Bonds rise as inflation fears stoke concern
Bonds rise as inflation fears stoke concern
Mumbai: Ten-year bonds rose for the third day after crude oil posted its biggest decline in more than three months on Tuesday, tempering concern inflation will quicken.
Yields, which move in the opposite direction to prices, slipped to the lowest in more than a week.
Inflation in India, which imports three-quarters of its energy requirements, slowed to the least in five years in the week ended 27 October.
“The decline in oil price is good for bonds," said Rajesh Babu, a dealer at state-owned Andhra Bank. in Mumbai. “Lower oil will support the current positive sentiment about the declining inflation rate."
The yield on the benchmark 7.99% note maturing in July 2017 fell 1 basis point, or 0.01 percentage point, to 7.88% at Mumbai, according to the central bank’s trading system.
The 10-year yield may fall to 7.84% by the year-end and 7.76% by the end of March 2008, according to the weighted average estimate in a Bloomberg News survey.
Crude oil in New York fell 3.7% on Tuesday, the biggest decline since 6 August.
It was at $91.85 a barrel on Wednesday, after reaching a record $98.62 on 7 November.
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