Benchmark yield at 4-month low on slower inflation rise
bond yields fell to their lowest levels in almost four months on Monday, pushing down borrowing costs across the economy, as a lower-than-expected rise in India's inflation and rising US bonds bolstered market sentiment. Yields and bond prices move in opposite directions.
The 10-year benchmark government bond yield — a pricing reference for a host of credit products — ended trade at 7.152% on Monday, its lowest closing level since September 26, Bloomberg data showed.
The 10-year bond yield had closed at 7.179% on Friday. The total traded amount for Gsecs was at ₹56,770 crore.
Data released after trading hours on Friday showed that India's Consumer Price Index inflation was at 5.69% in December versus 5.55% in November.
Although gauge headed higher, the rise was lower than market expectations of around 5.90%, traders said.
«The CPI prints have been decent. More importantly, core inflation has come in below 4%.
That has everyone excited plus state government bond supply is lower than what was announced,» said Rajeev Pawar, head of treasury at Ujjivan Small Finance Bank. «We are already at 7.14%.
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