BackIndian 10-year bonds drop as yields at two-week low deter buyers
The yield on the 8.83% notes due November 2023 rose one basis point from 11 April to 8.95%
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Mumbai: India’s 10-year government bonds fell as wholesale prices increased more than forecast amid speculation a drop in yields last week deterred buyers.
The yield on the 8.83% notes due November 2023 rose one basis point, or 0.01 percentage point, from 11 April to 8.95% in Mumbai, prices from the central bank’s trading system show. The rate slumped 13 basis points last week, the most since the five days through 17 January, reaching a two-week low of 8.94% on 11 April. Financial markets were shut Monday for a local holiday.
Wholesale prices rose 5.7% from a year earlier, compared with 4.68% in February and the 5.3% median estimate in a Bloomberg survey.
Consumer price gains probably quickened to 8.25% from 8.10% in February, a separate survey shows before figures to be released later Tuesday. Last week’s rally prompted investors to take profits, according to RBL Bank.
“People are unwilling to carry long positions before the CPI numbers," said Sagar Shah, associate vice-president for treasury at RBL Bank in Mumbai. The constant debt supply is expected to keep bonds in check.
The government will auction ₹ 20,000 crore of bonds on 17 April, compared with a sale of ₹ 16,000 crore on 11 April. Some 62% of the full-year sales target for the year ending March 2015 may be met in the April-September period, economic affairs secretary Arvind Mayaram said 28 March.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, rose two basis points to 8.62%, according to data compiled by Bloomberg. Bloomberg
Manish Modi in New Delhi contributed to this story.
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