Bond yields hit 4-month high as RBI OMO sales, global headwinds weigh
Crude shock sends Sensex, Nifty and rupee tumbling
Indian government bond yields climbed to a four-month high on Monday, pushed higher by concerns over the Reserve Bank of India's (RBI) liquidity tightening measures, a surge in government security and State development loan (SDL) supply, and adverse global market cues. The benchmark 10-year yield briefly peaked at 7.10 per cent before settling at 7.073 per cent, marking the highest closing level since May 22 of last year.
This sharp rise in bond yields comes after the RBI announced a liquidity absorption program of ₹1 lakh crore through open market operations, adding to existing pressures in a market already flooded with government securities and SDL issuances. Gaura Sengupta, Chief Economist at IDFC First Bank, attributed the yield surge to the RBI's liquidity absorption drive and the unfavorable global economic backdrop, with US Treasury yields on the rise and Brent crude prices hovering around $105-107 a barrel.
The weakness in the rupee, which slipped below the 96-per-dollar mark intraday, has further fueled worries of imported inflation and a prolonged higher-for-longer interest-rate cycle. Market participants are now watching the next resistance level at 7.10-7.15 per cent for the benchmark 10-year yield, with the outlook for the broader economy remaining cautious amid heightened volatility.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
