On the morning of the 3rd, at the Banker’s Club in Jung-gu, Seoul, Lee Bokhyun, the Governor of the Financial Supervisory Service, Rhee Changyong, the Governor of the Bank of Korea, Kim Beomseok, the Acting Minister of the Ministry of Economy and Finance, 1st Vice Minister, and Kim Byeonghwan, the Chairman of the Financial Services Commission attended the Macroeconomic and Financial Issues Meeting. The Ministry of Economy and Finance provided the photo.
The financial and foreign exchange authorities have announced their intent to closely monitor the effects of the recent rise in U.S. and Japanese government bond yields on the domestic market.
On the 23rd, the government stated that attendees at the Macroeconomic and Financial Issues Meeting (F4 Meeting), chaired by Acting Minister Kim Beomseok of the Ministry of Economy and Finance, discussed this. Present at the meeting were Acting Minister Kim, Rhee Changyong, Kim Byeonghwan, and Lee Bokhyun.
The participants noted the ongoing external uncertainties, such as trade negotiations between major countries and the U.S., and the U.S. economic situation, with particular attention to the increased volatility in the U.S. and Japanese government bond markets.
According to Bloomberg on the 21st, the 30-year U.S. government bond yield surged 12.3 basis points (1bp = 0.01% point) from the prior day, closing at 5.092%, the highest level since the end of October 2023. The yields on Japan’s 30-year and 40-year government bonds also rose to record levels of 3.185% and 3.635% during the day.
This is attributed to the excessive national debt situation that led to Moody’s downgrading the U.S. credit rating by one notch, as President Trump pushed for tax cut legislation, raising concerns about expanding deficits. In Japan, with elections approaching, political discussions about cutting consumption taxes have led to expectations that the shortfall in social security funds will be covered by deficit bonds, causing long-term government bond yields to rise.
Accordingly, the meeting attendees decided to closely examine the impacts of the increased volatility in the U.S. and Japanese government bond markets on the domestic financial and foreign exchange markets, with a focus on the F4 Meeting.
The participants also agreed to discuss plans to accelerate the clean-up and restructuring of certain real estate project financing (PF) projects where insufficient progress had been made. They evaluated that past efforts in cleaning up and restructuring real estate project financing had achieved significant results in guiding an orderly soft landing of real estate project financing.