The yield on the 10-year benchmark ended at 6.5345%, after reaching 6.5357% on Thursday. It rose 2 basis points during the week, which saw only three trading sessions due to local holidays.
Bond yields rise when prices fall.
Indian government bonds ended little changed, recovering from intraday declines but posting a weekly decline on Friday as weak trading volumes encouraged short sellers while investors largely stayed away due to interest rate uncertainty.
“The bears tried their luck and managed to reach 6.56%, but fundamentally these are still decent levels to get into, and we could see some reversal from Monday,” said a trader at a state-owned bank.
Traders sold debt on expectations of a trade deal between India and the US to cut current 50% tariffs on Indian goods, dampening expectations of any major interest rate cuts by central banks.
Reuters reported that Indian refiners are likely to cut Russian oil imports to comply with new US sanctions, removing a major obstacle to a deal. India’s central bank also noted in its monthly bulletin that the global economy was in flux and posed significant challenges to the global macroeconomic outlook, and that the Indian economy was not immune. Meanwhile, banking system liquidity slid into deficit for the second time in a month, rising overnight. rates.
“System liquidity has temporarily reduced and we expect the government spending situation and the planned implementation of 50 basis points of CRR (cash reserve ratio) cuts to improve in November. RBI is also providing liquidity through regular fine-tuning operations,” said Anurag Mittal, head of fixed income at UTI Mutual Fund.
PRICES
Indian overnight interest rate swap (OIS) rates were marginally lower after heavy payments were made on Thursday.
The one-year OIS rate ended at 5.46%, while the two-year OIS rate closed at 5.40%. The five-year swap rate fell by 2 basis points to 5.65%. ($1 = 87.8950 Indian Rupees)
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