Mumbai: India’s 10-year bonds fell, pushing yields to the highest in seven years, on concern oil prices near a record high will quicken inflation.
Benchmark notes declined for a second day, adding to the biggest quarterly loss in at least seven years, after crude oil reached an all-time high of $143.67 (Rs6,220.91) a barrel on Monday in New York. The commodity’s price has almost doubled in the past 12 months. Bonds dropped on speculation the central bank, which raised its benchmark rate to a six-year high last week, will take more steps to cap prices at its meeting on 29 July.
“Inflation jitters haven’t worn off,” said Anoop Verma, a fixed-income trader at Development Credit Bank Ltd in Mumbai. “Some people in the market are expecting further monetary measures to be announced at the policy meeting this month.”
The yield on the 8.24% note due April 2018 climbed 6 basis points to 8.75%, the highest since 2001, at the 5:30pm close of trading, according to the central bank’s trading system. The price of the note fell 0.38, or 38 paise per Rs100 face amount, to 96.65.
The benchmark yield climbed 74 basis points in the quarter ended Monday, the most in at least seven years. Hundred basis points make one percentage point.
Wholesale prices rose 11.42%, the fastest pace since February 1995, in the week ended 14 June.