10-year bond yield falls below seven per cent

MUMBAI:  The 10-year bond yield, on Thursday, fell below 7% to touch 6.97% for the first time in nearly 13 months, driven by easing inflation, falling crude oil prices and a decline in bond yields in the US after the Federal Reserve signalled a pause in future rate hikes. 

The benchmark yield plunged to 6.97% during the intraday trade and closed at 7.03%. It’s not just the fall, but also the pace of decline that has surprised the bond market participants. The yields have plunged by about 30 basis points in a period of less than a month. The 10-year bond yield was hovering around 7.30% on April 6 and has been falling consistently after a pause in repo rate hike by the RBI on April 7.  

“The sharp fall in the bond yields reflects the easing worries among market participants about inflation in the country. Now the bond market is expecting a long pause from RBI with no rate hike this year,” Ankit Gupta, Founder, BondsIndia.com told TNIE.

“Additionally, the US Federal Reserve has adopted a dovish tone in its recent meeting and has signalled that there would be no further rate hike which has pulled down the yields,” he added. Bond market is relieved by the continuous fall in inflation, which has further strengthened the belief of the bond market that there would be no more rate hikes by the RBI this year.