South Korea July Bond Sentiment Improves on US-Iran Ceasefire Hopes; BMSI at 85.1

Inflation and exchange-rate pressures persist

Sentiment in South Korea’s bond market improved in July from a month earlier as hopes grew that geopolitical risks would ease following a ceasefire agreement between the US and Iran.

The Korea Financial Investment Association on June 17 released its July 2026 Bond Market Survey Index, or BMSI, based on a June 8-11 survey of 100 people involved in bond holdings and portfolio management.

The headline BMSI for July rose 4.1 points from the previous month to 85.1. A reading above 100 means respondents expect bond prices to rise and yields to fall, signaling favorable market sentiment. A reading below 100 indicates subdued sentiment.

Sentiment tied to market interest rates improved from the previous month. The rate outlook BMSI rose 4.0 points to 71.0. The share of respondents expecting yields to fall increased 4 percentage points from a month earlier on expectations that the rise in South Korean government bond yields would moderate after the US-Iran ceasefire agreement.

Sentiment on inflation weakened from the previous month. The inflation BMSI fell 3.0 points to 50.0. The share of respondents expecting inflation to rise increased 5 percentage points from a month earlier as concerns persisted over a prolonged weak won and high oil prices.

Sentiment on the exchange rate also deteriorated from a month earlier. The exchange-rate BMSI fell 7.0 points to 91.0. The share of respondents expecting the exchange rate to rise increased 6 percentage points from the previous month as the won remained in the 1,500-per-dollar range and external factors, including US economic data releases, sent mixed signals.

Lee Su, Hankyung.com reporter 2su@hankyung.com