Deputy Prime Minister and Finance and Economy Minister Lee Hyoung-il said on the 29th that the government will act quickly if government bond yields keep climbing. "If the rise in yields proves excessive, we will immediately carry out necessary market stabilization measures, including emergency buybacks," he said.
Lee made the remarks at a Cabinet meeting presided over by President Lee Jae-myung at the Blue House, where he reported on emergency state management and response measures related to the war in the Middle East. Under a buyback, the government purchases treasury bonds in the market before they reach maturity. The step reduces the supply of bonds available to investors, easing upward pressure on yields.
"Global interest rates are rising on inflation concerns tied to higher oil prices, a shift toward monetary tightening in major economies and fiscal worries, and with the domestic policy rate also raised, the climb in local bond yields is continuing," Lee said.
Yields on Korean treasury bonds rose across the board the previous day, following a sharp jump in U.S. Treasury yields during the Chuseok holiday. The three-year yield broke above 4.1% for the first time in three years and 10 months.
On the situation in the Middle East, Lee said uncertainty persists. "There have been diplomatic efforts, including bilateral talks between the United States and Iran, but President Trump rejected a ceasefire proposal from the Iranian side," he said. "For crude oil, we will continue to operate supply measures such as bringing in alternative volumes and promoting the use of detour shipping routes."
