Korea's AI Impact Sparks Pressure Across Government Bond Market

South Korea's government bonds have lost 7.5% this year in local-currency terms, the worst performance among 44 markets tracked by Bloomberg. The benchmark three-year yield rose to about 3.9% Friday, its highest level since 2023. A surge in AI investment and semiconductor demand has reignited the economy, lifted prices, and fueled bets the Bank of Korea will need to raise rates.