Bond yields off lows, investors trim holdings

Bond yields off lows, investors trim holdings

Mumbai: Indian federal bond yields climbed off intraday lows in volatile trade on Friday as investors pared positions after prices rose for nine consecutive sessions.

At 11:29am, the benchmark 10-year bond yield was at 5.60%, off an early trough of 5.40%, its lowest since June 2004. It had ended at 5.50% on Thursday.

Dealers said investors were cashing in gains at 5.48% to 5.58% levels but they expect bond yields to stabilize later in the day.

The Reserve Bank of India (RBI) is expected to slash interest rates before or at a review in January as Thursday’s data showed annual inflation slowed to 6.84% in early December, below the RBI’s target of 7% for the 2008-09 fiscal year.

Rate cut expectations have also risen after a huge US rate cut this week and a sharp drop in global crude prices to 4- year low of around US $36 per barrel.