India's benchmark bond hit a 10-week low on Friday as an absence of open market operation added to supply concerns, while caution also prevailed ahead of next week's crucial inflation data. Yields rose for a seventh straight session as the central bank is expected to maintain a tight monetary stance in the face of inflationary pressures.
Bonds also came under pressure after the auction cut-off yield for the benchmark paper came in at 8.9368 percent, above a Reuters poll estimate of 8.9129 percent. Traders are eagerly awaiting inflation and industrial output data scheduled for next week which will provide a window to possible central bank action.
The benchmark 10-year bond yield closed 14 basis points (bps) higher at 8.99 percent, its highest level since August 28. It rose 29 bps for the week, a fourth consecutive weekly rise. The benchmark five-year swap rate closed 1 bp higher at 8.36 percent, while the one-year rate ended 2 bps higher at 8.49 percent.
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