US government bonds touch 5%…’bond ants’ advance to sweep 28 trillion won

While the U.S. 10-year maturity Treasury yield, which is the benchmark for global bond interest rates, touched 5%, individual investors were found to have made net purchases of bonds worth 28 trillion won this year. As high interest rates continue for a long time, it appears that the buying trend먹튀검증 of ‘bond ants’ aiming for interest income and capital gains has continued, believing that bond interest rates have peaked.

According to the ‘September 2023 OTC Bond Market Trends’ recently announced by the Korea Financial Investment Association, the net purchase amount of bonds such as government bonds, bank bonds, and corporate bonds by individual investors was calculated to be 2.7 trillion won. On a cumulative basis from January to September of this year, it is on the verge of exceeding 30 trillion won, with 28.1368 trillion won. This amount exceeds the total annual net purchases of bonds by individual investors last year (20.6 trillion won).

Kim Ji-man, an analyst at Samsung Securities, said, “Rather than selling bonds as interest rates rise, individual investors are continuing to make bold investments in bonds at a time when they can buy bonds at a cheaper price. We believe this is a time when individual interest in bond investment can remain steady.” “It does,” he analyzed.

Experts advised investing first in short-term bonds, as the high interest rate trend could last longer than expected. The price of bonds varies depending on the rate of interest rate fluctuation depending on the duration (average investment maturity period). Long-term bonds with long durations are sensitive to interest rates, so even if the interest rate moves by 1%, their price volatility is high. Short-term bonds with short duration are relatively less sensitive to interest rates, so their price volatility is low even if interest rates fluctuate by 1%.

For this reason, if interest rates are expected to rise in the future, it is advantageous to build a portfolio centered on bonds with relatively short duration, such as high yield bonds. On the other hand, if interest rates are expected to be lower in the future than now, it is better to build a portfolio centered on long-term bonds with long duration.

Meritz Securities analyst Yeo-sam Yoon said, “The attractiveness of investing in long-term bonds will increase from the beginning of the period when there are expectations of interest rate cuts.” “It would be much more beneficial if we did that,” he said. Analyst Kim Ji-man predicted, “As interest rates are relatively superior, interest in bond investment may continue.”

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