yield: Benchmark 10-year yield softens to 9-month low

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Mumbai: The yield on India’s 10-year benchmark government paper slid to its lowest level in nine months, helping bring down the cost of borrowing across the economy, as a fall in US bond yields and lower than anticipated supply of local debt created appetite for sovereign debt.

The 10-year benchmark bond yield closed at 7.02%, its lowest level since June 14, 2023, Bloomberg data showed. In the previous day’s trade, the benchmark yield had settled at 7.03%. Bond prices and yields move inversely. Government bond yields are the benchmarks used for pricing bonds issued by companies.

Benchmark 10-Year Yield Softens to 9-Month LowAgencies

Easing liquidity conditions in the banking system also improved the view on government bonds, although a further decline in yields was reined in ahead of two crucial data releases Tuesday – on inflation in the US and at home.

Yield on the 10-year US bond touched a five-week low of 4.05% on Monday, having registered a steep decline from 4.25% at the end of last month. A fall in US bond yields increases the appeal of relatively higher-yielding fixed-income instruments in emerging markets such as India.

“Market gauges are now predicting more than 70% chance of a Fed rate cut in June and that gives room for our 10-year bond yield to fall to 6.90% levels in coming weeks,” said Naveen Singh, head of trading at ICICI Securities Primary Dealership.

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