[Seoul International Finance Office Finance Expert Column] Kim Wan-joong, Senior Researcher, Samsung Finance Research Institute

Bond market, will the mountain be as high as the ball was deep?

In 2022, the domestic bond market experienced the worst year since the IMF. Considering that the domestic bond market was not well established at the time of the IMF, it would not be an exaggeration to say that it recorded the worst year ever.

Given that credit risks are also highlighted in the bond market in 2023 due to the Fed's notice of additional interest rate hikes, concerns about economic recession, and the possibility of a long-term recession in the real estate market, this year is also likely to be a challenging year. However, there is no need to take a gloomy view of the bond market. Last year, as the goal was deep, it is expected to be a year to prepare for a slow climb to the top while refining your breathing.

Over the past year, domestic and foreign interest rates have recorded a surge due to aggressive monetary tightening by major countries in response to inflation. As the inflationary pressure triggered by the expansion of liquidity supply to overcome the post-pandemic crisis intensified in line with the deterioration of the global supply chain caused by the corona, the competition for supremacy between the US and China, and the sharp rise in raw material prices caused by the Russia-U.S. war, central banks in major countries are implementing aggressive tightening policies. Over the course of the year, global interest rates have soared.

In particular, the Fed, which overlooked the surge in inflation at the beginning of the year as a temporary phenomenon, belatedly admitted to a policy misjudgment and took an emergency response. there is. In addition, Europe, which is experiencing a higher inflation rate than the US, continues aggressive tightening, such as the ECB giving up its negative interest rate policy and shifting to raising interest rates for the first time in 11 years.

In the case of Korea, it is an overstatement to say that the Bank of Korea led the rise in market interest rates by reinforcing its hawkish policy stance, such as the first ever big-step (50bp) hike in Korea due to prolonged high inflation of more than 5% and the burden of exchange rates due to accelerated monetary tightening in major countries. A situation other than this was created.

More details : Korea Financial Times (https://www.fntimes.com/html/view.php?ud=202301121219349347c1c16452b0_18&wcms=1)