(Sept 28): South Korea’s three-year yield rose to the highest level since November 2022 as the local bond market reopened after holidays, joining a global selloff as elevated oil prices stoked concern over inflation.

The yield jumped 11 basis points to 4.11%. Local markets were shut on Thursday and Friday, during which the longest-dated US bond yields climbed to the highest level in more than two decades.

“The fact that Korean yields are surging as well shows that this isn’t just a US issue, and it shows the market is growing concerned the Bank of Korea (BOK) will have to deliver more hikes,” said Kang Seungwon, a fixed-income analyst at NH Investment & Securities. A second straight Federal Reserve rate hike in October would most likely cement a Bank of Korea rate increase in November, Kang said.

Treasuries were lower in Asia on Monday, with bonds in Japan and Australia also falling as oil prices rallied after President Donald Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz.

Korean bonds have struggled for most of the year as the ongoing war in the Middle East boosted oil prices, raising concerns about faster inflation in a country that relies heavily on imported energy. The BOK has already delivered back-to-back rate hikes as stronger-than-expected economic growth driven by an unprecedented semiconductor boom added to price pressures.

The BOK held a market review meeting on Monday to assess global financial conditions during the Sept 24-27 holidays. Authorities will closely monitor markets as volatility could expand, the central bank said in a statement released following the meeting.

Uploaded by Liza Shireen Koshy