SEOUL, March 9 (Yonhap) — South Korea’s financial markets are likely to undergo further volatility as bond yields and inflation risks are rising amid hopes for an economic recovery, a vice finance minister said Tuesday.
First Vice Finance Minister Kim Yong-beom warned that if U.S. bond rates continue to rise, asset prices may suffer a decline, after their bull run caused by ample liquidity.
“If U.S. bond yields continue to rise, investors could turn risk-averse, which could spark a fall in asset prices and capital outflows from emerging markets,” Kim said at a government meeting on macroeconomic situations.
He said the government will closely monitor financial markets while keeping close tabs on such risk factors.
Yields on 10-year Korean government bonds continued to break yearly highs amid rises in global bond rates and concerns about the country’s planned massive debt sale.
The return on 10-year Treasurys came to 2.028 percent Monday, up 3.6 basis points from the previous session. The yield topped 2 percent for the first time since March 2019.
The country’s key stock index fell below the 3,000-point mark on the same day on renewed concerns about inflation risks. The stock market has seen a rise in price swings since it soared above 3,200 for the first time in late January.