India 10-year yield posts biggest weekly jump in 15 weeks on oil shock
India's benchmark 10-year bond yield logged its biggest weekly jump in 15 weeks on Friday, as surging oil prices sent the rupee plunging to record lows and stoked fears of inflation and hawkish central bank policy outlook.
By Reuters |
India's benchmark 10-year bond yield logged its biggest weekly jump in 15 weeks on Friday, as surging oil prices sent the rupee plunging to record lows and stoked fears of inflation and hawkish central bank policy outlook. Bond traders worldwide were left nursing losses after oil surged to $120 a barrel on Thursday, when Iran attacked Qatar's key facility that processes about a fifth of global liquefied natural gas.
Benchmark Brent crude was last at $110 a barrel, up nearly 7% on the week and about 50% so far this month. India's 10-year bond yield closed at 6.7369% on Friday after touching a high of 6.77%, with traders suspecting central bank buying in the secondary market. It closed at 6.7330% on Wednesday
Yield jumped 6 basis points from last Friday, the most since early December. The market was shut on Thursday.
The rupee weakened past 93 per dollar for the first time on Friday, posting its worst single-day fall in more than four years. It was down about 1.3% for the week, its steepest decline since late 2022. Meanwhile, British 10-year yield hit 4.95%, their highest since the global financial crisis, the U.S. two-year yield touched 3.96%, and euro zone government bond yields rose for a third straight day on Friday. Nearly all major developed market central banks kept rates unchanged this week, but emphasised their readiness to act to curb inflation should the energy shock drive a broader surge in prices. India, heavily reliant on Middle East oil, gas and remittances, is among the emerging Asian economies most exposed to the shock, alongside the Philippines and Thailand, Goldman Sachs said in a note. Investors are now watching for a shift in the Reserve Bank of India's tone at its next policy review in April. The central bank paused rate cuts in February after reducing rates by 125 basis points in 2025. India's banking system liquidity surplus also fell to a two-month low as tax-related outflows drained cash.
RATES
India's short-term overnight index swaps (OIS) jumped on weaker sentiment. The one-year OIS rose 3.75 basis points to 5.85%, the two-year gained 4 bps to 6.0575%, and the five-year was steady at 6.4125%.
($1 = 93.2650 Indian rupees)
Benchmark Brent crude was last at $110 a barrel, up nearly 7% on the week and about 50% so far this month. India's 10-year bond yield closed at 6.7369% on Friday after touching a high of 6.77%, with traders suspecting central bank buying in the secondary market. It closed at 6.7330% on Wednesday
Yield jumped 6 basis points from last Friday, the most since early December. The market was shut on Thursday.
The rupee weakened past 93 per dollar for the first time on Friday, posting its worst single-day fall in more than four years. It was down about 1.3% for the week, its steepest decline since late 2022. Meanwhile, British 10-year yield hit 4.95%, their highest since the global financial crisis, the U.S. two-year yield touched 3.96%, and euro zone government bond yields rose for a third straight day on Friday. Nearly all major developed market central banks kept rates unchanged this week, but emphasised their readiness to act to curb inflation should the energy shock drive a broader surge in prices. India, heavily reliant on Middle East oil, gas and remittances, is among the emerging Asian economies most exposed to the shock, alongside the Philippines and Thailand, Goldman Sachs said in a note. Investors are now watching for a shift in the Reserve Bank of India's tone at its next policy review in April. The central bank paused rate cuts in February after reducing rates by 125 basis points in 2025. India's banking system liquidity surplus also fell to a two-month low as tax-related outflows drained cash.
RATES
India's short-term overnight index swaps (OIS) jumped on weaker sentiment. The one-year OIS rose 3.75 basis points to 5.85%, the two-year gained 4 bps to 6.0575%, and the five-year was steady at 6.4125%.
ADVERTISEMENT
($1 = 93.2650 Indian rupees)
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
