In August 2026, the dollar value of Korea treasury bonds increased by US$51.8bn. But only US$13.41bn of that was new issuance. The rest was FX impact.
Three Korean treasury bonds were issued over the month, alongside one national housing bond. The former were split across three zero-coupon bonds valued at US$1.5 billion (due September 2028), US$1.02 billion (due September 2056) and US$1.16 billion (due September 2031). The US$828.61 million national housing bond was sold with a 1% coupon, and is due August 2031.
The weighted average price of Korean treasury bonds has declined year-on-year (YoY), from 97.7% to 86.67%.
Weighted average yields in Korean govies have increased from 2.7% to 4.24%, while spreads have tightened by a tenth of a basis point to 0.7.
By contrast, on Wednesday, 10-year US Treasury yields hit a 4.8% high. Weighted average yields have increased by 0.66 basis points YoY, and the weighted average spread has increased by 1.1 basis points.
The Korean won has appreciated 13.3% against the US dollar since July 2026, which BofA Global Research analysts state “reflects a rare alignment of current account, portfolio flow and corporate FX dynamics”. They also point to Korean government bonds’ inclusion in the FTSE World Government Bond Index (WGBI) in July.
READ MORE: South Korean govies join FTSE WGBI
It has been a similar story in Chinese government bonds, where US$16.82 billion in FX revaluation complemented an additional US$54.78 billion in new-issued bonds.
The weighted average yield of Chinese govies has dropped from 1.79% to 1.59% YoY.
Against the US dollar, the Chinese yuan is at its strongest since early 2023, valued at approximately 6.6950 per dollar.
©Markets Media Europe 2026
