Korean and US Bond Yields Move in Sync Due to Global Inflation
The Bank of Korea (BOK) has released a report analyzing the synchronization of Korean and U.S. long-term interest rates.
The study examined daily moves in 10-year government bond yields from 2001 to June 2024 and found that global inflation was the largest contributor, accounting for about 41%.
The analysis also showed that the policy expectations channel played a significant role in how external shocks spread to domestic long-term yields.
A BOK official stated that synchronization can be eased by properly managing expectations through communication with the market.
The report highlighted that global inflation, U.S. long-term interest rates, and U.S. Federal Reserve monetary policy all contributed to the synchronization of Korean and U.S. bond yields.