Indian bonds see biggest jump since 2020 as oil prices slide
Premium- Indian government bonds rallied as traders rushed to cover short positions amid a drop in oil prices and US Treasury yields.
World oil prices sank more than five percent Monday on fears that China's worsening Covid outbreak could slam demand from the major energy consumer.
Europe's benchmark contract Brent North Sea crude fell as low as $101.20 per barrel and US WTI oil dropped to $96.85.
Indian government bonds rallied by the most in 19 months, as traders rushed to cover short positions amid a drop in oil prices and US Treasury yields.
The yield on the benchmark 10-year bond was down 10 basis points to 7.06%, the biggest decline since September 2020. The second-most traded 6.67% 2035 bond yield dropped seven basis points. Monday’s rally was helped by traders covering their short positions, according to ICICI Securities Primary Dealership Ltd.
“Bonds rallied as crude and US Treasury yields moved lower," amid further deterioration in risk sentiment, said Gopal Tripathi, head of treasury at Jana Small Finance Bank. He added that traders see yields as having hit a peak for now, which was supporting bond prices.
Benchmark yields hit a three-year high of 7.28% earlier in April, the highest since May 2019, and eased five basis points last week.
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“I would think it is traders stop losses getting triggered as market was short and risk-off is leading to a sharper rally because of positioning," said Shailendra Jhingan, chief executive at ICICI Securities Primary Dealership Ltd.