The central bank granted a higher lump sum in the weekly bond auction, due to slowing demand from foreign banks and foreign investors

Bond yields rose by about 4 basis points on Friday, after the Federal Reserve increased the pace of tapering its bond-buying program and the Bank of England raised interest rates on Thursday for the first time since the start of the pandemic. The benchmark 10-year bond yield ended 6.10%-2031 at 6.4102%, nearly 5 basis points higher than the previous close of 6.3749% on Thursday.

Moreover, the central bank granted a higher yield yield in the weekly bond auction, due to sluggish demand from foreign banks and foreign investors. Taking the clues from the Bank of England rate hike, the market was a bit weak and volumes were lower than usual.

The 10-year yields rose 5 basis points and closed at 6.41%, with the auction stop close to 6.40% today (Friday), said Ajay Mangalonia, managing director and head of institutional fixed income at JM Financial.

In the weekly bond auction, the central bank set a higher cut of 6.4034% on 10-year bonds and Rs 13,000 crore ahead. Other bonds such as GOI FRB 2034 and 6.95%-2061 have also been fully subscribed.

Market participants expect to open record yields on Monday, tracking oil prices and uncertainty about a tapering Federal Reserve. Dealers with state-owned banks expect yields on the benchmark securities to trade between 6.40% and 6.45% next week.

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