Bond Markets Discount Economic Data As Yields Hold Steady
Bond Yields Extend Three Day Winning Streak On Monday
Bond yields ended marginally higher on Monday as traders continued to watch global cues. Domestic data released by the government, which showed that tax collections jumped in December, seemed to have left the markets unmoved.
The benchmark 10-year bond yield closed the session at 6.39 percent, marginally above its previous close of 6.38 percent on Friday. Intraday, yields touched a high and low of 6.41 percent and 6.39 percent respectively.
On Friday, data released by the government’s central statistical office (CSO) showed that growth for the current fiscal is likely to stay above the 7 percent mark. The data, however, was discounted by most economists as it has not built in any impact from the government’s demonetisation decision.
In the absence of reliable domestic data, bond markets continue to track US bond yields.
The US yields which spiked to 2.60 percent in the month of December post Donald Trump’s victory have corrected quite a bit since then to trade at 2.40 percent levels presently. These yields seemed to have slid quite a bit since they have priced in an extremely positive scenario in terms of how fiscal spending will support US growth. Keeping in mind both the domestic and global scenario, bond yields are expected to be in the range of 6.35-6.55 percent in the run up to the Union Budget 2017-18Mahendra Jajoo, Head - Fixed Income, Mirae Asset Global Investments
