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Yield of the widely traded 7.26 per cent 2032 Government Security (G-Sec) rose about 3 basis points on Wednesday as the monetary policy tone was more hawkish than expected.
This paper closed at a yield of 7.3435 per cent against previous close of 7.3102 per cent, with its price declining about 23 paise to close at ₹99.43 against previous close of ₹99.655.
Bond yields and price are inversely co-related and move in opposite directions.
HDFC Bank, in a report, noted that the monetary policy tone was more hawkish than what most market participants had expected as the RBI recognised that they are still away from achieving their objective of durable disinflation. ·
“Going forward, the central bank is likely to become more data dependent, and this does not rule out another rate hike in the upcoming policy,” per the report.
The Bank’s economists expect the 10-year paper to trade between 7.30-7.35 per cent in the near-term.
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