Bond Yields Consolidate In Thursday Trade
The benchmark 10-year bond yield closed flat on Thursday
Bond yields consolidated on Thursday after a slide in the previous session. Traders also remained on the sidelines ahead of the weekly auction on Friday.
For the day, the benchmark 10-year bond yield closed unchanged at 6.38 percent. During the session, yields touched a high and a low of 6.39 and 6.35 respectively.
A surprise reduction in government borrowings has led to optimism around the government’s financial position which could keep yields in check. On Wednesday, the Finance Minister also said that he expects tax collections this fiscal to exceed budget estimates. This should allow the government to comfortably meet the budget deficit target of 3.5 percent of GDP for the current year. The downside on yields, however, has been limited by profit booking. Bond prices and yields move inversely.
On the global front, US treasury yields ended lower on Wednesday after minutes of the December 13-14 Federal Reserve meeting left traders uncertain about the likely pace of rate hikes in 2017.
Back home, any uptick in yields was capped by the strength in the rupee. The Indian currency strengthened 8 paise to 67.96 against the US Dollar compared to its previous close of 68.04.
