The cut-off yield on the new 10-year Government Security (G-Sec) came in higher at 6.79 per cent as the yield of the extant 10-year G-Sec rose in the secondary market, tracking US Treasury yields, which went up due to higher-than-expected services, PMI reading and geopolitical risks arising from the Iran-Israel conflict. 

Earlier market players were expecting the cut-off yield to come in at 6.70 to 6.73 per cent on the new 10-year G-Sec, but increased geopolitical tension in the Middle-East pushed crude oil prices up, spookingmarket sentiments.  

The government has raised ₹22,000 crore through auction of this paper. It also raised ₹7,000 crore through the auction of 7.02% GS 2027 and ₹10,000 crore through the auction of 7.46% GS 2073. 

The yield of the extant 10-year G-Sec (coupon rate: 7.10 per cent) jumped 5 basis points, to close at 6.83 per cent, against previous close of 6.78 per cent.  

Harsimran Sahni, EVP & Head - Treasury, Anand Rathi Global Finance, noted that the cut-off yield of the new 10-year at 6.79 per cent was about 3 basis points above the extant 10-year at 6.82 per cent in the secondary market.  

“The new 10-year will take about a minimum of 1.5 months to become liquid as auctions are scheduled only once in 3 weeks. Till then, the present 10-year -- 7.10 GS 2034 will trade in the range of 6.65% - 6.85%,” he said. 

Sahni observed that due to the increase in geo-political tensions in the Middle East, there has been a bearish undertone in the financial markets affecting crude oil prices and bond yields simultaneously.  The US 10-year yield has gradually risen from the low of 3.60% to the present yield of 3.84%.  

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