Mumbai: Indian federal bond yields rose on Friday, mainly tracking higher US treasury yields after the Federal Reserve raised its discount rate on Thursday.
• At 9:20 am, the yield on the benchmark 10-year bond was at 7.90% after rising to 7.94% in early deals. It had ended at 7.86% on Thursday.
• Shorter-dated US Treasury yields rose on Friday with the two-year note yield hitting its highest in a month after the US central bank lifted its discount rate, while the spread between two-year and 10-year yields narrowed.
• The Federal Reserve said on Thursday that the discount rate, the rate it charges banks for emergency loans, would be increased to 0.75% from 0.50%, effective Friday, although it left its benchmark federal funds rate unchanged near zero.
• Dealers said the domestic market was awaiting clarity on next fiscal year’s borrowing numbers, which will be announced in the federal budget on 26 February.
• The government will gradually wind down its growth-supporting stimulus over the 2010-11 financial year beginning on 1 April, but will still need to borrow a record amount from the market, a Reuters survey of economists showed.
• The survey of 27 participating economists showed a median fiscal deficit of 5.6% of gross domestic product in 2010-11. Gross market borrowing of the government is forecast to rise to a record Rs4.61 trillion in the next fiscal year from the current year’s 4.51 trillion.