The Korea Financial Investment Association conducted a survey of 100 participants in the bond market, and reported on the 18th that the July Bond Market Sentiment Index (BMSI) recorded a drop of 15.1 points from the previous month to 99.7.
BMSI is calculated based on individual survey items related to interest rates, prices, and exchange rates. If the BMSI falls below the baseline of 100, it indicates that sentiment in the bond market has deteriorated.
Sentiment in the bond market concerning prices has significantly worsened. The price BMSI for July was recorded at 89, down 22 points from 111 in the previous month. Among respondents, those forecasting "price increases" rose to 15%, up 10 percentage points in a month. During the same period, the response rate for "price decreases" fell to 4%, down 12 percentage points.
The Korea Financial Investment Association explained that increased uncertainty in commodity prices due to geopolitical crises in the Middle East has led to a rise in respondents predicting price increases, such as hikes in public utility fees.
The July exchange rate BMSI was also recorded at 149, down 3 points from the previous month. Dominant forecasts indicated a weakening of the dollar due to U.S.-China trade conflicts and U.S. tariff policies. 52% of bond market participants believed that the won would depreciate against the U.S. dollar.
Sentiment in the bond market related to market interest rates has improved. This is likely influenced by the Monetary Policy Committee's decision to lower the base rate in May. 56% of respondents anticipated that interest rates would remain stable in July, while 11% expected an increase, and 33% predicted a decrease.