Mumbai: Federal bond yields briefly rose to near one-month highs today as investors pared positions ahead of debt supplies and weekly inflation data due around noon.
At 10:49am, the 10 year benchmark bond yield was at 6.10%, off in intra-day high of 6.16%, a level it last tested in mid-December.
It had jumped 57 basis points on Wednesday to 5.87% after the government announced a large additional borrowing plan, and the market was shut on Thursday for a holiday.
Volume was heavy at Rs26.35 billion ($537.8 million) on the central bank’s trading platform with the 10 year bond being the most actively traded.
Traders said that yields of above 6.1% is an opportunity to buy bonds because the central bank is expected to follow an easing monetary policy to boost flagging economic growth.
The market is awaiting a Rs150 billion bond auction today.
“If the bonds are oversubscribed, investor sentiment would revive, but if primary dealers had to underwrite the bonds that would be a negative,” traders said.
“Bonds are unlikely to react much to inflation numbers because the sentiment has been dented by news of fresh supplies,” said a trader at a state-owned bank.
A poll indicated that inflation is seen at a 10 month low of 6.09%, compared with 6.38% previously after food supplies improved and steep duty and fuel price cuts worked through into the broader economy.
Earlier this week, the government said it would issue Rs500 billion ($10.3 billion) of fresh bonds by March.