Stock market declines from bond market

Stock market declines from bond market

Investment sentiment worsens rapidly ... Net sales with foreigners and institutions

■ Korea-US Treasury bond rates soared sharply

The sharp rise in interest rates on US Treasury bonds is expected to boost the US economy. 

The rise in bond yields means that bond prices are falling, as the US stock market rises to its highest daily level and the preference for risky assets increases. 

The Donald Trump Administration tax reform bill, which cuts corporate taxes, is also a factor in lowering bond prices.

"The interest rate is showing that the US economy is good, but the Fed is likely to raise the benchmark interest rate more than three times," said Lee Hyun-sun, a researcher at the Hana Financial Investment Corporation. "In terms of demand, "We expect interest rates on major government bonds to continue rising until the first half of this year."

The Korean bond market is no exception to the US bond yield. The US Treasury note interest rate rose to 2.7%, the psychological barrier, and domestic bond yields also rose. 

In the bond market, there is a growing concern that investment sentiment supporting bond prices will be broken.

In the stock market as well as in bonds, the aftermath is worrisome. 

In the past, interest rates and share prices both rose in favor of the economy, and interest rates and share prices fell in the wake of the economic downturn, but this principle broke down in the wake of the global financial crisis. 

The central bank has lowered the benchmark interest rate to zero to implement a quantitative easing policy, but the New York stock market did not follow suit. 

Some analysts say that the Fed's interest rate hike is likely to slow down as the Fed raises its benchmark interest rate.

Kim Hak-kyun, a senior research fellow at Mirae Asset Daewoo, said, "After the global financial crisis, the relationship between interest rates and stock prices has changed." 

Although stocks are more attractive than bonds yet, if the interest rate exceeds the threshold, No, "he said. "If the US Treasury yields rise by more than 3 percent, it will have a negative impact on the domestic stock market," he said.

On the other hand, the Korean stock market turned to a downward trend in the wake of the cumulative fatigue and the surge in US government bond yields. 

The KOSPI closed at 2567.74, down 30.45 points (1.17 percent) from the day before, owing to the net sell-off of foreigners and institutions. The KOSDAQ, which had risen to the 930 level, also fell by 6.09 points (0.66 percent) to close at 920.96.