of Korea’s target, and the possibility of further policy tightening is high.”
He added: “If the sell-off in global bond markets continues, it will become increasingly difficult for Korean bond yields to withstand upward pressure.”

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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The rally in South Korean bonds may not be sustainable: effect of stabilization measures weakens and rate hike expectations rise

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