Interest rates are unstable. The government raised a warning to the market, saying, “Long-term interest rates rise and volatility may increase.”
Kim Yong-beom, the first vice minister of the Ministry of Strategy and Finance, said at a macro-economic and financial meeting on the morning of the 19th, “In the recent global financial market, the US Treasury bond rate has risen due to the expectation of economic recovery following the announcement of a large-scale economic stimulus plan by the US Joe Biden administration, and the prospect of expanding government bond issuance.” “This has emerged as an important variable in the global foreign exchange market,” he said.
Kim Yong-beom, the first vice minister of the Ministry of Strategy and Finance (second left in the photo), speaks at the Macroeconomic Finance Conference held at the Bank Federation Hall in Jung-gu, Seoul on the morning of the 19th. yunhap news
On the 18th (local time), the 10-year U.S. Treasury bond yield was 1.11% per year. It is steadily rising after breaking the 1% mark for the first time in 10 months on the 6th. This is in accordance with the Biden administration’s announcement of additional stimulus measures to respond to the novel coronavirus infection (Corona 19), worth $1.9 trillion (about 2,000 trillion won), ahead of the inauguration ceremony on the 19th.
With the inauguration of the Biden government, the trend of “recovery → inflation” emerged, and the prospect that the US monetary authority, the Federal Reserve System (Fed), could implement a policy to collect dollars released contributed to the rise in market interest rates. On the 14th, Fed Chairman Jerome Powell said, “The rate hike is not close,” and evolved directly, but it did not completely subside the market unrest.
The Korean market was also affected. In the Korean bond market on the 19th, the 10-year Treasury Bond yield rose by 0.002 percentage points from the day before and rose to 1.716% per year. The 20-50-year interest rate jumped to 1.8%. Until March this year, it fell to the 1.3% level, but it has been steadily rising recently.
Deputy Minister Kim said, “It is characteristic that the long- and short-term interest rate difference is widening as the interest rate of KTBs rises centered on long-term bonds.” It is due to the combined effect of the risk aversion mitigation effects of the back,” he analyzed.
Jerome Powell Chairman of the Federal Reserve System (Fed). Reuters = Yonhap News
He pointed out the possibility of expanding market volatility. Deputy Minister Kim said, “This week’s hearing for the nominee of the US Treasury Secretary Janet Yellon, and the government will closely examine the related trends as it can affect the global financial market as the promotion of the new US administrative government policies in earnest after Biden took office.” Revealed. He also said, “We will make every effort to stabilize the financial sector by monitoring changes in internal and external conditions and long-term interest rate reactions, paying attention to the possibility of expanding market volatility.”
Meanwhile, officials from the Financial Services Commission, Bank of Korea, Financial Supervisory Service and International Finance Center also attended the meeting.
Sejong = Reporter Cho Hyun-sook [email protected]