India’s sovereign bonds surged Thursday, with the yield on the 10-year benchmark note plunging to a seven-month low intraday, after Mint Road unexpectedly split ranks with the central banks for Europe’s richer neighbourhoods and the US to leave interest rates unchanged at the latest policy review.
Yield on the most liquid 10-year sovereign bond settled at 7.21 per cent as against 7.28 per cent at previous close. Bond prices and yields move inversely. A decline of one basis point on the 10-year bond yield corresponds to a rise in prices of roughly 7 paise.
Intraday, yield on the 10-year bond touched a low of 7.15 per cent - the lowest level since September 15, 2022 - as traders celebrated the central bank’s decision to hold off on further tightening. A fall in government bond yields bodes well for broader borrowing costs in the economy as sovereign debt products are the benchmarks for pricing a wide variety of credit instruments.
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