businessfortnight

Mumbai:  Indian 10-year bond yield dropped most in a year on Monday after the Reserve Bank of India (RBI) scrapped plans to sell bonds worth Rs10,000 crore via open market operations (OMOs). At 11.14am, the 10-year bond yield was trading at 6.905%, down 14.40 basis points, its biggest slide since November 2016, from its previous close of 7.049%. Bond yields and prices move in opposite directions. “We believe the reversal in RBI’s stance is positive for bond yields and one should see bond yields now heading lower from the current elevated levels. Even as this takes out the near-term worry on yields, pick-up in credit growth will put some upward pressure on bond yields in the medium-term,”  Mint  reported on Friday, quoting Bank of Baroda note. The move came after Moody’s Investor Services raised nation’s rating to Baa2, the first upgrade in 14 years, from the lowest investment grade of Baa3 and changed the outlook from stable to positive. “In view of the recent market developments and

India’s benchmark 10-year bond yield rose to its highest in over 13 months as higher-than-expected October inflation dashed rate cut expectations. The 10-year bond yield went up as high as 7.01 percent, the highest since September 29, 2016, after October inflation rose to 3.58 percent as food and fuel prices accelerated. The paper had closed at 6.97 percent on Monday. Traders expect yields to rise further as state-run banks, the usual buyers in the secondary market, sit on heavy losses. “We keep saying that state-run banks will come and buy, but are they mad, can’t they see the realities that those days of bond rally are over now?” said a trader. “They can’t keep adding to speculative risks because even for that they need capital to provide for the mark-to-market losses.” The 10-year paper has risen by 50 basis points since the start of July as concerns over global rate tightening and upside risks to inflation back home surfaced.

Mumbai:  The 10-year bond yield hit over 7% on Tuesday, the first time after 14 months, as retail- and wholesale-based inflation quickened more than estimated, reducing expectation of a rate cut any time soon by the Reserve Bank of India (RBI). At 12.05pm, the 10-year bond yield was at 7.058%, a level last seen on 8 September 2016, compared to its previous close of 6.972%. Bond yields and prices move in opposite directions. Wholesale Price Index-based inflation rose to 3.59% against  Bloomberg ’s estimates of 3.01%. Consumer inflation rose 3.58% in October from a year ago, up from 3.28% in September.  Bloomberg  analysts’ estimated Consumer Price Index-based inflation at 3.43%. Broking firm Nomura Research expected CPI inflation to rise above 4% in November and to stay above the RBI’s target of 4% through 2018. “The likelihood of inflation testing the 4% target by late 2017 and staying above it for rest of FY18 reinforces our expectations that the Reserve Bank of India will remain on