Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Opinion / Online-views/  Bond yields ease as rate cut hopes intensify
BackBack

Bond yields ease as rate cut hopes intensify

Bond yields ease as rate cut hopes intensify

Premium

Mumbai: Federal bond yields dropped on Friday as expectations intensified the RBI may slash interest rates after it set a lower-than-expected cut-off yield at a bond buyback auction on Thursday.

At 10:23am, the 10-year benchmark bond yield was at 5.41%, taking the fall to 79 basis points this week after a 113 basis points rise in the previous week. It had ended at 5.55% on Thursday.

Volume was heavy at Rs82.75 billion on the RBI’s trading platform with the 10-year bond being the most traded.

RBI bought back Rs30 billion of market stabilisation scheme (MSS) bonds on Thursday and set a cut-off price of Rs104.52, or a yield of 4.2906%.

The market had expected a cut-off yield of 4.40-4.50%.

“It shows that the central bank will cut interest rates further and the corridor between the repo and reverse repo will be narrower," said S Srikumar, head of fixed-income at Corporation Bank in Mumbai.

Traders said they would keenly wait for the results of a Rs100 billion federal debt auction later in the day before taking aggressive positions.

Since mid-October, the RBI has cut the repo rate, at which it lends to banks, by 350 basis points as high borrowing costs and the global financial crisis took a toll on economic growth.

“The 10-year bond yield is likely to fall to 5% levels over the next two weeks as a result of falling inflation, tumbling global commodity prices and a further slowdown in global economies," Srikumar said.

Foreign banks were the major sellers and public, private banks and mutual funds were main buyers on Thursday.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 16 Jan 2009, 11:06 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App