Treasury bills - bonds with a tenure of less than one year - jumped to their highest level in nearly two years, as near deficit liquidity and high oil prices have sealed another 50-75 basis points hike, traders said.
Read more: These 7 private and public banking stocks have an upside of up to 27% in one year, according to analysts
Bonds Corner Powered By India bonds end flat as oil woes come up against short covering
Indian government bonds faced volatility as oil price hikes raised inflation concerns and affected market sentiment. The 6.94% 2036 bond yield fluctuated but ended slightly unchanged as traders reacted to market conditions. Elevated crude prices have increased worries about inflation, a wider fiscal deficit, and slower economic growth for India. The rupee weakened further against the dollar, prompting fears of aggressive policy tightening by the Reserve Bank of India.
India bonds sink on oil spike before Fed decisionGlobal bond issuance set to grow at slowest pace in five years in 2027, S&P Global Ratings saysIndia benchmark yield falls most in 3 months on value buyingGreece raises €500 million from three-month T-bills, yield rises Browse all Bonds News withThe 91-day cutoff yield came in at 5.93%, while the 182-day cutoff yield was at 6.54%. The 364-day t-bill yield was at 6.69%, RBI data showed. These yields are about 20 basis points higher than the previous successful t-bill auction.
Read more: From 104 shareholders to nearly 80 lakh! Jio becomes India's most widely owned stock on listing day
The central bank had cancelled the auction in the week of October 21 due to high yields, which were about 15 basis points higher than the previous week.
"Liquidity tightening and high oil prices have intensified short-term funding pressures, prompting traders to demand a higher liquidity premium and triggering higher yields in the t-bill", a trader from a primary dealership said. System liquidity has hovered at a surplus of around ₹35,000 crores, from a large surplus last month. The daily average surplus in October so far stood at ₹2.6 lakh crore, versus ₹7.8 lakh crore in September. The 10-year yield closed at 7.44% on Wednesday.
Add as a Reliable and Trusted News Source Add Now!
(You can now subscribe to our ETMarkets WhatsApp channel)