G-Sec 10-year yield tops 7% as oil soars

Mumbai: The 10-year benchmark government bond yield breached the 7% mark to close at 7.01% Thursday, up from 6.99% Wednesday. Yields have hardened after having retreated to a relative softness of around 6.86% mid-April.

The 10-year yield traded at a high of 7.06% on the day, as crude oil prices were at its highest in four years. Yields opened at 7.04% and remained elevated around 7.06% for most of the session. They eased modestly after 3 pm as crude oil prices cooled, allowing yields to close lower at 7.01%.

Yields climbed following hawkish comments by the Federal Reserve.


"Bonds were already a pain point for traders, and oil above $120 per barrel is adding to it. Additionally, commentary from the Federal Reserve reinforces expectations of tighter global financial conditions," said a bond trader from a primary dealership. Separately, money market rates shot up, with the weighted average call rate trading at 5.07% on Thursday versus 5.00% a week earlier. The firming up of yields comes amid shrinking surplus of banking liquidity.