Investors flocking to bonds amid uncertainties

SEOUL, Feb. 5 (Yonhap) -- Investors are putting money in bonds, defying expectations that better economic situations and the U.S. Fed's reduced assets purchases will trigger a capital move into stocks and other risky assets, data showed Wednesday.

The yield on benchmark 3-year Treasurys stood at 2.85 percent on Tuesday, hitting a yearly low, with that on 5-year and 10-year Treasurys each reaching yearly lows of 3.17 percent and 3.54 percent, respectively. The yield moves opposite to the price.

Market analysts have been expecting capital flight from safe-haven bonds at the start of the year, but capital has been heading to bonds as investors worry more about the global economic situation and increased uncertainty in emerging markets.

"Many thought investors would pull money out of bonds, but such bond sell-offs have yet to materialize, and bond prices are rising," said Moon Hong-chul, an analyst at Dongbu Securities. "They are coming back to safe assets."

Analysts said the renewed appetite for bonds is being triggered by concerns that the world's two largest economies -- the U.S. and China -- may show a disappointing pace of recovery. Also, a bear run on the local stock market, coupled with turbulence in some emerging markets in the wake of an additional cutback of the U.S. Fed's bond-purchasing program, sparked a capital flight to the fixed-income assets.

"Investors' fondness of safe assets has grown sharply due to crumbling situations in emerging markets," said Lee Jae-seung, an analyst at KB Investment