Bond yields up on fear of big rate hike on Tuesday
MUMBAI: Indian federal bond yields rose further on Monday as many investors trimmed holdings in minimal risk assets due to fear of stringent monetary action by the central bank on Tuesday.
* Dealers said comments by Revenue Secretary Sunil Mitra that current fiscal year may end with inflation at 9 percent fanned fear of aggressive rate action by the Reserve Bank of India on Tuesday.
* However, most analysts still expect the RBI to avoid a tough monetary stance and limit a rate increase to 25 basis points, to ensure economic growth is not squeezed by its fight to rein in inflation.
* At 2:03 p.m., the most-actively traded 8.13 percent, 2022 bond yield was at 8.24 percent, 4 basis points higher from the previous close.
* The second-most actively traded 8.08 percent, 2022 bond yield was at 8.28 percent, up 3 basis points from the previous close.
* The illiquid benchmark 10-year bond climbed 6 basis points to 8.22 percent.
* Dealers said the market may look at the macroeconomic report due to be released by the central bank around 1130 GMT for further cues on its likely action on Tuesday.
* Dealers said comments by Revenue Secretary Sunil Mitra that current fiscal year may end with inflation at 9 percent fanned fear of aggressive rate action by the Reserve Bank of India on Tuesday.
* However, most analysts still expect the RBI to avoid a tough monetary stance and limit a rate increase to 25 basis points, to ensure economic growth is not squeezed by its fight to rein in inflation.
* At 2:03 p.m., the most-actively traded 8.13 percent, 2022 bond yield was at 8.24 percent, 4 basis points higher from the previous close.
* The second-most actively traded 8.08 percent, 2022 bond yield was at 8.28 percent, up 3 basis points from the previous close.
* The illiquid benchmark 10-year bond climbed 6 basis points to 8.22 percent.
* Dealers said the market may look at the macroeconomic report due to be released by the central bank around 1130 GMT for further cues on its likely action on Tuesday.
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