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10-year yield climbs further; here’s what is bothering bond markets

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10-year yield climbs further; here’s what is bothering bond markets

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India's 10-year bond yield rose a further 6 points to a new three-year high of 7.18 percent. Yields had already risen 20 basis points on Friday post the RBI policy. It is a double whammy for the bond market as US yields have risen to 2.77 percent and which is also three years high. But it is at a three-year high in India because of an unexpectedly hawkish policy.

India's 10-year bond yield rose a further 6 points to a new three-year high of 7.18 percent. Yields had already risen 20 basis points on Friday post the RBI policy. It is a double whammy for the bond market as US yields have risen to 2.77 percent, which is also three years high. The hawkish tone of the policy has added to this movement.

The highlights of the policies were a revision of inflation from 4-4.50 percent to 5.7 percent. The introduction of the standing deposit facility (SDF) at 3.75 has meant that there was a jump from the lowest yield in the market at around 3.35.
Therefore. another way to look is that this is actually a 40 basis hike, though, on the face of it, it sounds like a no hike policy.
Watch the accompanying video of CNBC-TV18’s Latha Venkatesh for more details.
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