S. Korean bonds rally on hopes for further rate cut

South Korea's government bonds continued to advance on Wednesday, pushing the three-year yield to a fresh record low as expectations grew that the Bank of Korea would make another rate cut in the coming months to support growth. The yield on the benchmark three-year Treasurys stood at a fresh record low of 2.360 per cent in the morning session, down 1 basis point from the previous session's close. The yield on five-year Treasurys also fell 0.4 basis point to a yearly low of 2.655 per cent. Bond prices, which move inversely to yields, have been rising over the past few weeks on speculation that the central bank would trim its base interest rate following a 0.25-percentage point reduction in August. The central bank froze the rate at 2.25 per cent for September. Market hopes have run high that the central bank, faced with a mounting call from the government to cut the rate, would pull the rate down to a record low level, according to Yonhapnews