Bond yields end flat, Re weakens

MUMBAI: Government bond yields continued to remain under pressure ahead of fresh supplies this week, but ended unchanged from the Tuesday levels, still the highest in three weeks. The yield on the 10-year benchmark bond was at 7.33%, flat over Tuesday’s close. State-run banks were looking to buy cheaper bonds after the recent jump in yields, traders said.

Yields have been rising in recent session on expectations of a hike in policy rates and cash reserve ratio after data on Monday showed a surprisingly strong economic growth data of 7.9% for the July-September quarter. Yields were also under pressure due to a rise in US treasury yields overnight on easing concerns about the debt problems in Dubai. But, by late evening on Wednesday, US government bond prices were little changed after a mixed private sector jobs report.

“The bullish outlook on growth after strong IIP numbers has shifted the focus on the resultant pressure on inflation,” said J Moses Harding, head-global markets group, IndusInd Bank. “There is a shift in the immediate direction for 10-year yield to move towards 7.50% in the near term,” he added.

The rupee ended weaker on Wednesday, falling from one-week highs after a reversal of early sharemarket gains raised and on dollar demand from oil refiners. The rupee ended at 46.35 against the dollar, slightly weaker than Tuesday’s close of 46.312.