India 10Y Yield Hits 3-Week High on Bond Supply Boost
At the close of September, the yield on India's 10-year Government Security (G-Sec) edged up to approximately 6.53%, marking its highest level in over three weeks. This uptick is a response to the government's decision to increase the proportion of 10-year bonds in its borrowing strategy for the October to March period. The initiative will see the share of 10-year bonds rise to more than 28% of total market borrowings, with the weekly auction size expanding from 300 billion to 320 billion rupees. This approach is designed to cater to fiscal requirements but also introduces supply-side pressure that may elevate yields further. Market participants currently await the Reserve Bank of India's monetary policy announcement on Wednesday, where interest rates are anticipated to remain stable. Nevertheless, any unexpected policy moves could further impact bond yields. Additionally, broader risk factors continue to affect the rupee and bond market, as heavy US tariffs on Indian exports combined with stricter immigration policies hinder export opportunities, remittance flows, and foreign capital investments.
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